I PONTRIBUTION AGREEMENT


T             ION AGREEMENT (this "Agreement") is made



as of April /,q,1998, among South Seas Properties Company 
Limited Partnership, a'n Ohio limited partnership (IISSPCII), 
South Seas Resorts Company Limited Partnership, a Florida 
limited partnership (IISSRCII), South Seas Resort Limited 
Partnership, an Ohio limited partnership (IISSRLP'l), Marco 
SSP, Ltd., a Florida limited partnership ("Marco"), and South 
Seas &: Captiva Properties, L.P., a Florida limited 
partnership (IISS&CPII; SSPC, SSRC, SSRLP, Marco and SS&CP 
are referred to herein individually as a "Seller", and 
collectively as "Sellers"), CapStar Hotel Com-oany, a 
Delaware corporation ("CapStar"), and CapStar Management 
Company, L.P., a Delaware limited partnership ("CapStar 
Management"; CapStar and CapStar Management are referred to 
herein individually as a "Purchaser", and collectively as the 
"Purchasers").



RECITALS:

A., SSPC owns, among other things, the hotel, 
resort and golf and tennis club properties listed below 
(individually, an IISSPC Owned Property" and, collectively, 
the IISSPC Owned Properties"):



1.	Best Western Sanibel Island Beach Resort, Sanibel 
Island, Florida ("Best Western Sanibel,');



2.	Song of the Sea, Sanibel Islaiid, Florida ("Song of the 
Sea"); and



3.	The Dunes Golf & Tennis Club, Sanibel Island, Florida 
("Dunes Club,');



B.	SSRLP owns the resort commonly known as South 
Seas Plantation Resort & Yacht Harbour, Captiva Island, 
Florida ("South Seas Plantation");



      C. Marco owns the resort hotel commonly known as the
Radisson Suite Beach Resort on Marco Island, Marco Island,
Florida ('!Marco Radisson,l);



D.   SS&CP is in the real estate brokerage business
(the "Brokerage Business");



E.	Sellers are engaged (directly or indirectly) 
in, among other things, the following related businesses: (i) 
operating and managing the SSPC Owned Properties, South Seas 
Plantation and Marco Radisson (individually, a "Property" 
and, collectively, the "Properties"), (ii) managing the 
short-term rental and leasing of individual condominium units 
and private residences at South Seas Plantation, and (iii) 
the Brokerage Business (collectively, the "Business,,);

F.	Each Seller desires to contribute to CaDStar 
Management all of the right, title and interest in and to the 
assets, properties and rights (contractual or otherwise) and 
business of such Seller with respect to the Business, on the 
terms and conditions set forth herein.



G.	Concurrently with the execution of this 
Agreement, SSPC, SSRC and Safety Harbor Management Company, 
Ltd., a Florida limited partnership ("SHMCII), and Purchasers 
have entered into a separate Asset Purchase Agreement (the 
"Other Agreement") providing for the sale of certain assets 
of SSPC, SSRC and SHMC to Purchasers.



H.	CapStar and American General Hospitality 
Corporation ("AGTII) have signed a definitive agreement 
pursuant to which, among other things: (i) CapStar will merge 
into AGT (the "Merger"), (ii) AGT will change its name to 
MeriStar Hospitality Corporation ("MeriStar Hospitality"), 
(iii) an operating partnership to be named MeriStar 
Hospitality Operating Partnership, L.P. will become the 
MeriStar Hospitality operating partnership in connection with 
the Merger ("MeriStar Hospitality Operating Partnership"), 
(iv) CapStar will spin off its hotel operations and 
management business to its current shareholders as a new C-
corporation to be named MeriStar Hotels & Resorts, 
Inc(i'MeriStar Hotels") and (v) a new operating partnership 
to be named MeriStar Hotels & Resorts Operating Partnership, 
L.P. will be formed t'I'MeriStar Hotels Operating 
Partnership").



NOW, THEREFORE, in consideration of the mutual 
covenants contained herein and for other good and valuable 
consideration, the receipt and sufficiency of which are 
hereby acknowledged, each Seller and each Purchaser agrees as 
follows:



ARTICLE I
DEFINITIONS; DESCRIPTION OF CONTRIBUTED ASSETS;
EXCLUDED PROPERTY



Section 1.1 Definitions. Capitalized words not 
otherwise defined in this Agreement have the meanings set 
forth in Exhibit A.



Section 1.2 Contributed Assets. Upon the terms and 
subject to the conditions set forth in this Agreement, at the 
Closing, each Seller shall contribute to CapStar Management 
all right, title and interest of that Seller in and to the 
Contributed Assets, but expressly excluding the Excluded 
Assets.



Section 1.3 Excluded Assets. There shall be 
excluded from the assets, properties, rights (contractual and 
otherwise) and business to'be contributed to CapStar 
Management pursuant to Section 1.2 the assets, properties, 
rights (contractual and otherwise) and business set forth on 
Schedule 1.3 (the "Excluded Assets").

Section 1.4 Non-Assi ent of Certain Property. 
Notwithstanding anything to the contrary in this Agreement, 
to the extent that the assignment hereunder of any of the 
Contributed Assets shall require the consent of any other 
party (or in the event that any of the same shall be non-
assignable), neither this Agreement nor any action taken 
pursuant to its provisions shall constitute an assignment or 
an agreement to assign if such assignment or attempted 
assignment would constitute a breach thereof or result in the 
loss or diminution in the value of such Contributed Asset; 
provided, however, that in each such case, Sellers shall use 
commercially reasonable efforts to obtain the consent of such 
other party to an assignment thereof to CapStar Management.



ARTICLE II
ASSUMPTION OF CERTAIN LIABILITIES; LIABILITIES NOT ASSUMED



Section 2.1 Assum-ption of Certain Liabilities.
CapStar Management shall assume and be responsible for the 
timely satisfaction or performance, as the case may be, of 
the following: (i) all Liabilities with respect to the 
Properties and the Contributed Assets (including, without 
limitation, the Contracts, the Indenture and the Leases) 
arising or a--cruing on or after the Closing Date; (ii) any 
Liabilities described herein to the extent CapStar or CapStar 
Management has received a credit against the Contribution 
Consideration therefor; and (iii) the Assume@.  Debt 
(collectively, the "Assumed Liabilities").



Section 2.2 Liabilities Not Assumed. Except for 
the Assumed Liabilities, neither CapStar nor CapStar 
Management shall by execution and performance of this 
Agreement assume or otherwise be responsible for any 
Liabilities of Sellers or with respect to the Contributed 
Assets (the "Excluded Liabilities").



ARTICLE III
CONTRIBUTION CONSIDERATION; PAYMENT OF CONTRIBUTION
CONSIDERATION; EARNEST MONEY DEPOSIT



Section 3.1 Contribution Consideration. In
consideration for the Contributed Assets, Purchasers shall 
pay to Sellers, in the manner set forth in Section 3.2 below, 
One Hundred Fifty-Three Million Dollars ($153,000,000), plus 
or minus the adjustments and prorations called for in Article 
XII and elsewhere in this Agreement (the "Contribution 
Consideration").



Section 3.2 Payment of Contribution Consideration.



(a)	on the terms and subject to the conditions of 
this Agreement, on the Closing Date, Purchasers shall: (i) 
assume the Assumed Liabilities, and (ii) issue to SSPC a 
number of Partnership Units (the "Unit Portion") equal to the 
quotient obtained by dividing Thirty Million Dollars 
($30,000,000) (the "Dollar Amount") by the Collar Price; 
provided, however, that if



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the Closing Date Price is less than $27.17, the number of 
Partnership UniL-s to be issued shall be determined by 
multiplying the quotient obtained by dividing the Dollar 
Amount by $30.56 by a fraction the numerator of which is 
$27.17 and the denominator of which is the Closing Date 
Price; and, provided, further that if the Closing Date Price 
is greater than $40.75, the number of Partnership Units to be 
issued shall be determined by multiplying the quotient 
obtained by dividing the Dollar Amount by $37.36 by a 
fraction the numerator of which is $40-75 and the denominator 
of which is the Closing Date Price.  If the Closing Date 
Price is less than $27.17, CapStar shall have the option of 
paying the difference between the "Collar Amount" and the 
"Floor Amount" in immediately available funds at the Time of 
Closing, in which event the number of Partnership Units to be 
issued shall be determined by dividing the Dollar Amount by 
the Collar Amount.  For purposes of the preceding sentence, 
the "Collar Amount" shall mean the amount determined by 
multiplying the quotient obtained by dividing the Dollar 
Amount by $30.56 by $27.17, and the "Floor Amount" shall mean 
the amount determined by multiplying the quotient obtained by 
dividing the Dollar Amount by $30.56 by the Closing Date 
Price.



(b)	If at the Time of Closing the sum of the 
Assumed Debt and the net adjustments and prorations called 
for in Article XII and elsewhere in this Agreement 
(collectively, the "Variable Portion") is greater than One 
Hundred Twenty-Three Million Dollars ($123,000,000), then at 
the Time of Closing SSPC shall pay to CapStar in immediately 
available funds the amount by which the Variable Portion 
exceeds One Hundred Twenty-Three Million Dollars 
($123,000,000).  If at the Time of Closing the Variable 
Portion is less than One Hundred Twenty-Three Million Dollars 
($123,000,000), then at the Time of Closing CapStar shall pay 
to SSPC in immediately available 'Lunds the amounl- by which 
the Variable PorL--ion is less than One Hundred Twenty-Three 
Million Dollars ($123,000,000).



Section 3.3 Effect of Mercrer Transaction on 
Contribution Consideration. If between the date hereof and 
the Time of Closing the Merger is consummated, then in lieu 
of delivering Partnership Units in CapSL--ar Management in 
satisfaction of the Unit Portion of the Contribution 
Consideration, CapStar shall deliver to SSPC or shall cause 
to be delivered to SSPC one Partnership Unit in each of 
MeriStar Hotel Operating Partnership and MeriStar Hospitality 
Operating PartnershiD for each Partnership Unit in CaDStar 
Management that SSPC otherwise would have been entitled to 
under this Agreement. .Sellers and Purchasers acknowledge and 
agree that the consummation of the Merger shall not be a 
condition to their respective obligations under this 
Agreement.



Section 3.4 Earnest Money Deposit.  Upon execution 
of this Agreement CapStar shall deposit the sum of One 
Million Dollars ($1,000,000) (the "Initial Deposit") in an 
escrow account



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established with First American Title Insurance Company, 
Washington, D.C. (the "Escrow Agent").  Upon expiration of 
the Due Diligence Period, if CapStar and CapStar Management 
decide to proceed with the transaction contemplated hereby, 
CapStar shall deposit the additional sum of Fourteen Million 
Dollars ($14,000,000), Five Million Dollars ($5,000,000) of 
which may be in the form of an irrevocable letter of credit 
complying with the requirements of Section 3.5 below (the 
"Additional Deposit"; the Additional Deposit and the Initial-
Deposit are hereafter collectively referred to as the 
"Earnest Money Deposit").  The Initial Deposit and the 
Additional Deposit shall be invested in an interest-bearing 
account reasonably acceptable to both parties.  If there is a 
conflict between the provisions of this Agreement and the 
terms of any applicable escrow agreement, the provisions of 
this Agreement shall govern.  If this transaction is 
consummated, the Earnest Money Deposit (together with any 
interest earned thereon) shall be returned to CapStar. if 
Purchasers terminate this Agreement prior to the expiration 
of the Due Diligence Period, the Earnest Money Deposit 
(together with any interest earned thereon) shall be returned 
to CapStar.  If after expiration of the Due Diligence Period 
this transaction is not consummated, the Earnest Money 
Deposit (together with any interest earned thereon) shall be: 
(i) returned to capSL--ar if the reason this transaction is 
not consummated is because (A) CapStar and CapStar Management 
have elected to terminate this Agreement pursuant to Article 
X, (B) CapStar and CapStar Management have elected to 
terminate this Agreement pursuant to Section 11.7, or (C) the 
failure of one or more of the conditions precedent set forth 
in Sections 7.1 or 7.2 of this Agreement to be satisfied at 
or prior to the time required by this Agreement, or (ii) paid 
to Sellers, as liquidated damages under Section 11.10 hereof, 
if this transaction is not consummated by reason of the 
default of Car,Star or CapSt--ar Management hereunder.



Section 3.5 Letter of Credit. In lieu of funding 
the entire Additional Deposit in immediately available funds, 
CapStar may deliver to the Escrow Agent an irrevocable and 
unconditional letter of credit in the amount of up to Five 
Million Dollars ($5,000,000), expiring no sooner than thirty 
(30) days following the scheduled Closing Date, naming the 
Escrow Agent as beneficiary thereunder, issued by a bank that 
is a member of the New York Clearing House Association, and 
otherwise in form and substance reasonably acceptable to SSPC 
(the "Letter of Credit").  The cost of the Letter of Credit 
shall be paid by CapStar.  The Letter of Credit shall be held 
by the Escrow Agent to secure CapStar's and CapStar 
Management's obligations under this Agreement.  If the 
Closing is unlikely to occur on the scheduled Closing Date 
and if CapStar fails to extend the Letter of Credit at least 
fifteen (15) days prior to its expiration to a date upon 
which the Closing is likely to occur, then the Escrow Agent 
may draw the proceeds of the Letter of Credit and hold the 
proceeds thereof as security for the performance of CapStar's 
and CapStar Management's obligation to complete the 
transaction contemplated

hereby.  As provided in the Letter of Credit, it may be drawn 
upon by the Escrow Agent if SSPC has terminated this 
Agreement due to the default of CapStar or CapStar Management 
hereunder.  All funds drawn on the Letter of Credit shall 
comprise earnest money and shall be paid over to SSPC at the 
same time any remaining Earnest Money Deposit is paid over to 
SSPC under Section 3.4. The Letter of Credit shall be 
returned to CapStar (i) upon SSPC's receipt of the 
Contribution Consideration andother sums to be paid under 
this Agreement, or (ii) at the same time the Earnest Money 
Deposit is paid over to CapStar under Section 3.4. In 
addition to the other instances in this Section 3.5 under 
which the Letter of Credit may be drawn upon, the Letter of 
Credit may be drawn upon and the proceeds thereof paid to 
SSPC at such time as SSPC is required under Section 8.4(e) to 
purchase Notes tendered as part of the Tender Offer.



Section 3.6 Tax-Free Contribution. The parties 
agree that the transfer of Contributed Assets to CapStar 
Management as contemplated by this Agreement shall be treated 
for federal income tax purposes as a contribution of the 
Contributed Assets to CapStar Management in exchange for a 
partnership interest in CapStar Management that is intended 
to qualify as a tax-free contribution under the Code.



ARTICLE IV
DUE DILIGENCE PERIOD; BOARD OF DIRECTOR APPROVAL



Section 4.1 Due Diligence Period.

(a)	CapStar and CapStar Managemen



	(a) CapStar and CapStar Management shal	until
5:00 p.m., Eastern Standard Time, on April Y01998 (	"Due
Diligence Period"), to determine whether in@aeir sole	and

absolute discretion they will proceed with this transaction.  If 
CapStar fails to notify SSPC in writing prior to the expiration of the 
Due Diligence Period that CapStar has elected not to proceed with this 
transaction, CapStar and CapStar Management shall be deemed to have 
irrevocably elected to proceed with this transaction.



(b)	subject to the remaining provisions of this 
Section 4.1, during the Due Diligence Period, Sellers shall 
give CapStar and CapStar Management access to the 
Contributed Assets.  Sellers shall furnish to CapStar and 
CapStar Management as promptly as reasonably practicable 
during the Due Diligence
Period all	additional materials, documents and 
information
concerning	the Contributed Assets as CapStar or CapStar
 .Management	may reasonably request, to the extent the same 
exist
and are in	the possession or control of Sellers or the 
Seller
Entities. 	CapStar and CapStar Management agree that no 
Seller
shall have	to undertake any tests, studies or 
investigations in
discharging its obligations under this Section 4.1(b).

(c)	CapStar and CapStar Management shall have the 
right, at their cost and expense, to perform or cause to be 
performed, any structural, engineering and environmental 
tests, studies and investigations deemed necessary by CapStar 
or CapStar Management; provided, however, that such tests, 
studies and investigations undertaken by CapStar or CapStar 
Management or their respective employees, agents or 
representatives (collectively, the "CapStar Representatives") 
shall be conducted only: (i) upon not less than forty-eight 
(48) hours' prior notice to SSPC; (ii) during normal business 
hours of SSPC; and (iii) with SSPC's prior written approval 
(which approval shall not be unreasonably withheld).  All of 
CapStar's and CapStar Management's activities under this 
Section 4.1 shall be coordinated through Richard E. Krichbaum 
or his designee.  CapStar and CapStar Management shall 
conduct their activities under this Section 4.1 in a manner 
so as not to unreasonably interfere or otherwise unreasonably 
disrupt the Business, operation of the Properties or the 
Employees or guests of Sellers.  Notwithstanding any other 
provision of this Section 4.1 to the contrary, neither 
CapStar nor CapStar Management shall perform any drilling, 
boring or similar invasive testing without Richard E. 
Krichbaum's prior written consent.  Neither CapStar nor 
CapStar Management shall, without the prior written consent 
of Richard E. Krichbaum, (i) disclose the nature or purpose 
of their activities to anyone other than CapStar 
Representatives and Robert M. Taylor, Richard E. Krichbaum, 
Timothy R. Bogott or Judy Emens, or (ii) disrupt Sellers' 
Employees or guests.- CapStar and CapStar Management agree to 
jointly and severally indemnify and hold harmless Sellers, 
their respective employees and partners from and against any 
and all losses, damages, claims, costs and expenses 
(including legal fees- and expenses) to the extent caused by 
CapStar, CapStar Management or the CapStar Representatives 
arising from any inspection activities undertaken under this 
Section 4.1. CapStar and CapStar Management, at their own 
cost and expense, shall restore any damage to the Property 
caused by any of the tests, studies or investigations made by 
CapStar, CapStar Management or the CapStar Representatives.  
Any information obtained by CapStar, CapStar Management or 
the CapStar Representatives under this Section 4.1 shall be 
subject to the confidentiality provisions of Section 8.3(a) 
of this Agreement.  The indemnification obligations and other 
obligations of CapStar and CapStar Management in this Section 
4.1 shall survive termination of this Agreement and the 
Closing.



(d)	Sellers and CapStar have caused the Title 
Compdny to furnish to CapStar and CapStar Management the 
title insurance commitments listed on Schedule 4.1(d) issued 
by the Title Company covering each parcel of Real Property, 
binding the Title Company to issue ALTA Form B-1970 Owner's 
Policies of Title Insurance, in favor of CapStar Management, 
together with copies of all documents identified in such 
title insurance commitments as exceptions to title (the 
"Title Commitments").  Sellers have delivered or made 
available to CapStar and CapStar Management



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copies of the existing land surveys listed on Schedule 4.1(d) 
with respect to each parcel of Real Property (the "Existing 
Surveys").  CapStar shall,have until 5:00 p.m., Eastern 
Standard Time, on April 9, 1998, to notify SSPC and the Title 
Company of any restrictions, reservations, limitations, 
easements, conditions, defects or encumbrances (together 
herein called "Title Defects") disclosed in the Title 
Commitments which are objectionable to CapStar.  If CapStar 
so notifies SSPC of any Title Defects, SSPC shall have until 
5:00 p.m., Eastern Standard Time, on April 13, 1998 (the 
"Reply Period") in which to cure or remove or commit to cure 
or remove such Title Defects.  Upon expiration of the Reply 
Period, the Title Company shall notify SSPC and CapStar as to 
whether or not it is then in a position to insure over the 
Title Defects or issue its policies of title insurance 
(collectively, the "Title Policies") without showing as 
exceptions the Title Defects.  If the Title Company shall 
notify the parties that it will issue the Title Policies, 
this transaction shall be consummated in accordance with the 
terms and provisions of this Agreement.  If the Title Company 
shall notify the parties that it will not issue the Title 
Policies with the Title Defects removed or insured over, this 
Agreement shall, at CapStar's option, thereupon be 
terminated, void and of no further force and effect, the 
Escrow Agent shall thereupon return to CapStar the funds and 
documents previously paid or deposited by it, including, but 
not limited to, the Earnest Money Deposit, and the parties 
shall be fully released and discharged from any liability or 
obligation hereunder.  The items set forth in the Title 
Commitments to which CapStar does not object or to which 
CapStar has objected prior to expiration of the Due Diligence 
Period but which the Title Company has agreed in writing to 
remove or insure over are hereafter referred to as "Permitted 
Title Exceptions." Permitted Title Exceptions shall also 
include any purchase money security interests granted in 
connection with the purchase of any of the personal property 
that is the subject of the Equipment Leases being assumed by 
CapStar Management hereunder.  Notwithstanding anything to 
the contrary contained in this Agreement, with the exception 
of the Assumed Debt, the Permitted Title Exceptions and any 
items for which CapStar or CapStar Management has received a 
credit against the Contribution Consideration under Section 
12.1 hereof, Sellers shall cause all monetary liens or 
encumbrances affecting the Properties and disclosed in the 
Title Commitments (or incurred after the effective time of 
the Title Commitments) to be removed on or prior to Closing.



ARTICLE V
SELLERS' REPRESENTATIONS AND WARRANTIES



To induce CapStar and CapStar Management to enter 
into this Agreement and to consummate the transaction 
contemplated hereby, each Seller hereby makes the following 
representations and warranties with respect to itself and the 
Contributed Assets in which such Seller has an ownership 
interest (directly or

indirectly) , upon which each Seller acknowledges and agrees 
that
CapStar and CapStar Management are entitled to rely:



Section 5.1 Organization and Power of Sellers.  
Each Seller is duly formed or organized (as the case may be), 
validly existing and in good standing or full force and 
effect in the jurisdiction of its formation or organization, 
and is qualified to do business in all jurisdictions in which 
such qualification is necessary (except where such failure to 
qualify would not result in a Material Adverse Effect), and 
has all requisite corporate or partnership (as the case may 
be) power and authority to own, lease and operate its 
proverty and to carry on its business as now being conducted.



Section 5.2 Authority and Binding Obligation.  
Each Seller has full corporate or partnership (as the case 
may be) power and authority to execute and deliver this 
Agreement and all documents now or hereafter to be executed 
and delivered by such Seller pursuant to this Agreement and 
to perform all obligations arising under this Agreement and 
under such other documents.  The execution, delivery and 
performance of this Agreement by each Seller has been duly 
and validly authorized by all necessary corporate or 
partnership (as the case may be) ac+@-ion on the part of such 
Seller, and this Agreement has been duly executed and 
delivered by such Seller.  This Agreement and such other 
documents, when executed and delivered, will each constitute 
the legal, valid and binding obligations of each Seller, 
enforceable against each Seller in accordance with their 
respective terms.



Section 5.3 Consents and Approvals; No Conflicts. 
With respect to each Seller: (i) there is no legal impediment 
to such Seller's donsummation of the transaction contemplated 
by this Ag--eement; and (ii) no f iling with, and no permit, 
authorization, consent or approval of, any Governmental 
Authority is necessary for the consummation by such Seller of 
the transaction contemplated by this Agreement.  Neither the 
execution and delivery of this Agreement by such Seller, nor 
the consummation by such Seller of the transaction 
contemplated hereby, nor compliance by such Seller with any 
of the provisions hereof will: (i) result in a violation of 
any provision of such Seller's organizational or governing 
documents in which such Seller owns an interest; (ii) violate 
any Applicable Law to which such Seller is subject; or (iii) 
result in a violation or breach of, or constitute a default 
under, any Material Contract.



Section 5.4 Title to Contributed Assets.

(a)	Schedule 1.2(a) sets forth a true, correct 
and complete legal description of each parcel of the Land and 
the correct and complete address of each Property.  SSPC 
(with respect to Best.Western Sanibel, Song of the Sea, and 
Dunes Club), SSRLP (with respect to South Seas Plantation), 
and Marco (with respect to Marco Radisson) own fee simple 
title to such



9

Real Property, which in each case shall be free and clear of 
all mortgages, pledges, liens, security interests, 
encumbrances and restrictions of any nature whatsoever as of 
the Closing Date, subject only to the Permitted Title 
Exceptions.



(b)	Each Seller has good title to the Personal 
Property used by it in connection with its business, which in 
each case shall be free and clear of all mortgages, pledges, 
liens, security interests, encumbrances and restrictions of 
any nature whatsoever as of the Closing Date, subject only to 
the Permitted Title Exceptions.



(c)	Except for the pledge of the DG&CC Stock 
granted in connection with the Credit LyonnaiS Debt, SSPC 
owns the DG&CC Stock free and clear of all liens, security 
interests, encumbrances and restrictions of any nature 
whatsoever.  The sole asset held by DG&CC is the liquor 
license issued i-n connection with the operation of the 
Dunes.  To Sellers, Knowledge, DG&CC has no Liabilities.



Section 5.5 Absence of Changes.  Since December 31, 
1997, there has not been any material adverse change in the 
business, assets, properties, liabilities, revenues or 
financial condition of any Seller or the Properties, except 
for changes due to the seasonal nature of the Business.



Section 5.6 Financial Statements and Reports; Absence
of Undisclosed Liabilities.



(a)	Schedule 5.6 sets forth: (i) the audited and 
unaudited consolidated financial statements of SSPC, (ii) the 
unconsolidated unaudited financial statements of SSPC, Marco 
SSP, Ltd. and South Seas Resort Limited Partnership, and 
(iii) certain other financial reports that have been 
furnished previously to Purchasers by Sellers (the "Financial 
Statements").  The Financial Statements are true and correct 
in all material respects, have been prepared from and are in 
accordance with the books and records cf each Seller in 
substantial conformity with GAAP applied on a consistent 
basis throughout the periods involved, and fairly present in 
all material resnects the financial condition of each Seller 
as of the dat@s stated and the results of operations for the 
periods then ended (subject, in the case of unaudited interim 
consolidated financial statements, to normal year-end 
adjustments).  SSPC has filed all required forms, reports and 
documents with the Securities and Exchange Commission 
required to be filed by it pursuant to the Securities 
Exchange Act of 1934, as amended, and the rules and 
regulations promulgated thereunder, all of which have 
complied in all material respects with the applicable 
requirements of the Securities Exchange Act of 1934, as 
amended, and such rules and regulations (hereinafter 
collectively referred to as the IISSPC Reports").  None of 
the SSPC Reports, at the time filed, contained any untrue 
statement of a material fact or omitted to



1 0

state a materi-al fact required to be stated therein or 
necessary in order to make the statements therein, in light 
of the circumstances under which they were made, not 
misleading.  The financial statements of SSPC included in the 
SSPC Reports complied as to form in all material respects 
with applicable accounting requirements and the published 
rules and regulations of the Securities and Exchange 
Commission a-Qplied on a consistent basis (except as 
otherwise noted in such financial statements) and present 
fairly in all materi-al respects the financial position, 
results of operations, cash flows and changes in financial 
position of SSPC and its consolidated subsidiaries as of the 
dates stated or the periods indicated, subject, in the case 
of unaudited interim consolidated financial statements, to 
normal year-end adjustments.  Purchaser acknowledges that 
under the terms of the lease between SHMC, an affiliate of 
SSPC, the annual lease payment is $1,200,000 and that a 
portion of the lease payment will be credited against the 
option to purchase contained in the lease if the option is 
exercised.  Because SHMC expects to exercise the option, SSPC 
has capitalized a portion of the annual lease payment and 
SSPC's Financial Statements reflect lease expense of 
approximately $135,000 for the calendar year 1997.



(b)	To Sellers, Knowledge, no Seller has any 
Liabilities which are required to be disclosed on a balance 
sheet under GAAP, other than (i) the Liabilities shown in the 
Financial Statements, (ii) Liabilities disclosed in any of 
the Schedules attached hereto, and (ii) Liabilities which 
have arisen since December 31, 1997 in the ordinary course of 
business (none of which relate to any breach of contract, 
tort, or violation of .kpplicable Law).



SecL--ion 5.7 Com-pliance with A-ot)licable Law. 
Except as disclosed in Schedule 5.7, to Sellers' Knowledge, 
no Seller is in violation of any Applicable Law.



Section 5.8 Liticration. Except as disclosed in 
Schedule 5.8, there is no action, suit or proceeding pending 
or, to Sellers, Knowledge, threatened against any Seller or 
the Properties in any cour-L or before any Governmental 
Authority which: (i) seeks to enjoin or prohibit, or 
otherwise questions the validity or enforceability of this 
Agreement or any action taken or to be taken by Sellers in 
connection with this Agreement, or (ii) if adversely 
determined would have a Material Adverse Effect.



Section 5.9 Insurance. Schedule 5.9 sets 'Lorth a 
true, correct and complete lisl-- and description of each 
insurance policy maintained by any Seller with respect to the 
Properties (the "Insurance Policies").  To Sellers' 
Knowledge, all of the Insurance Policies are valid and in 
full force and effect.



11

Section 5.10 Labor and Em-ployment Matters. To 
Sellers' Knowledge, each Seller has complied in all respects 
with all Applicable Laws relating to employment matters.  
There are no collective bargaining or other labor agreements 
to which any Seller is bound with respect to employees of any 
Seller.



Section 5.11 Taxes.  All Taxes imposed upon any 
Seller with respect to the Business or the Contributed Assets 
which are due and payable by the applicable Seller have been 
paid in full and are current.  No Seller has received any 
written notice that any such Taxes are overdue or have not 
been paid.  To Sellers, Knowledge, each Seller has duly filed 
all federal, state and local tax returns and tax reports 
required to be filed by it under Applicable Law, all such 
returns and reports are true and correct in all material 
respects and all Taxes and other charges arising under such 
returns and reports have been fully paid or will be timely 
paid.



Section 5.12 Enviro=ental Matters. Schedule 5.12 
sets forth a true, correct and complete list of all 
environmental assessments, reports and studies with respect 
to the Land prepared within the last three (3) years by or on 
behalf of, or otherwise in the possession or control of, any 
Seller and Sellers have delivered or made available to 
CapStar a copy of each such assessment, report and study.  
Except as disclosed in Schedule 5.12, there are no pending 
Environmental Claims, and to Sellers, Knowledge, no 
Environmental Claims are threatened.



Section 5.13 ERISA. (a) The only "employee pension 
benefit plans", as defined in Section 3 of ERISA, maintained 
by S-ellers are those disclosed in Schedule 5.13 (the 
"Pension Plans"), and the only "employee welfare benefit 
plans", as defined in Section 3 of ERISA, maintained by any 
Seller are those disclosed in Schedule 5.13 (the "Welfare 
Plans"; the Pension Plans and the Welfare Plans are hereafter 
collectively referred to as the "Plans") .



(b)	Except as disclosed in Schedule 5.13, a 
favorable determination letter has been issued by the 
Internal Revenue Service wil--h respect to L--he tax-
qualified status under Section 401(a) of the Code for each 
Pension Plan.  Since the date of the most recent 
determination letter, each Pension Plan has been timely 
amended to comply with all Applicable Laws with respect to 
such Pension Plan, and a request for a new determination 
letter has been filed with the Internal Revenue Service 
within the time required to preserve the rights of the 
sponsor of such Pension Plan to adopt such amendments to such 
Pension Plan as may be required by the Internal Revenue 
Service in order to secure a favorable determination letter 
with respect to such Pension Plan's continued L--ax-qualified 
status.



(c) No Seller has incurred any material liability to
the Internal Revenue Service, the U.S. Department of Labor, 
the



12

Pension Benefi-t Guaranty Corporation or any participant or 
former participant with respect to the Plans, other than 
routine claims for benefits.



- (d) Except as disclosed in Schedule 5.13: (i) the 
Plans have been maintained, operated and administered in all 
material respects in accordance with their respective terms 
and the provisions of ERISA and the Code, and (ii) there are 
no accumulated funding deficiencies (as defined in Section 
302 of ERISA and 412 of the Code) with respect to any Plan.



Section 5.14 ' Permits. Except as disclosed in ' 
Schedule 5.14, to Sellers' Knowledge, each Seller holds all 
Permits required in conducting its business and operating its 
properties, each of which to Sellers' Knowledge is valid and 
in full force and effect and no provision or condition of 
which has been breached or violated.



Section 5.15 Leases. Schedule 1.2(i) and Schedule 
1.2(i) set forth a true, correct and complete list of the 
Tenant Leases and Seller Leases, respectively, and Sellers 
have delivered or made available to CapStar a true, correct 
and complete copy of the Tenant Leases and Seller Leases, and 
true, correct and complete sample forms of the Condominium 
Lease Agreements.  No Seller has received any written notice 
of any default under any of the Leases, and to Sellers' 
Knowledge, no event has occurred or circumstance exists 
which, with notice or the passage of time, would result in a 
default thereunder. Schedule 5.15 sets forth a true, correct 
and complete list of the Condominium Lease Agreements as of 
March 31, 1998, including the units covered by such 
Condominium Lease Agreements, the dates such Condominium 
Lease Agreements were entered into and the names of t--he 
other parties thereto.



Section 5.16 Contracts. Schedule 5.16 sets forth a 
true, correct and complete list of all Equipment Leases 
(indicating therein which Equipment Leases constitute Capital 
Leases) and all Material Contracts in e'Lfect as of the date 
hereof, and Sellers have delivered or made available to 
CapStar a true, correct and complete copy of the Equipment 
Leases, Material Contracts, Franchise Agreements, Management 
Agreements and Memberships.  No Seller has received any 
written notice of any default under any of the Contracts, and 
to Selle--s' Knowledge, no event has occurred or circumstance 
exists which, with notice or the passage of time, would 
result in a default thereunder. Schedule 5.16 sets forth a 
true, correct and complete list of all Contracts and Leases 
that require aggregate remaining payments in excess of Two 
Hundred Thousand Dollars ($200,000) and that require by their 
express terms the consent of the other party thereto in 
connection with the assignment thereof to CapStar Management 
as contemplated by this Agreement.  Each Purchaser 
acknowledges that only the consents listed as deliveries 
under



13

Section 9.2 shall constitute a condition to each Purchaser's
obligations hereunder.



Section 5.17 ' Indenture. To SSPC's knowledge, the 
Indenture is valid and in full force and effect and 
enforceable in accordance with its terms.  To SSPC's 
knowledge, none of the parties under the Indenture is in 
default thereunder.  No notice has been received by SSPC 
claiming any default by SSPC or indicating the desire or 
intention of any other party thereto to amend, modify, 
rescind or terminate the Indenture.



Section 5.18 Foreicrn Person. No Seller is a 
"foreign person" for purposes of the withholding provisions 
of Sections 1445 and 7701 of the Code.



Section 5.19 ' Finders and Investment Brokers. 
Except for NationsBanc Montgomery Securities LLC, no broker, 
finder or financial adviser has acted directly or indirectly 
as such for Sellers in connection with the transaction 
contemplated by this Agreement, or is entitled to any fee or 
commission in connection with this Agreement or the 
transaction contemplated hereby.



Section 5.20 Credit Lvonnais Debt.  Pursuant to 
the terms of the Amended and Restated Loan Agreement, dated 
as of September 26, 1996, as amended, among Credit Lyonnais 
New York Branch ("CLNYBII) , Barnett Bank, N.A., FINOVA 
Capital Corporation, CLNYB as administrative agent and 
collateral agent, SSPC, SSRC, Marco, SSRLP and Safety Harbor 
Management Company, Ltd. (the "Credit Lyonnais Loan 
Agreement"), the Credit Lyonnais Debt may be prepaid, in 
full, without premium or penalty (other than prepayment 
costs) , at the end oE- any applicable interest period upon 
not less than three (3) business days' prior written notice.



Section 5.21 Trademarks. Schedule 5.21 sets forth 
a true, correct and complete list of each registered 
trademark, tradename, symbol and logo used by Sellers in 
connection with the Business (the "Proprietary Rights").  
Sellers are the sole and exclusive owners of all right, title 
and interest in and to all Proprietary Rights.  The 
Proprietary Rights do not infringe upon any trademark, 
tradename, symbol or logo of any third party and, to,the best 
of Sellers, Knowledge, none of the Proprietary Rights are 
being infringed upon by any person, firm, corporation or 
other legal entity.



Section 5.22 Additional Documents. SSPC has 
delivered or will, prior to the Time of Closing, deliver to 
CapStar all .documents and information in SSPC's possession 
relating to the property underlying the Option Agreement.



CAPSTAR AND CAPSTAR MMAGEMENT ACKNOWLEDGE AND 
AGREE THAT, SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, 
CAPSTAR MANAGEMENT IS TAKING THE CONTRIBUTED ASSETS AND THE 
PROPERTIES ON AN AS-IS, WHERE-IS BASIS WITH ALL FAULTS AND 
THAT, EXCEPT AS



14

EXPRESSLY SET FORTH IN THIS ARTICLE V, NO SELLER MAKES ANY 
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR ARISING BY 
OPERATION OF LAW OR OTHERWISE, INCLUDING, BUT IN NO WAY 
LIMITED TO, ANY WARRANTY OF CONDITION, MERCHANTABILITY, OR 
FITNESS FOR A PARTICULAR PURPOSE AS TO THE CONTRIBUTED ASSETS 
AND THE PROPERTIES.  CAPSTAR AND CAPSTAR MANAGEMENT REPRESENT 
THAT THEY ARE ENGAGED IN THE BUSINESS OF HOTEL AND RESORT 
PROPERTIES INVESTMENT, OWNERSHIP AND OPERATION AND AS OF THE 
CLOSING DATE, THEY HAVE BEEN GIVEN FULL AND COMPLETE ACCESS 
TO THE CONTRIBUTED ASSETS AND THE PROPERTIES FOR ALL 
INSPECTIONS AND REVIEWS THAT THEY RAVE DESIRED TO CONDUCT IN 
PERSON AND THROUGH THEIR RESPECTIVE AGENTS, EMPLOYEES OR 
REPRESENTATIVES, AND THEY WILL BE FAMILIAR WITH THE 
CONTRIBUTED ASSETS AND THE PROPERTIES AND WILL RAVE MADE SUCH 
INDEPENDENT INVESTIGATIONS AS THEY DEEM NECESSARY OR 
APPROPRIATE CONCERNING THE CONTRIBUTED ASSETS AND THE 
PROPERTIES.



Each of L-he representations and warranties 
contained in this Article V and its various subparagraphs are 
intended for the benefit of CapStar and CapStar Management 
and may be waived in whole or in part by CapStar and CapStar 
Management, but only by an instrument in writing signed by 
CapStar and CapStar Management.  All rights and remedies 
arisi-ng in connection with the untruth or inaccuracy of any 
such representations and warranties shall survive the Closing 
of the transaction contemplated hereby for the period set 
forth in Section 11.1 hereof unless CapStar or CapStar 
Management has Knowledge prior to Closing of the untruth or 
inaccuracy of any representation or warranty and CapStar and 
CapStar Management nevertheless elect to close this 
transaction.



ARTICLE VI
CAPSTAR'S AND CAPSTAR MANAGEMENT'S REPRESENTATIONS AND 
WARRANTIES



To induce Sellers to enter into this Acrreement 
and to consummate the transaction contemplated hereby, 
@apstar and CapStar Management hereby jointly and severally 
make the following representations and warranties, upon which 
CapStar and CapStar Management acknowledge and agree that 
Sellers are entitled to rely:



Section 6.1 Oraanization and Power.  Each 
Purchaser is duly formed or organized (as the case may be), 
validly existing and in good standing or full J'-orce and 
effect in the jurisdiction of its formation or organization 
and is qualified to do business in all jurisdictions in which 
such qualification is necessary (except where such failure to 
qualify would not result in a Material Adverse Effect) and 
has all requisite corporate or partnership (as the case may 
be) power and authority to own, lease and operate its 
property and to carry on its business as now being conducted.  
If the Merger is consummated prior to consummation of this 
transaction, MeriStar Hotel Operating Partnership, MeriStar 
HospiL--ality operating Partnership, MeriStar



is

Hotels and MeriStar HosDitality (collectively, the "Merger 
Entiti-es") will each be duly formed or organized (as the 
case may be), validly existing and in good standing or full 
force and effect in the jurisdiction of its formation or 
organization and will be qualified to do business in all 
jurisdictions in which such qualification is necessary 
(except where the failure to so qualify will not result in a 
Material Adverse Effect) and will have all requisite 
corporate or partnership (as the case may be) power and 
authority to own, lease and operate its property and to carry 
on its business as presently contemplated to be conducted.



Section 6.2 Authority and Binding Obligation. Each 
Purchaser has full corporate or partnership (as the case may 
be) power and authority to execute and deliver this Agreement 
and all documents now or hereafter to be executed and 
delivered by such Purchaser pursuant to this Agreement and to 
perform all obligations arising under this Agreement and 
under such other documents.  The execution, delivery and 
performance of this Agreement by each Purchaser has been duly 
and validly authorized by all necessary corporate or 
partnership (as the case may be) action on the part of such 
Purchaser and this Agreement has been duly executed and 
delivered by such Purchaser.  This Agreement and such other 
documents, when executed and delivered, will each constitute 
the legal, valid and binding obligations of each Purchaser, 
enforceable against each Purchaser in accordance with their 
respective terms.  If the Merger is consummated prior to 
consummation of this transaction, each Merger Entity will 
have full corporate or partnership (as the case may be) power 
and authority to perform all obligations arising under this 
Agreement and all other documents to he executed and 
delivered pursuant to this Agreement and this Agreement and 
such other documents, when executed and delivered, will each 
constitute the legal, valid and binding obligations of each 
Merger Entity, enforceable against each Merger Entity in 
accordance with their respective terms.



Section 6.3 Consents and A-pprovals; No Conflicts. 
Except as disclosed in Schedule 6.3: (i) there is no legal 
impediment to consummation by either Purchaser of the 
transaction contemplated by this Agreement, and (ii) no 
filing with, and no pe=it, authorization, consent or approval 
of, any Governmental Authority or other third party is 
necessary for the consummation by either Purchaser o-Lc the 
transaction contemplated by this Agreement.  Neither the 
execution and delivery of this Agreement by each Purchaser, 
nor the consummation by each Purchaser of the transaction 
contemplated hereby, nor compliance by each Purchaser with 
any of the provisions hereof will: (i) result in a violation 
of any provision of the organizational or governing documents 
of such Purchaser; (ii) violate any Applicable Law to which 
such Purchaser is subject; or (iii) result in a violation or 
breach of or constitute a default under any contract, 
agreement, note, bond, mortgage, indenture, license, lease, 
franchise, permit or other instrument or obligation to which 
such Purchaser is a party or by whi-ch any of such 
Purchaser's properties are bound.  If the



16

Merger is consummated prior to consummation of this 
transaction, (i) there will be no legal impediment to any 
Merger Entity's consummation of the transaction contemplated 
by this Agreement, and (ii) no filing with, and no pe=it, 
authorization, consent or approval of, any Governmental 
Authority or other third party will be necessary for the 
consummation by any Merger Entity of the transaction 
contemplated by this Agreement.  If the Merger is consummated 
prior to consummation of this transaction, neither the 
consummation by each Merger Entity of the transaction 
contemplated hereby, nor compliance by each Merger Entity 
with any of the provisions hereof will: (i) result in a 
violation of any provision of the organizational or governing 
documents of such Merger Entity; (ii) viola-te any Applicable 
Law to which such Merger Entity will be subject; or (iii) 
result in a violation or breach of or constitute a defaull- 
under any contract, agreement, note, bond, mortgage, 
indenturei license, lease, franchise, permit or other 
instrument or obligation to which such Merger Entity will be 
a party or by which any of such Merger Entity's properties 
will be bound.



Section 6.4 Litigation- There is no claim, 
litigation, proceeding or investigation pending, or to either 
Purchaser's Kr-owledge, threatened, which seeks to enjoin or 
prohibit, or otherwise questions the validity or 
enforceability of this Agreement or any action taken or to be 
taken by either Purchaser in connection with this Agreement.



Section 6.5 Finders and Investment Brokers. All 
negotiations relating to this Agreement and the transaction 
contemplated by this Agreement have been carried on without 
the involvement of any person or entity acting on behalf of 
either Purchaser in such a manner as to give rise to any 
valid claim against any Seller 'Lor any broker's fee, 
finder's fee or similar compensation.



Section 6.6 Financial Statements and Reports. 
CapStar has filed all required fo=s, reports and documents 
with the Securities and Exchange Commission required to be 
filed by it pursuant to the Securities Act of 1933, as 
amended, and the Securities Exchange Act o@L 1934, as 
amended, and the rules and regulations promulgated 
thereunder, all of which have complied in all material 
respects with the applicable requirements of the Securities 
Act of 1933, as amended, and the Securities Exchange Act of 
1934, as amended, respectively, and such rules and 
regulations (hereinafter collectively referred to as the 
"Purchaser Reports").  None of the Purchaser Reports, at the 
time filed, contained any untrue statement of a material fact 
or omitted to state a material fact required to be stated 
therein or necessary in order to make the statements therein, 
in light of the circumstances under which they were made, not 
misleading.  The financial statements of CapStar included in 
the Purchaser Reports complied as to form in all material 
respects with applicable accounting requirements and the 
published rules and



17

regulations of the Securities and Exchange Commission applied 
on a consistent basi-s (except as otherwise noted in such 
financial statements) and present fairly in all material 
respects the financial position, results of operations, cash 
flows and changes in financial position of CapStar and its 
consolidated subsidiaries as of the dates stated or the 
periods indicated, subject, in the case of unaudited interim 
consolidated financial statements, to normal year-end 
adjustments.  If the Merger is consummated prior to this 
transaction, each Merger Entity that will be subject to 
Securities and Exchange Commission reporting requirements 
will file all required forms, reports and documents with the 
Securities and Exchange Commission required to be filed by it 
pursuant to the Securities Act of 1933, as amended, and the 
Securities Exchange Act of 1934, as amended, and the rules 
and regulations promulgated thereunder, all of which will 
comply in all material respects with the applicable 
requirements of the Securities Act of 1933, as amended, and 
the Securities Exchange Act of 1934, as amended, 
respectively, and such rules and regulations (hereinafter 
collectively referred to as the "Merger Entity Reports").  
None of the Merger Entity Reports, at the time filed, will 
contain any untrue statement of a material fact or omit to 
state a material fact required to be stated therein or 
necessary in order to make the statements L--herein, in light 
of the circumstances under which they are made, not 
misleading.  The financial statements of the Merger Entities 
included in the Merger Entity Reports will comply as to form 
in all material respects with applicable accounting 
requirements and the published rules and regulations of the 
Securities and Exchange Commission applied on a consistent 
basis (except as otherwise noted in such financial 
statements) and will present fairly in all material respects 
the financial position, results of operations, cash flows and 
changes in financial position of the Merger Entity filing the 
same and its consolidated subsidiaries as of the dates stated 
or the periods indicated, subject, in the case of unaudited 
interim consolidated financial statements, to normal year-end 
adjustments.



Section 6.7 Stock Issuance. The CapStar Common 
Stock to be issued in exchange for the Partnership Units has 
been duly authorized for issuance and, when issued and 
delivered by CapStar will be validly issued, fully paid and 
nonassessable and listed (cr approved for listing upon notice 
of issuance) on The New York Stock Exchange.  The CavStar 
Common Stock to be issued in ex.change for the Partnership 
Units will not be issued in violation of any preemptive or 
similar rights.  CapStar will comply with all ADplicable Laws 
and all rules and regulations of the United States Securities 
and Exchange Commission and state securities administrators 
in connection with the offer, issuance and delivery of the 
CapStar Common Stock to be issued in exchange for the 
Partnership Units.  If the Merger is consummated prior to 
consummation of this transaction, the MeriStar Hotels Common 
Stock to be issued in exchange for the MeriStar Hotels 
Partnership Units will have been duly authorized for issuance



18

and, when issued and delivered by MeriStar Hotels will be 
validly issued, fully paid and nonassessable and listed (or 
approved for listing upon notice of issuance) on a national 
stock exchange or interdealer quotation system and the 
MeriStar Hospitality Common Stock to be issued in exchange 
for the MeriStar Hospitality Partnership Units will have been 
duly authorized for issuance and, when issued and delivered 
by MeriStar Hospitality will be validly issued, fully paid 
and nonassessable and listed (or approved for listing upon 
notice of issuance) on a national stock exchange or 
interdealer quotation system.  If the Merger transaction is 
consummated prior to the consummation of this transaction, 
the MeriStar Hotels Common Stock and the MeriStar Hospitality 
Common Stock to be issued in exchange for the MeriStar Hotels 
Partnership Units and the MeriStar Hospitality Partnership 
Units, respectively, will not be issued in violation of any 
preemptive or similar rights.  If the Merger transaction is 
consummated prior to the consummation of this transaction, 
MeriStar Hotels and MeriStar Hospitality will each comply 
with all Applicable Laws and all rules and regulations of the 
United States Securities and Exchange Commission and state 
securities administrators in connection with the offer, 
issuance and delivery of the MeriStar Hotels Common Stock and 
the MeriStar Hospitality Common Stock to be issued in 
exchange for the MeriStar Hotels Partnership Units and the 
MeriStar Hospitality Partnership Units, respectively.



Section 6.8 Book Ca-pital Account. The initial 
book cavital account of SSPC (and the account of each SSPC 
partner receiving Partnership Units) to be reflected on 
CapStar Management's books and records shall be the face 
amount of the Partnership Units, with each CapStar Management 
Partnership Unit having a value equal to the Collar Price of 
the CapStar Common Stock.  If the Merger is consummated prior 
to consummation of this transaction, the initial book capital 
account of SSPC to be reflected on MeriStar Hotel Operating 
Partnership's books and records and MeriStar Hospitality 
Operating Partnership's books and records shall be the face 
amount of the MeriStar Hotel Partnership Units and MeriStar 
Hospitality Partnership Units, respectively.



Section 6.9 Partnership Unit Issuance. The 
Partnership Units to be issued pursuant to this Agreement 
have been duly authorized for issuance and the general 
partner of CapStar Management has full power and authority 
under the CapStar Management PartnershiD Agreement to issue 
and deliver the Partnership Units required to be delivered 
hereunder.  When issued and delivered by CapStar Management, 
the Partnership Units required to be delivered hereunder will 
be validly issued and fully paid and SSPC shall not be under 
any obligation to contribute additional capital to CapStar 
Management.  CapStar Management will comply with all 
Applicable Laws and all rules and regulations of the United 
States Securities and Exchange Commission and state 
securities administrators in connection with



19

the offer, issuance and delivery of the Partnership UniL-s 
required to be-.delivered hereunder.  Upon the issuance of 
the Partnership Units as con templated by t-his Agreement, 
SSPC will be a limited partner-in CapStar Manage@nt, shall 
have the rights of a limited partner holding the Partnership 
Units as set forth in the CapStar Management Partnership 
Agreement, and shall not be subject to any liabilities of 
CapStar Management, except to the extent of the capital 
contributed to CapStar Management by Sellers.  A true, 
correct and complete copy of the CapStar Management 
Partnership Agreement, together with all amendments thereto 
is attached hereto as Schedule 6.9. If the Merger is 
consummated prior to consummation of this transaction, the 
MeriStar Hotel Partnership Units and the MeriStar Hospitality 
Partnership Units to be issued pursuant to this Agreement 
will be duly authorized for issuance and the general partner 
of MeriStar Hotels and the general partner of MeriStar 
Hospitality will each have full power and authority to issue 
and deliver the Mer-iStar Hotel Partnership Units and the 
MeriStar Hospitality Partnership Units, respectively.  When 
issued and delivered by MeriStar Hotel Operating Partnership 
and MeriStar Hospitality Operating Partnership, the MeriStar 
Hotel Partnership Units and the MeriStar Hospitality 
Partnership Units, respectively, will be validly issued and 
fully paid and SSPC shall not be under any obligation to 
contribute additional capital to MeriStar Hotel Operating 
Partnership or MeriStar Hospitality Operating Partnership.  
MeriStar Hotel Operating Partnership and MeriStar Hospitality 
Operating Partnership will comply with all Applicable Laws 
and all rules and regulations of the United States Securities 
and Exchange Commission and state securities administrators 
in connection with the offer, issuance and delivery of the 
MeriStar Hotel Partnership Units and the MeriStar Hospitality 
Partnership Units, respectively.  Upon the issuance of the 
MeriStar Hotel ParL--nership Units and the MeriStar 
Hospitality Partnership Units as contemplated by this 
Agreement, SSPC will be a limited partner in MeriSt--ar Hotel 
Operating Partnership and MeriStar Hospitality Operating 
Partnership, respectively, and shall not he subject to any 
liabilities of MeriStar Hotel Operating Partnership or 
MeriStar Hospitality Operating Partnership, except to the 
extent of the capital contributed to MeriStar Hotel Operating 
Partnership and MeriStar Hospitality Operating Partnership, 
respectively.



Each of the representations and warranties 
contained in this Article VI and its various subparagraphs is 
intended for the benefit of Sellers and may be waived in 
whole or in part by Sellers, but only by an instrument in 
writing signed by Sellers.  All rights and remedies arising 
in connection with the untruth or inaccuracy of any such 
representations and warranties shall survive the Closing of 
the transaction contemplated hereby for the period set forth 
in Section 11.1 hereof, unless Sellers have Knowledge prior 
to Closing of the untruth or inaccuracy of any representation 
or warranty, and Sellers nevertheless elect to close this 
transaction.



2 0

ARTICLE VII
CONDITIONS PRECEDENT



Section 7.1 Conditions Precedent to the 
Obligations of Both Purchasers and Sellers. The respective 
obligations of Purchasers and Sellers hereunder are subject 
to the satisfaction at or prior to the Closing Date (with 
respect to subsections (a) and (c)), and the Initial Tender 
Expiration Date, as the same may be-extended under Section 
8.4 (with respect to subsection (b)), of the following 
conditions precedent:



(a)	Adverse Proceedings. No preliminary or 
permanent injunction or other order, decree or ruling issued 
by a court of competent jurisdiction or by a Governmental 
Authority nor any statute, rule, regulation or executive 
order promulgated or enacted by any Governmental Authority 
shall be in effect which would: (i) make the consummation of 
the transaction contemplated hereby illegal, or (ii) 
otherwise prevent consummation of the transaction 
contemplated hereby.



(b)	Consent of Noteholders; Tender Offer. No 
later than the Initial Tender Expiration Date (as the same 
may be extended by the First and Second Extension Periods 
under Section 8.4 hereof), the holders of at least 66 2/3-. 
of the outstanding Notes shall have approved the transfer of 
management functions from SSRC to Ca-oStar Management as 
required under.Section 8.1(b) of the Indenture and the 
amendments to the Indenture set forth in Exhibit B through 
any combination of: (i) consents received from Noteholders in 
connection with the Consent Solicitation made as part of the 
Tender Offer, and (ii) Notes tendered as part of the Tender 
Offer (the Noteholders of which shall be required to consent 
to the items described above i-n this Section 7.1(b)).



(c) Consu=ation of Transaction Contemplated b



the



Other Aareement. The transaction contemplated by the other 
Agreement shall have been consummated or shall be consummated 
simultaneously with the consummation of the transaction 
contemplated hereby.



Section 7.2 Additional Conditions As to 
Purchasers' Oblicrations. Each Purchaser's obligations 
hereunder are also subject to the satisfaction on or prior to 
the Closing Date (or such earlier date as may be specifically 
indicated below) of the

following conditions precedent:                               
-



(a)	Sellers' Deliveries. Sellers shall have 
delivered to or for the benefit of Purchasers, on or before 
the Closing Date, all of the documents required of Sellers 
pursuant to Section 9.2.



(b)	- ReDresentations and Warranties. All of the 
representations and warranties made in Article V of thi-s 
Agreement shall be true and correct in all material respects 
when



21

made (without taking into account any qualification as to 
Knowledge) and, unless such representation or warranty is 
made as of a specific date, at and as of the Closing Date as 
if made at and as of such time (without taking into account 
any qualification as to Knowledge), and Sellers shall have 
executed and delivered to Purchasers a certificate to the 
foregoing effect.



(c)	Covenants and Obligations. Sellers shall have 
performed in all material respects all of their covenants and 
other obligations under this Agreement, and Sellers shall 
have executed and delivered to Purchasers a certificate to -
Lhe foregoing effect.



(d)	Title Policies. The Title Company shall be 
ready, willing and able to issue the Title Policies insuring 
in CapStar Management fee simple title to each parcel of Real 
Property with gap coverage from Sellers through the date of 
recording, subject only to the Permitted Title Exceptions.



(e)	Licruor Licenses. (i) CapStar Management or 
its designee shall have obtained valid liquor licenses for 
all Properties either (A) through the transfer of existing 
licenses (if permissible under Applicable Law) or (B) through 
the issuance of new licenses, or (ii) Sellers and CapStar 
Management or its designee shall have entered into an interim 
arrangement allowing CapStar Management or its designee to 
sell liquor at the Properties until licenses are obtained by 
CapStar Management or its designee.



(f)	Material Adverse Change. From the date of 
expiration of the Due Diligence Period, there shall not have 
occurred any material adverse change in the condition of the 
Contributed Assets or the operation of the Properties, except 
for changes due to the seasonal nature of the Business and 
except for any matter that may arise a'Lter the expiration of 
the Due Diligence Period under Article X of this Agreement.



results o'L its due diligence review relating to zoning 
Marco Radisson.  The condition set forth in this Section 
7.2(g lapse at 8:00 a.m., Eastern Standard Time, on April 13, 
1998. apstar does not notify SSPC in writing prior to 8:00 
a.m., Eas tandard Time, on April 13, 1998,_ that it is not 
satisfie wit results of its due diligence review relating to 
zoning issues he Marco Radisson, CapStarr shall be deemed to 
have waived this tion and elected to proceed to Closing 
without any abatement reduction in the Contribution 
Consideration.  If CapStar not SSPC prior to 8:00 a.m., 
Eastern Standard Time, on April 13, that it is not satisfied 
with the results of its due dilig nce relating to zoning 
issues at the Marco Radission, S eliminate the Marco Radisson 
from the Contributed A



22

the Contribution Consideration shall be reduced by the



amount @



it C) an elect to proceed with this



Each of the conditions set forth in this Section 
7.2 is intended for the benefit of Purchasers; provided, 
however, that if Purchasers consummate the transaction 
contemplated by this Agreement without the benefit of one or 
more of the 'Loregoing conditions having been satisfied, 
Purchasers shall be deemed to have waived any such condition 
or conditions.



Section 7.3 As to Sellers' obligations. Each 
Seller's obligations hereunder are subject to the 
satisfaction on or prior to the Closing Date of the following 
conditions precedent:



(a)	Purchasers' Deliveries. Purchasers shall have 
delivered to or for the benefit of Sellers, on or before the 
Closing Date, all of the documents required of Purchasers 
pursuant to Section 9.3.



(b)	Representations and Warranties. All of 
representations and warranties made in Article VI of this 
Agreement shall be true and correct in all material respects 
when made (without taking into account any qualification as 
to Knowledge) and, unless such representation or warranty is 
made as of a specific date, at and as of the Closing Date as 
if made at and as of such time (without taking into account 
any qualification as to Knowledge), and Purchasers shall have 
executed and delivered to Sellers a certificate to the 
foregoing effect.



(c)	Covenants and Oblicrations. Purchasers shall 
have performed in all material respects all of their 
covenants and other obligations under this AgreemenL-, and 
Purchasers shall have executed and delivered to Sellers a 
certificate to the foregoing effect.



(d)	Receipt of Contribution Consideration. 
Sellers shall have received the Contribution Consideration, 
as adjusted pursuant to Article XII, and all other sums 
required to be paid by Purchasers hereunder.



(e)	Legal Opinion. SSPC shall have received the 
opinion of Diamond, DeCampo & Ash, counsel to Purchasers, in 
form and substance reasonably satisfactory to SSPC.



Each of the conditions set forth in this Section 
7.3 is intended for the benefit of Sellers; provided, 
however, that if Sellers consummate the transaction 
contemplated by this Agreement without the benefit of one or 
more of the foregoing conditions having been satisfied, 
Sellers shall be deemed to have waived any such condition or 
conditions.



23

ARTICLE VTII
COVZNANTS



SeCLiOrl 8.1 Mutu2Ll Cqvenants-      Pur=hasers and SelJ.ers
iii"tually covenant as -@Oollowm:

(a)
SL =an t q.	Pur,-:1-iagere and Sellex-t3 sell 
keep Confidential
and rot disclose	to ariy            o-- e.-it4@ty the 
terms, mcnditiona
ar.d provisions o@- tl-.is AcT=eement; provided, 'I-iowevor, 
%"-ha--: Purchasers a-d Scllers s@all make a jo.@,-ir- 
publ.ic rialatj,ng t-0 "lie transaction co.-it la,-.ed hereby 
at 7.,Ov a.m., @aste--n standard 'rime, on Ap--il 1998, (i-") 
eac@party may at any time after execution hereof di-gclos-- 
'"he terrne, conditions



-his Agzeement as required under 
Applicable

and provia:Lcns of L-                                           
- Law
(i.n--I.ud,ing, wlrhour- limitation, SFC: Laws), (ii,.) each 
par--y may at any time afte-- exec,4tion hereca@ disclose the 
terms. conditioiig
and provisions of this Agree-,nent i,n             wit@i Llie 
Tezidel-
Ofter and Consent Sol.icitation, and (iv) eaqh party may a-@ 
a.,iy L@-iiie a.CLex- execution hereof discloic the termi;, 
conclill-lions and provisions of this Agreement to pexsonia 
on a "need -a know" basis, auch as ',--heir re5pectj.ve 
off.'Lcars, dirL-ctoz-s, emp'-cyeee, attorneys, 
acctDuiitanLs, engineers, surveyox7s, consulta,-itEi,
lexide@-,s,         4nvestoro, 'pozential lessees and @anke-s 
and
@uch other third parties whose a5s4-stance io required in 
Confection with ,--he consummal"-ioa of this transaction. ,



(b)	Additional Agreeme@e. SUbjeCt to the ' terms 
an6 conditions provided in this Ac

each ?Lzrchaser 
azid each seller agrees -@o une their commercially reasonable 
e-@forl-@s I-_o

-take, Q-- cause to be taken, all actions a:id to do, or 
cau5e '-Io be
dono, all th4rlgB - ,IeCappary, prope-- or adv,'-Bable to 
consummate and

make effective as promptly as practicable the tranaaction 
contemplated by this Agreement and to cooperate with ai-le 
aiioi:kip-.iti connection w;-th the foregoing, including 
using its commercially reasonable efforts to obta4-n all 
necescary consents, approvals and aia-@horizations as are 
required %--o be obtained from third parties or u.-ider 
Applicable Law, to defend a3.1 I.awq@iits or Other 3.ec;al. 
@)-oceeditigs challezigirig tliiw Agreemer4t or t;he 
consumiiiatiq,-i rf the transaction contemplated he--eby, to 
cause to be noted or rescinded any in-un=tion or restrairing 
order or ot'.,ier crder adversely affec--i.,ig the ability of 
the parties to conauminate the transaction conteniiolated 1-
iereby, and tc) @ffec-t all

necessary registrations a@d filings.



5ection 8.2 cgvengil@o of giellex-m. Sellere hereby
co-ie,-iant wil--h P-u--chasers as follows;



(a)	gc?@@@u@r q of Busiirimam; Xaintenance Of 
ProPtirtv.

 . kV. _.
Fz:om the dat:e. hf----r,eof the Closi:lg DaLe, Smller@ shall 
operate the Business and maintain azid opeT4te each Property 
in the Ord4-nary Course of Bu--iness.  Withoul-- limiting the 
gen@ral4-ty of the foregning- (i) -,no wall. exc)iancze, 
assign,



24



ARTICLE VIII
COVENANTS



Section 8.1 Mutual Covenants.  Purchasers and 
Sellers mutually covenant as follows:

(a)	Covenants Against Disclosure; Public 
Announcements. Purchasers and Sellers shall keep confidential 
and not disclose to any person or entity the terms, 
conditions and provisions of this Agreement; provided, 
however, that: (i) Purchasers and Sellers shall make-a joint 
public announcement relating to the transaction contemplated 
hereby at -I:ov a.m., Eastern Standard Time, on April '15, 
1998, (ii) each party may at any time after execution hereof 
disclose the terms, conditions



and provisions of this Agreement as required under Applicable 
Law (including, without limitation, SEC Laws), (iii-) each 
party may at any time after execution hereof disclose the 
terms, conditions and provisions of this Agreement in 
connection with the Tender Offer and Consent Solicitation, 
and (iv) each party may at any time after execution hereof 
disclose the terms, conditions and provisions of this 
Agreement to persons on a "need to know" basis, such as their 
respective officers, directors, employees, attorneys, 
accountants, engineers, surveyors, consultants, lenders, 
partners, investors, potential lessees and bankers and such 
other third parties whose assistance is required in 
connection with the consummation of this transaction. -



(b)	Additional Aareements. Subject to the terms 
and conditions provided in this Agreement, each Purchaser and 
each Seller agrees to use their commercially reasonable 
efforts to take, or cause to be taken, all actions and to do, 
or cause to be done, all things necessary, proper or 
advisable to consummate and make effective as promptly as 
practicable the transaction contemplated by this Agreement 
and to cooperate with one another in connection with the 
foregoing, including using its commercially reasonable 
efforts to obtain all necessary consents, approvals and 
authorizations as are required to be obtained from third 
parties or under Applicable Law, to defend all lawsuits or 
other legal proceedings challenging this Agreement or the 
consummation of the transaction contemplated hereby, to cause 
to be lifted or rescinded any injunction or restraining order 
or other order adversely affecting the ability of the parties 
to consummate the transaction contemplated hereby, and to 
effect all necessary registrations and filings.



Section 8.2 Covenants of Sellers. Sellers hereby
covenant with Purchasers as follows:



(a)	Continuance of Business; Maintenance of 
Property. From the date hereof until the Closing Date, 
Sellers shall operate the Business and maintain and operate 
each Property in the Ordinary Course of Business.  Without 
limiting the generality of the foregoing: (i) no Seller will 
sell, exchange, assign,



24





ARTICLE VIII
COVENANTS



Section 8.1 Mutual Covenants. Purchasers and Selle
mutually covenant as follows:



(a) Covenants Against Disclosure; Public
Announcements. Purchasers and Sellers shall keep confide



Announcements. Purchasers and Sellers shall keep confi	ial
and not disclose to any person or entity the terms, con	ons
and provisions of this Agreement; provided, however,-t@' :	(i),,

Purchasers and Sellers shall make a joint public anno@cementj relating 
to the transaction contemplated hereby at !;,/* a.m., Eastern Standard 
Time, on April 14-, 1998, (ii) eacly Qarty may at any time after 
execution hereof disclose the and provisions of this Agreement as 
required (including, without limitation, SEC Laws), at any time after 
execution hereof disclose and provisions of this Agreement in conne 
offer and Consent Solicitation, and (iv) time after execution hereof 
disclose the provisions oi'- this Agreement to persons basis, such as 
their respective office 51/1 directors, employees,

attorneys, accountants, engineers, sur eyors, consultants,

conditions
plicable Law
party may
conditions
he Tender
party may at any
s, conditions and
"need to know"


lenders, vartners, investors, pot such other third parties whose as 
connection with the consummation

lessees and bankers and ce is required in s transaction.



(b)	Additional Agre ts.  Subject to the terms and 
conditions provided in this A@/ement, each Purchaser and each 
Seller agrees to use their c@iercially reasonable efforts to 
take, or cause to be taken,/@l actions and to do, or cause to 
be done, all things necessa roper or advisable to consummate 
and make effective as prompt practicable the transaction



contemplated by this A

ent and to cooperate with one another



in connection with the     egoing, including using if--=
commercially reasonaby    fforts to obtain all necessary 
consents,

If , .




approvals and autl
third parties or i



tions as are required to be 
obtained from
-plicable Law, to defend 
all lawsuits or




I
other legal p	gs challenging this Agreement or the
consummation	ransaction contemplated hereby, to 
cause
be lifted or	d any injunction or restraining order 
or



other order
consummate



to



other orde	rsely affecting the ability of the parties 
to
consummate	ransaction contemplated hereby, and to 
effect all
necessary	rations and filings.



ection 8.2 Covenants of Sellers. Sellers hereby
covena     th Purchasers as follows:



(a) Continuance of Business; Maintenance of Property.



he date hereof until the Closing Date, Sellers shall e the 
Business and maintain and operate each Property in dinary 
Course of Business.  Without limiting the generality
foregoing:	(i) no Seller will sell, exchange, assign,



24

transfer, convey, lease or otherwise dispose of all or any 
part of the Contributed Assets or any interest therein except 
for Fixtures and Tangible Personal Property, Consumables and 
Supply Inventories which are sold or consumed in the Ordinary 
Course of Business; (ii) each Seller will keep all Contracts, 
Leases and Permits to which it is a party in full force and 
effect, will pay all charges when due under such agreements 
(unless being contested in good faith) and will perform all 
of its obligations under such agreements in the Ordinary 
Course o'L Business; (iii) no Seller will enter into any 
material contracts, licenses, easements or other agreements 
relating to the Contributed Assets which wi-11 obligate 
either Purchaser or be a charge or lien against the 
Contributed Assets, except those that will be discharged on 
or before the Closing Date, those entered into in the 
Ordinary Course of Business which are necessary to continue 
the operations of the Properties in the Ordinary Course of 
Business or those which are terminable without penalty on 
sixty (60) days, notice; (iv) each Seller will cause its 
respective Property to be operated and maintained in the 
manner in which it is being operated and maintained as of the 
date of this Agreement, which undertaking includes, but is 
not limited to, maintaining Fixtures and Tangible Personal 
Property, Consumables and Suvply Inventories in those 
quantities and at those levels present as of the date of this 
Agreement (subject to normal adjustments to take into account 
the seasonal nature of the Business) and entering into 
bookings in the ordinary Course of Business; (v) SSPC will 
promptly notify CapStar of any matter arising prior to the 
Closing which could reasonably be expected to have a Material 
Adverse Effect (including, without limitation the 
commencement of any litigation or proceeding or any notice of 
a violation of Applicable Laws issued by any governmental or 
quasi-governmental authority; (vi) SSPC will promptly notify 
CapS-Lar of any actual or proposed change in the assessed 
value of the Properties or any portion of the Properties 
(including any tentative or preliminary assessment) and of 
the institution or proposed institution of any proceeding 
(whether formal, informal, judicial or administrative) 
relating to any such change or proposed change; and (vii) no 
Seller will take any action with respect to the contesting or 
resolution of the taxable assessed value of the Land and 
Improvements without the prior written consent of CapStar, 
which consent shall not be unreasonably withheld.



(b)	Licruor Licenses. Sellers shall use all 
reasonable efforts to cause to be transferred to CapStar 
Management or its designee, all liquor licenses and alcoholic 
beverages licenses currently in use in connection with the 
Business and operation of the Properties.  To that end, 
Sellers and Purchasers shall cooperate each with the other, 
and each shall execute such transfer forms, license 
applications and other documents as may be necessary to 
effect such transfer- If pe=itted under Applicable Law, the 
parties shall execute and file all necessary applications and 
papers with the appropriate liquor and alcoholic



25

beverage authorities prior to the Closing, to the end that 
the issuance of new licenses shall take effect, if possible, 
on the Closing Date, simultaneously with Closing.  If not so 
permitted, then the parties agree each with the other that 
they will promptly execute all applications and other 
documents required by the liquor authorities in order to 
effect the issuance of new licenses at the earliest date 
possible consistent with Applicable Law in order that all 
liquor licenses may be issued to CapStar Management or its 
designee at the earliest possible time.  If under Applicable 
Law the new licenses cannot be issued until after the Closing 
of the transaction contemplated herein, then Sellers covenant 
and agree that they will use reasonable efforts to enable 
CapStar Management to keep the bars and lounges and liquor 
facilities at the Improvements open between the Closing Date 
and the time when the new liquor licenses actually become 
effective, by exercising management and supervision of such 
facilities under the existing licenses under a management 
agreement to be executed between Sellers and CapStar 
Management (or its designee) in a form reasonably agreed to 
between Sellers and CapStar Management, until.such time as 
new liquor licenses can be issued (but in no event longer 
than six (6) months from the Closing Date); provided, 
however, that CapStar shall indemnify and hold Sellers 
harmless from any liabilities, damages, claims, costs or 
expenses (including reasonable attorneys' fees) encountered 
in connection with such operations during said period of time 
and CapStar Management shall maintain commercial general 
liability insurance (including dram shop liability) in the 
amount of Ten Million Dollars ($10,.000,000) in favor of 
Sellers.  The provisions o'L this Section 8.2(b) shall 
survive the Closing.



(c) EmDloyee Matters. The employment of the Employees
shall be terminated by SSRC at the Time of Closing.



(d)	Prolect Capital Ex-penditures. In connection 
with any Project Capital Expenditure undertaken by any Seller 
after the date of execution of this Agreement, each Seller 
agrees as follows: (i) to submit plans and specifications 
therefor to CapStar for its review and approval (which 
approval shall not be unreasonably withheld or delayed); (ii) 
to complete such projects in accordance with the plans and 
specifications therefor; (iii) to complete such projects in a 
good and workmanlike manner, in timely fashion and using good 
materials; and (iv) to complete such projects in accordance 
with all Applicable Laws.  At the Time of Closing, Sellers 
shall deliver to Purchasers a report detailing each Project 
Ca3Dital Expenditure undertaken by Sellers, the work 
completed in connection wi-th each Project Capital 
Expenditure, the amount spent (or committed to be spent) in 
connection with each Project Capital Expenditure and the 
work, if any, needed to be completed in connection with each 
Project Capital Expenditure.



2 6

(e)	Accredited Investors. SSPC will distribute 
Partnership Units issued in connection with this transaction 
only to SSPC partners that have certified to SSPC and to the 
Purchasers that they are at the Time of Closing accredited 
investors (as that term is defined in Regulation D 
promulgated under the Securities Act of 1933, as amended), 
and sign and deliver to the Purchasers a certificate 
containing the same information as in the certificate 
delivered by SSPC at the Time of Closing.



(f)	Credit Lvonnais Debt.  At the request of 
CapStar, SSPC will deliver written notice of prepayment to 
Credi-t Lyonnais New York Branch as required under the te=s 
of the Credit Lyonnais Loan Agreement.



Section 8.3 CovenanL-s of Purchasers. Purchasers
hereby covenant with Sellers as follows:



(a)	Confidential Info=ation. Neither Purchaser 
nor any of their respective agents or representatives shall 
use for their own benefit (except in connection with this 
transaction and as required by SEC Laws) and shall hold in 
strict confidence and not disclose any data and@information 
relating to th-e financial statements, conditions and 
operations of Sellers that is confidential in nature and not 
generally known to the public (the "Confidential 
Info=ation").  If the transaction contemplated by this 
Agreement is not consummated for any reason, each Purchaser 
shall return to Sellers within five (5) business days of the 
termination of this Agreement for any reason all data, 
information and any other written material obtained by such 
Purchaser or its agents and representatives from Sellers in 
connection with this transaction and any copies, summaries or 
extracts thereof, and except as noted herein, shall refrain 
from disclosing any of the Confidential Information to any 
third party or using any of the Confidential Info=ation for 
its own benefit or that of any other person or entity.  This 
Section 8.3(a) shall survive termination of this Agreement.



(b)	Sellers' Executive Management Emplo-yees. 
CapStar
shall aL-- the	Time of Closing assume all of the rights 
and
obligations of	SSRC under the terms of the Management 
Transition
Agreements (which Terms shall not be modified or amended 
after the date of execution of this Agreement without 
CapStar's prior written consent) between the Executive 
Management Employees and SSRC (the "Management Transition 
Agreements"), copies of which have been delivered to CapStar.



(c)	Employee Matters. Except with respect to the 
Sellers' Executive Management Employees, which shall be 
governed by the provisions of Section 8.3(b), on the Closing 
Date, CapStar shall: (i) offer initial employment to all of 
Sellers, Management Level Employees; provided, that CaDStar 
may at any time -Drior to June 1, 1998, designate in writing 
to SSPC up to ten (10)



27

Management Level Employees that CapStar shall not be required 
to offer employment; and (ii) offer initial employment to 
such other EmiDloyees as CapStar so desires; provided, 
however, that CapStar shall offer employment to a sufficient 
number of such other .Employees to prevent Sellers from 
incurring liability under the Worker Adjustment and 
Retraining Notification Act, 29 U.S.C. 2101 et sea (the 
"WARN Act"), and CapStar shall indemnify and hold harmless 
Sellers from and against any claims, penalties, damages, 
losses, liabilities and expenses incurred by Sellers under 
the WARN Act.  'The Executive Management Employees, the 
Management Level Employees and the other Employees who accept 
such offers of employment by CapStar are referred to herein 
as the "Transferred Employees".  Subject to the penultimate 
sentence of this Section 8.3(c), the parties acknowledge that 
all Transferred Employees (other than the Executive 
Management Employees) shall be subject to such terms and 
conditions of employment as CapStar may set or establish, 
including, but not limited to, such matters as wages, hours 
and working conditions.  The Transferred Employees shall 
receive credit from CapStar for years of service (time 
worked) with Sellers for all purposes (including, without 
limitation, compensation, vacation, severance, options, 
bonuses and all pension or welfare plans of CapStar).  
Notwithstanding any provision of this Section 8.3(c) to the 
contrary, CapStar agrees that for the one year period 
commencing on the Closing Date all Management Level Employees 
whose employment is terminated by CapStar without cause shall 
be paid one week of severance pay for each year of credited 
service such Employee has with Sellers and CapStar or any 
affiliate of CapStar.  The provisions of this Section 8.3(c) 
shall survive the Closing.



(d)	Maintenance of Oualified Debt.  For a period 
of five (5) years following the Closing (the "Maintenance 
Period"), CapStar Management will prevent the realization of 
gain by any SSPC partner as a result of the negative capital 
account balances of SSPC's limited partners through a 
combination of the following: (i) maintaining an appropriate 
level of SSPC,s existing qualified nonrecourse debt; (ii) 
replacing SSPC,s existing qualified nonrecourse debt with 
crualified nonrecourse debt; and (iii) providing to each SSPC 
partner that holds Partnership Units the o portunity to 
guarantee or otherwise

 . p
provide credit support for CapStar Management's indebtedness.  
Purchasers agree that the sum of clauses (i) and (ii) above 
shall be no less than the portion of the Assumed Debt 
represented by the Non-Tendered Notes at all times during the 
Maintenance Period and the sum of clauses (i), (ii) and (iii) 
shall at all times during the Maintenance Period be no less 
than $75,000,000.  Upon expiration of the Maintenance Period, 
CapStar Management will provide each SSPC partner that holds 
Part@-nership Units the opportunity to continue to guarantee 
or otherwise provide credit support for CapStar Management's 
indebtedness in an amount that will prevent realization of 
gain by that SSPC partner as a result of the negative capital 
account balance of that SSPC partner.



2 8

The covenants set forth in this Section 8.3(d) shall 
terminate at such time as the last remaining SSPC partner 
exchanges his Partnership Units for shares of CaiDStar Common 
Stock.



(e)	Sale of Properties. For a period of five (5) 
years following the Closing Date (the IISSP Sale Maintenance 
Period"), CapStar Management shall not have the authority, 
without the prior written consent of SSPC, to sell, transfer 
or otherwise convey South Seas Plantation or any interest 
therein, except in each such case in an exchange qualifying 
under Section 1031 of the Code (or in any other transaction 
the effect of which is to continue tax deferral to SSPC's 
limited partners) and in which no negative tax consequences 
are triggered for SSPC (or its partners) or except if CapStar 
Management compensates SSPC (or its partners) for any adverse 
tax consequences resulting from such sale or transfer.  Upon 
expiration of L-he SSP Sale Maintenance Period, CapStar 
Management shall have the authority, without the prior 
written consent of SSPC, to sell, transfer or otherwise 
convey South Seas Plantation or any interest therein so long 
as CapStar Management compensates SSPC (or its partners) for 
any adverse tax consequences resulting from such sale or 
transfer.  For purposes of determining any adverse tax 
consequences under this Section 8.3(e), the parties shall use 
the maximum federal income tax rate and a discount rate per 
annum equal to the LIBOR Rate over a period equal to the 
longer of: (i) five (5) years, and (ii) the difference 
between ten (10) years and the number of whole calendar years 
during which CapStar Management owned South Seas Plantation 
or any Section 1031 exchange proverty.  The covenants set 
forth in this Section 8.3(e) shall terminate at such time as 
the last remaining SSPC partner exchanges his Partnership 
Units for shares of CapStar Common Stock.  CapStar Management 
shall have no obligation under this Section 8.3(e) to 
compensate the heirs, legal representatives, or estate of any 
SSPC partner.



(f)	Unit Rehab Loan. Upon expiration of the Due 
Diligence Period, CapStar agrees to make a loan to SSPC in an 
original principal amount of up to Two Mi-llion Five Hundred 
Thousand Dollars ($2,500,000) to be used by SSPC to rehab 
third party owned condominium units at South Seas Plantation 
(the "Unit Rehab Loan").  CapStar shall receive a credit in 
the amount of the Unit Rehab Loan against CapStar's 
obligation to fund the Additional Deposit.  CapStar shall not 
receive any credit against the Contribution Consideration 
with respect to the Unit Rehab Loan.  CapSL-ar's obligation 
to make the Unit Rehab Loan is conditioned upon: (A) CapStar 
and SSPC mutually agreeing on a draw schedule for the Unit 
Rehab Loan, (B) SSPC's delivery to CapStar of reasonably 
acceptable plans and specifications for the work to be 
undertaken with the proceeds of the Unit Rehab Loan, and (C) 
the delivery by SSPC to CapStar of signed modifications to 
the Condominium Lease Agreements of those unit owners whose 
units are being rehabbed with the proceeds of the Unit Rehab 
Loan, which modifications shall be in form and substance



2 9

reasonably satisfactory to SSPC and CaDStar.  Interest on the 
Unit Rehab Loan shall accrue at a per annum rate equal to 
LIBOR plus 200 basis points.  If the Closing occurs, the 
outstanding principal balance of the Unit Rehab Loan shall be 
forgiven and accrued but unpaid interest shall be added to 
the Unit Portion of the Contribution Consideration and paid 
by CapStar Management to SSPC at Closing.  If the Closing 
does not occur by reason of CapStar's default hereunder, the 
Unit Rehab Loan shall be treated as if it were Earnest Money 
Deposit for all purposes of this Agreement and SSPC shall 
have no further obligation for its repayment.  If the Closing 
does not occur for reasons other than CapStar's default 
hereunder, the Unit Rehab Loan shall convert to a term loan 
with a maturity of July 1, 2000 and the entire outstanding 
principal balance and all accrued but unpaid interest shall 
be due and payable on July 1, 2000; provided, however, that 
SSPC may voluntarily prepay the entire outstanding principal 
balance and all accrued but un-Qaid interest (without payment 
of any premium or penalty) at any time prior thereto, and 
SSPC shall pay to CapStar a monthly asset management fee of 
Twenty-Five Thousand Dollars ($2S,000) until the entire 
outstanding principal balance and all accrued but unpaid 
interest shall have been repaid by SSPC.  If the Unit Rehab 
Loan is converted to a term loan as contemplated by the 
immediately preceding sentence, SSPC shall execute and 
deliver to CapStar a promissory note evidencing the 
indebtedness and setting forth the terms of the term loan.  
The parties agree that the asset management fee shall be 
reduced proratably if SSPC does not borrow the entire amount 
available under the Unit Rehab Loan.  SSPC covenants that all 
money disbursed under the Unit Rehab Loan shall be used 
solely for or in connection with the rehab of third party 
owned condominium units at South Seas Plantation and no money 
under the Unit Rehab Loan shall be diverted, used or borrowed 
for any other use.  SSPC agrees That each disbursement under 
the Unit Rehab Loan will be made by SSPC as the work 
progresses to enable SSPC to make progress payments on 
account of work or materials previously done or furnished.  
Any portion of the Unit Rehab Loan that has been drawn but 
that has not been disbursed (or committed for disbursement 
'Lor work or materials previously done or furnished) as of 
the Time of Closing shall be paid over to CapStar at the Time 
of C'Losing.  CapStar's obligation to fund the Unit Rehab 
Loan shall survive any termination of thi-s Agreement.



(g)	CapStar Manaaement Partnership Agreement. 
From the date of execution of this Agreement until the Time 
of Closing, no class or series of Partnership Units or 
preferred units shall be established and units thereof issued 
for less than the fair market value of such units.



(h)	Prolect Capital Expenditures. CapStar 
acknowledges that it has received Sellers' proposed list of 
Project Capital Expenditures in connection with its due 
diligence efforts.  Promptly after execution of this 
Agreement (but in any event within 20 days after execution of 
this Agreement), CapStar



3 0

shall evaluate all proposed Project Capital Expenditures of 
Sellers' to determine a final scope and schedule for the 
Project Capital Expenditures.  If Sellers undertake any 
Project Capital Expenditures that have been approved by 
CapStar ("Approved Project Capital Expenditures"), the ConL-
ribution Consideration shall be increased, as contemplated by 
Section 12.4 hereof, by the amount spent by Sellers on the 
Approved Project CaDital Expenditures.  If CapStar does not 
approve a Project Capital Expenditure, Sellers shall be under 
no obligation to undertake such Project Capital Expenditure.  
If CapStar fails to undertake its evaluation of the Project 
Capital Expenditures as required under this Section 8.3(h) 
and deliver to SSPC its determination of the final scope and 
schedule for the Project Capital Expenditures within the time 
period seL-- forth in this Section 8.3(h), Ca-oStar shall be 
deemed to have approved all the Project Capital Expendi-tures 
submitted to CapStar.  Notwithstanding anything to the 
contrary contained in this Section 8.3(h), CapStar hereby 
approves the South Seas Plantation condominium unit 
refurbishment project in the amount of $2,150,000.



(i)	Exchange Rights. Upon issuance of the 
Partnership Units to SSPC (or the SSPC partners) in 
connection with this transaction, each SSPC partner shall be 
granted the following quarterly exchange rights (the 
"Exchange Rights") with respect to the PartnershiD Units 
issued to such SSPC partner, which Exchange Rights shall be 
evidenced an Exchange Rights Agreement in form and substance 
--easonably acceptable to SSPC and CapStar (the ItExchange 
Rights Agreement"):



(i)	Each partner shall have the right, 
commencing
on the date of the	ten month anniversary of the Closing 
Date (the
"Lock-Up Period"),	to require CapStar Management to 
exchange,
subject to the limitations in clause (ii) below, all or a 
portion of the Partnership Units held by such partner for the 
Cash Amount.  CapStar shall have the right to satisfy an 
Exchange Right directly by issuing to the SSPC partner a 
number of shares of CapStar Common Stock that are covered at 
the time of issuance by an effective registration statement 
under the Securities Act of 1933, as amended, equal to the 
CapStar Shares Amount.  For purposes of the preceding 
sentence, each share of CapStar Common Stock shall have a 
value determined in accordance with the definition of Value 
contained in this Agreement. value shall be determined as of 
the Valuation Date notwithstanding that an SSPC partner may 
be unable to exercise Exchange Rights in any given calendar 
quarter under clause (ii) below.  Subject to clause (ii) o-Lc 
this Section 8.3(i), if CapStar Management elects to satisfy 
an Exchange Right with the Cash Amount, the Cash Amount shall 
be paid no later than thirty (30) days following the end of 
the quarterly period in which CapStar Management received 
notice of exchange.  If CapStar elects to satisfy an Exchange 
Right by issuing the CapStar Shares Amount, the CaDStar 
Common Stock to be issued in connection therewith shall be 
issued no later than sixty (60) days following the end of the 
quarterly period in



3 1

which CapStar Management received notice of exchange.  No 
later than ten (10) days following the end of each c-
ruarterly period in which Exchange Rights have been 
exercised, CapStar shall notify, in writing, each SSPC 
partner exercising Exchange Rights in any given quarterly 
period whether CapStar will satisfy the Exchange Right by 
paying the Cash Amount or issuing CapStar Common Stock equal 
to the CapStar Shares Amount.  Upon expiration of the LockUp 
Period, there shall be established an "Exchange Right Fiscal 
Year", which shall commence on the first day of the first 
month immediately succeeding the expiration of the Lock-Up 
Period and which shall end on the first anniversary of such 
date.  Each three-month period during any Exchange Right 
Fiscal Year shall constitute the quarterly periods referred 
to in this Section 8.3(i)-



(ii)	Notwithstanding clause (i) above, no 
partner shall be entitled to exchange his Partnership Units: 
(A) until the aggregate value of all Partnership Units to be 
exchanged in any one quarterly period equals or exceeds 
$100,000 (the "Minimum Exchange Value"), or (B) at any time 
after the aggregate value of all ParL--nership Units 
exchanged in any-one Exchange Right Fiscal Year exceeds 
Eighteen Million Dollars ($18,000,000) (the "Maximum Annual 
Exchange Value").  All Partnership Units put for exchange 
shall be exchanged on a first-in, first-out basis according 
to the date the notice of exchange is received by CapStar 
Management.  If Partnership Units are put for exchange in any 
quarterly period in which the Minimum Exchange Value has not 
been met, such Partnership Units will be deemed to have been 
put for exchange in each succeeding quarterly period until 
the Minimum Exchange Value has been met.  Likewise, if 
Partnership Units are put for exchange in any Exchange Right 
Fiscal Year in which the Maximum Exchange Value has been 
exceeded, such Partnership Units shall be deemed to have been 
put for exchange in the next succeeding Exchange Right Fiscal 
Year.  The parties agree that at such time as the Closing 
Date Price is determined under this Agreement, the Minimum 
Exchange Value and the Maximum Exchange Value will be 
expressed as a number of Partnership Units, which shall be 
determined by dividing the Minimum Exchange Value by the 
Closing Date Price and by dividing the Maximum Exchange Value 
by the Closing Date Price, respectively.  Commencing 
immediately upon expiration of the Lock-Up Period, CapStar 
shall be entitled during the term of the Exchange Rights 
Agreement to "blackout" one of the quarterly Exchange Right 
periods of the SSPC partners for each Exchange Right Fiscal 
Year during the term of the Exchange Rights Agreement if 
CapStar determines, in the good faith exercise of the 
business judgment of its Board of Directors, that such 
Exchange Rights could materially interfere with any bona fide 
financing, acquisition, corporate reorganization or any other 
corporate development involving CapStar.  Written notice of 
any such "blackout" shall be given to each SSPC partner at 
least thirty (30) days prior to the end of the calendar 
quarter in which such "blackout" is to occur.  The foregoing 
restrictions and limitations shall represent the only



32

restrictions and limitations imposed upon the SSPC partners 
with
respect to the Exchange Rights.



(iii)	CapStar and CapStar Management shall 
take whatever action is necessary, including, without 
limitation, amending the CapStar Management Partnership 
Agreement, to provide each SSPC partner receiving Partnership 
Units in connection with this transaction with the foregoing 
Exchange Rights.



(j)	Credit Lvo=ais Debt and Capital Leases. At 
the Time of Closing, CapStar shall assume the obligations of 
Sellers under the Assumed Debt and either: (i) payoff and 
satisfy in full the Assumed Debt, or (ii) refinance the 
Assumed Debt, or (iii) obtain the consent of the holders of 
the Assumed Debt to the assumption of the Assumed Debt by 
Purchasers.



(k)	Utility Easement.  Purchasers agree to grant 
to South Seas Utility Company (IISSUCII) and its successors 
and assigns a non-exclusive construction and maintenance 
easement when and if requested by SSUC (the "Utility 
Easement-,).  The Utility Easement will be approximately 
fifty (50) feet in width (twenty-five (25) feet on either 
side of the centerline of the main South Seas Plantation 
Drive) from Captiva Drive to the maintenance area and the 
maintenance roadway leading from the main drive to the 12.5 
acre sewer plant site owned by SSUC and will be utilized by 
SSUC for the purpose of installing waste water collection or 
effluent transmission lines to connect the plant into a 
larger system serving portions of Captiva Island outside of 
South Seas Plantation.  Purchasers, obligations under this 
Section 8.3(k) shall be conditioned upon: (i) Purchasers 
receiving adequate assurances that any installation will not 
have a material adverse impact on South Seas Plantation and 
will not negatively impact the level of business at South 
Seas Plantation, and (ii) SSUC and Purchasers executing and 
delivering each to the other an easement in form and 
substance reasonably satisfactory to Purchasers and SSUC, and 
(iii) SSUC paying for all costs incurred in connection with 
the Utility Easement, including, without limitation, the 
costs of any alterations to South Seas Plantation needed to 
accommodate installation of the Utility Easement.  The 
provisions of this Section 8.3(k) shall survive the Closing.



Section 8.4 Covenants RelatincT to SSPC's 
$43,500,000 10% Subordinated Notes.  The parties agree that 
the Contributed Assets shall be contributed subject to the 
Notes and that Purchasers shall receive a credit against the 
Contribution .Consideration, in both cases as described in 
this Section 8.4. Because Purchasers desire to retire some 
portion or all of the Notes after Closing, SSPC agrees as an 
accommodation to Purchasers to take the following actions:



(a) Tender Offer; Depositar-V. Promptly upon
expiration of the Due Diligence Period, SSPC, at its sole 
cost



3 3

and expense, shall take all acl-ion, make all necessary 
registrations and filings and prepare all materials (the 
"Tender Offer Materials") required in connection with making 
a tender offer (the "Tender Of-Lcer") to the Noteholders 
pursuant to which SSPC shall offer to purchase each Note at a 
purchase price equal to the sum of the outstanding principal 
balance of such Note, plus all accrued but unpaid interest on 
such Note, plus the Premium.  SSPC shall deliver the Tender 
Of@Ler Materials to CapStar for its review and comment prior 
to filing the Tender Offer Materials with the Securities and 
Exchange Commission or delivering the Tender Offer Materials 
to the Noteholders.  In order to be considered validly 
tendered, each Noteholder desiring to tender his or her Notes 
shall be required to consent to the transaction contemplated 
by this Agreement and amendments to the Indenture set forth 
in ' Exhibit B. All No-Les tendered as part of the Tender 
Offer shall be held by SunTrust Bank, Central Florida, N.A., 
as depositary (the "Depositary"), until all conditions to the 
Tender Offer have been satisfied or waived.  If the 
conditions to the Tender Offer have not been satisfied or 
waived as of the Initial Tender Expiration Date, as the same 
may be extended under clauses (e) or (f) below, Notes 
tendered to the Depositary shall be returned by the 
Depositary to the Noteholders.



(b)	Consent Solicitation. The Tender Offer shall 
include a solicitation of consent of the Noteholders (the 
"Consent Solicitation") so that Noteholders shall have the 
option to consent to: (i) the transfer of management 
functions to CapStar (or its designee), and (i-i) an 
amendment to the Indenture as set forth in Exhibit B, without 
having to tender their Notes.  SSPC shall be under no 
obligation to pay for any consents (other than payment of the 
Premium for Notes validly tendered).  SSPC reserves the right 
to seek the consent of the Noteholders through the Tender 
Offer and Consent Solicitation to eliminate the rights of the 
Noteholders to exchange Notes under Section 10.11 of the 
Indenture and to amend the Indenture to provide that the 
Notes may be redeemed on or after September 1, 1998, without 
the payment of any redemption premium.



(c)	Minimum Tender/Consent Recruirements. The-
Tender Offer shall be conditioned upon the closing of the 
transaction contemplated by this Agreement and the receipt of 
consent of holders of no less than 66 2/30-. of the 
outstanding Notes (the "Minimum Consent Requirement") through 
any combination of: (A) consents received from Noteholders in 
connection with the Consent SoliciL-ation, and (B) Notes 
tendered as part of the Tender Offer.



(d)	Commencement of Tender Offer and Consent 
Solicitation. All initial filings required under SEC Laws in 
connection with the Tender Offer and Consent Solicitation 
shall be made no later than April 27, 1998.  SSPC shall use 
commercially reasonable efforts to commence the Tender Offer 
and Consent Solicitation no later than May 15, 1998, and, 
thereafter,



34

shall use commercially reasonable efforts to complete the 
Tender Offer on the terms and subject to the conditions set 
forth herein and in the Tender Offer Materials.  The Tender 
Offer shall initially expire no later than July 1, 1998 (the 
"Initial Tender Expiration Date").



(e)	First Extension of Tender Offer and Consent 
Solicitation. If the Minimum Consent Requirement has not been 
satisfied on or prior to the Initial Tender Expiration Date, 
SSPC shall extend the Tender Offer and Consent Solicitation 
until August 14, 1998 (the "First Extension Period"), and 
such extension shall automatically extend the Closing Date 
under Section 9.1 hereof.  During the First Extension Period, 
all Notes previously tendered and not accepted for payment 
will remain subject to the Tender offer and Consent 
Solicitation.  Subject to the terms and conditions of the 
Tender Offer and the Consent Solicitation, all Notes 
previously tendered and not accepted for payment: (i) may be 
accepted for payment by SSPC (or its designee), in its sole 
and absolute discretion, at any time during the First 
Extension Period, and (ii) shall be accepted for payment by 
SSPC (or its designee) at such time during the First 
Extension Period as (A) more than fifty percent (50?s) of the 
outstanding principal amount of the Notes have been validly 
tendered and (B) CapStar shall have demanded, in writing, 
that SSPC accept Notes for payment (each, a "Bond Purchase").  
If SSPC is required to make a Bond Purchase under clause (ii) 
above, SSPC shall be entitled to use the Earnest Money 
Deposit, and the Escrow Agent is hereby instructed to 
disburse the Earnest Money Deposit to SSPC, for the purpose 
of accepting for payment and paying any Notes validly 
tendered as part of the Tender Offer.  Any Notes purchased 
using the proceeds of the Earnest Money Deposit shall be the 
property of CapStar.  If the Minimum Consent Requirement has 
not been satisfied prior to expiration of the Second 
Extension Period (as defined in clause (f) below), either 
party may at any time therea@Lter terminate this Agreement.



(f)	Second Extension of Tender Offer and Consent 
Solicitation. if the Minimum Consent Requirement has not been 
satisfied on or before expiration of the First Extension 
Period, SSPC shall extend the Tender Offer and Consent 
Solicitation until September 28, 1998 (the "Second Extension 
Period"), and such extension shall automatically extend the 
Closing Date under Section 9.1 hereof.  The Contribution 
Consideration shall be reduced on a dollar-for-dollar basis, 
up to a maximum of Two Million Two Hundred Twenty-Five 
Thousand Dollars ($2,225,000) for each dollar spent by 
CapStar or CapStar Management on or after August 14, 1998, in 
respect of the following items (to the extent the same are 
bona fide expenses of CapStar or CapStar Management relating 
to the Tender Offer and Consent Solicitation): (i) legal 
fees; (ii) accounting fees; (iii) investment banking fees; 
(iv) investment advisory fees; (v) soliciting agent fees; 
(vi) information agent fees; (vii) incentive fees or 
commissions paid to brokers involved in the



3 5

Tender Of'Ler; (viii) Notes purchased by CapStar; (ix) travel 
expenses; (x) filing fees; (xi) printing costs and expenses; 
(xii) mailing costs and expenses; (xiii) solicitation costs 
and expenses; and (xiv) such other fees or expenses that SSPC 
approves in writing.  During the Second Extension Period, all 
Notes previously tendered and not accepted for payment will 
remain subject to the Tender Offer and Consent Solicitation 
and, subject to the terms and conditions of the Tender Offer 
and the Consent Solicitation, may be accepted for payment by 
SSPC (or its designee).



(g)	Adjustment to Contribution Consideration. If 
the Minimum Consent Requirement is satisfied, CapStar shall 
pay the outstanding principal balance of, accrued interest on 
and the Premium relating to all Notes that are validly 
tendered and accepted by SSPC for payment (collectively, the 
"Tender Payment").  The Tender Payment shall constitute 
Assumed Debt for purposes of this Agreement.  With respect to 
all Notes that have not been tendered and remain outstanding 
upon expiration of the Tender Offer (collectively, "Non-
Tendered Notes"), CapStar shall assume the obligations of 
SSPC thereunder and receive a credit against the Contribution 
Consideration in an aggregate amount equal to the sum of the 
presenl- value (using a discount rate equal to the London 
Interbank Offering Rate on the date of expiration of the 
Tender Offer plus 200 basis points (the "LIBOR Rate")) of: 
(A) the Redemption Price (as defined in Section 11.1 of the 
Indenture) for Notes redeemed on or after April 15, 2000, but 
before Aoril 15, 2001, of all Non-Tendered Notes, plus (E) 
the difference between (1) interest payable under the 
Indenture on Non-Tendered Notes for the period commencing on 
the date of expiration of the Tender Offer and ending on 
April 15, 2000, and (2) interest payable on Non-Tendered 
Notes for the period commencing on the date of expiration of 
the Tender Offer and ending on April 15, 2000 assuming an 
interest rate, per annum, equal to the LIBOR Rate.



(h)	Escrow De-posit. At the Time of Closing, 
there shall be withheld from the Contribution Consideration 
and placed into an escrow account with NationsEank (the 
"Tender offer Escrow Account"), pursuant to an escrow 
agreement in form and substance reasonably satisfactory to 
SSPC and CapS(--ar, an amount (the "Tender O-ffer Escrow 
Amount") dete=ined in accordance with the following:



(i)	if 66 2/30-. or more of the Notes are 
tendered, an amount equal to the present value (using a 
discount rate equal to the LIBOR Ra-Le) of the difference 
between: (A) the interest payable on Non-Tendered Notes for 
the period commencing on the date of expiration of the Tender 
Offer and ending on April 15, 2000 assuming an interest rate, 
per annum, equal to the LIBOR Rate, and (B) the interest 
payable on Non-Tendered Notes for the period commencing on 
the date of expiration of the Tender Offer and ending on 
April 15, 2000 assuming an interest rate, per



3 6

annum, equal to 4.75.'6 (the "Comparable Convertible Rate").  
The Comparable Convertible Rate will be recalculated at the 
Time of Closing using the same methodology used to determine 
the Comparable Convertible Rate on the date hereof; and



if less than 66 2/30i of the Notes are 
tendered, an amount equal to the present value (using a 
discount rate equal to the LIBOR Rate) of the difference 
between: (A) the interest payable on Non-Tendered Notes for 
the period commencing on the date of expiration of the Tender 
Offer and ending on April 15, 2000 assuming an interest rate, 
per annum, equal to the yield to maturity at the time of 
computation of 5.500-. United States Treasury securities due 
April 15, 2000, plus 50 basis points, and (3) the interest 
payable on Non-Tendered Notes for the period commencing on 
the date of expiration of the Tender Offer and ending on 
April 15, 2000 assuming an interest rate, per annum, equal to 
the Comparable Convertible Rate.



Release of Escrow Dep6sit. The Tender Offer 
Escrow Amount shall be held in the Tender Offer Escrow 
Account until May 15, 2000 (the "Escrow Expiration Date").  
CapStar shall be entitled to a portion of the Tender Offer 
Escrow Amount equal to the product obtained by multiplying t-
-he aggregate outstanding principal balance of Non-Tendered 
Notes by a fraction, the numerator of which shall be the 
aggregate outstanding principal amount of Notes the holders 
of which have elected to exchange their Notes under the 
Indenture and the denominator of which shall be the aggregate 
outstanding principal amount of NonTendered Notes.  Any 
portion of the Tender Offer Escrow Account remaining after 
the distribution to CapStar in accordance with the preceding 
sentence shall be disbursed to SSPC.  All interest earned on 
the Tender Offer Escrow Amount shall be paid to SSPC.



(j)	Coopera@i6n by purchasers. Purchasers shall 
cooperate with SSPC in connection with SSPC,s obligations 
under this Section 8.4, including, without limitation, by 
providing information to SSPC relating to CapStar and CapStar 
Management for inclusion in the Tender Offer and Consent 
Solicitation materials to be delivered to the Noteholders and 
by voting any Notes purchased by CapStar in favor of the 
transaction contemplated hereby.



ARTICLE IX
CLOSING



Section 9.1 Closincr. Unless otherwise mutually 
agreed to by SSPC and CapStar and subject to Section 8.4, the 
Closing shall occur on July 1, 1998 (provided that all 
conditions precedent to the parties obligations hereunder 
have been satisfied or waived (other than conditions with 
respect to actions the respective parties will take at the 
Closing) and if not so satisfied or waived, the Closirig 
shall be automatically extended from time to time until the 
first subsequent business



37

day on whi-ch all such conditions are so satisfied or waived, 
subject, however to Section 11.9 hereof) (the "Closing 
Date"); provided, however, that CapStar shall have the right 
to accelerate or extend the Closing Date for a period of 
fifteen (15) days, by providing written notice thereof to 
SSPC, in order to accommodate the Closing of the Merger.  
Notwithstanding the foregoing, in no event shall the Closing 
occur lal--er than fifteen (15) days following consummation 
of the Merger (provided that all conditions precedent to the 
parties obligations hereunder have been satisfied or waived 
(other than conditions with respect to actions the respective 
parties will take at the Closing) as of such date and if not 
so satisfied or waived, the Closing shall be automatically 
extended from time to time until the first subsequent 
business day on which all such conditions are so satisfied or 
waived, subject, however to Section 11.9 hereof).  As more 
particularly described below, at the Closing the parties will 
meet: (i) to execute all of the documents required to be 
delivered in connection with the transaction contemplated 
hereby (the "Closing Documents',); (ii) issue the Partnership 
Units; and (iii) take all other action required by this 
Agreement to be taken in order to consummate the transaction 
contemplated by this Agreement (the "Closing").  The Closing 
shall take place at the Corporate Offices, or at any other 
place to which SSPC and CapStar may mutually agree prior to 
the Closing Date.  The point in time at which the Closing 
shall have been consummated is referred to herein as the 
"Time of Closing.,,



Section 9.2 Sellers' Deliveries. At the Closing, 
each Seller (as indicated below) shall deliver to CapStar 
Management all of the following instruments, each of which 
shall have been duly executed and, where applicable, 
acknowledged and/or sworn on behalf of such Seller and, 
except as otherwise noted, shall be dated as of the Closing 
Date:



(a)	The certificates required by Section 7.2(b) 
and
(c) hereof.



(b)	Appropriate resolutions of the shareholders 
or board of directors (for corporate Sellers), and the 
general parl--ner (for partnership Sellers) authorizing this 
transaction, together with all other necessary approvals and 
consents of Sellers and such documentary and other evidence 
as may be reasonably required by CapStar Management 
authorizing and evidencing the authorization of (i) the 
execution on behalf of Sellers of this Agreement and the 
authority of the person or persons who are executing the 
Closing Documents to be executed .and delivered by Sellers 
prior to, at or otherwise in connection with the Closing, and 
(ii) the performance by Sellers of their obligations 
hereunder and under the Closing Documents.



(c) All Deeds and Conveyance Documents necessary to
transfer title to the Contributed Assets to CapStar 
Management as



3 8

contemolated by the te=s of this Agreement and as reasonably
requested by CapStar Management.



(d)	A consent from the landlord under each of the 
Seller Leases, in form and substance reasonably satisfactory 
to CapStar, if required by the terms of the Seller Leases.



(e)	A consent from the franchiser or licensor 
under each of the Franchise Agreements, in fo= and substance 
reasonably satisfactory to CapStar, if required by the terms 
of the Franchise Agreements.



(f) A Te=ination of Management Agreement in form and
substance reasonably satisfactory to CapStar.



(g)	Such agreements, affidavits or other 
documents as may be reasonably required by the Title Company 
to issue the Title Policies.



(h) A FIRPTA affidavit in the form set forth in the
regulations under Section 1445 of the Code.



(i) All current real estat--e and personal property tax
bills in Sellers, possession.



(j)	Stock certificates representing the DG&CC 
Stock, duly executed in blank for transfer, or accompanied by 
appropriate stock powers duly executed in blank for transfer.



(k)	All originals (or copies if originals are not 
available) of the Books and Records, Customer and Marketing 
Information, Permits, Property Reports, and all other 
documents and records relating to the Business or any 
Property in the possession or control of Sellers, which shall 
be deemed to be delivered upon delivery of possession of the 
Properti-es, the Corporate Office and Vacation Planning 
Center.



(1) A counterpart signature page to the Opti-on



Agreement.

(m) A counterpart signature page to the Exchange
Rights Agreement.



(n)	A payoff letter from each lessor under each 
Capital Lease indicating all amounts due and owing in order 
to fully discharge and payoff as of the Time of Closing such 
Capital Lease and, to the extent CapStar desires to payoff 
the Credit Lyonnais Debt at the Time of Closing, a payoff 
letter from Credit Lyonnais New York Branch in respect of the 
Credit Lyonnais Debt indicating all amounts due and owing in 
order to fully discharge and payoff as of the Time of Closing 
the Credit Lyonnais Debt.



3 9

(o) An accredited investor certificate, in form and
substance reasonably satisfactory to CapStar, from SSPC.



(p)	Such other and further documents and 
instruments as may be reasonably requested by CapStar or its 
counsel in order to better effectuate the purposes of this 
Agreement.



Section 9.3 Purchasers' Deliveries. At the 
Closing, Purchasers shall deliver to Sellers the Contribution 
Consideration (by wire transfer of immediately available 
funds to an account designated by Sellers in the case of the 
Cash Portion) and all other sums required to be paid by 
Purchasers hereunder, and all of the following instruments, 
each of whi-ch shall have been duly executed and, where 
applicable, acknowledged and/or sworn on behalf of 
Purchasers, and, except as otherwise noted, shall be dated as 
of the Closing Date:



(a) Any supplemental Indentures required under the



Indenture.



(b) The certificates required by Section 7.3(b) and



(c) -

(c)	Appropriate of CapStar and the general such 
documentary and other by Sellers authorizing and the 
execution on behalf of authority of the person or

resolutions of the Boards of Directors partner of CapStar 
Management, and evidence as may he reasonably required 
evidencing the authorization of (i) Purchasers of this 
Agreement and the persons who are executing the various 
documents to be executed and delivered by Purchasers prior 
to, at or otherwise in connection with the Closing, and (ii) 
the Derformance by Purchasers of their obligations hereunder 
and under such documents.



(d)	A counterpart of each of the agreements to be 
delivered by Sellers under Section 9.2 which require 
execution by either Purchaser.



       (e).A counterpart signature page to the Exchange
Rights Agreement and the CapStar Management Partnership
Agreement.



(f) The legal opinion referred to in Section 7.3(e).



(g)	An Assignment and Assumption Agreement, in 
form and substance reasonably satisfactory to SSPC and 
CapStar, pursuant to which SSRC shall assign to CapStar all 
of its right, title and interest in and to the Management 
Transition Agreements and CapStar shall assume the 
obligations of SSRC under the Management Transition 
Agreements.



40 .

(h)	Such other and further documents and 
instruments as may be reasonably requested by Sellers or 
their counsel in order to better effectuate the purposes oi'- 
this Agreement.



Section 9.4 Possession. Sellers shall deliver
possession of the Contributed Assets at the Closing.



ARTICLE X
CONDEMNATION; DAMAGE OR DESTRUCTION



Section 10.1 Conde=ation- In the event of any 
actual or threatened taking, pursuant to the power of eminent 
domain, of all or any portion of the Real Property, or any 
proposed sale in lieu thereof, SSPC shall give written notice 
thereof to CapStar promptly after SSPC receives notice 
thereof.  If: (i) all or more than ten percent (10'-.), by 
value, of South Seas Plantation, Best Western Sanibel, Song 
of the Sea, the Dunes Club and Marco Radisson, taken as a 
whole, is, or is to be, so condemned or
sold,	or (ii) all or more than ten percent (lo-.), by 
value, of
South	Seas Plantation is, or is to be, so condemned or 
sold, or
(iii)	all or more than twenty percent (20'-.), by value, of 
Best
Western Sanibel, Song of the Sea, the Dunes Club or Marco 
Radisson, taken individually, is, or is to be, so condemned 
or sold, Purchasers shall have the right to terminate this 
Agreement.  If Purchasers elect not to terminate this 
Agreement, all proceeds, awards and other payments arising 
out of such condemnation or sale (actual or threatened) shall 
be paid or assigned, as applicable, to Purchasers at Closi-
ng.  If Purchasers elect to terminate this Agreement by givi-
ng Sellers written notice thereof prior to the Closing, the 
Earnest Money Deposit shall be promptly returned to CapStar 
and all rights and obligations of Sellers and Purchasers 
hereunder (except those rights and obligations set forth 
herein which expressly survive a termination of this 
Agreement) shall te=inate immediately.



Section 10.2 Da3nacTe or Destruction.

(a)	If, after expiration of the Due Diligence 
Period but prior to Closing, there shall occur any uninsured 
damage or destruction L-o the Property in excess o-Lc: (i) 
ten percent (10'i), by value, of South Seas Plantation, Best 
Western Sanibel, Song of the Sea, the Dunes Club and Marco 
Radisson, taken as a whole,
(ii)	ten percent (10--.), by value, o@L South Seas 
Plantation, or
(iii)	twenty percent (20'-.), by value, of Best Western 
Sanibel,-
Song of the Sea, the Dunes Club or Marco Radisson, taken 
individually, or that would require longer than three hundred 
sixty-five C365) days to repair, Purchasers shall have the 
option, in their sole judgment and discretion, (i) to 
terminate this Agreement, or (ii) to proceed with Closing 
without any adjustment in the Contribution Consideration, in 
which event, at Closing, Sellers shall transfer and assign to 
Purchasers all Sellers, right, title and interest in and to 
all proceeds from all insurance policies owned by Sellers wi-
th respect to the



41

Contributed Assets for such damage or destruction, provided 
that any existing mortgagees having approval or similar 
rights relating to application of insurance proceeds have 
agreed that the insurance proceeds may be transferred and 
assigned to Purchasers.  If Purchasers elect to proceed with 
Closing, and, as of the Closing Date, the existing mortgagees 
have not agreed that the insurance proceeds may be 
transferred and assigned to Purchasers, then, in such event, 
the insurance proceeds shall be transferred and assigned by 
Sellers to Purchasers as soon as practicable after Closing.  
If Purchasers shall elect to terminate this Agreement, 
Purchasers shall give written notice thereo'L to Sellers on 
or before the earlier to occur of (A) ten (10) days after 
Purchasers shall have received written notice of such damage 
or destruction, or (E) the Closing DaL--e.  If Purchasers do 
not give such notice within such time, Purchasers shall be 
conclusively deemed to have elect--d to proceed with Closing, 
and shall not have any further right to terminate this 
Agreement as a result of such damage or destruction.  Upon 
any termination of this Agreement under this Section 10.2(a), 
the Escrow Agent shall return to Purchasers the Earnest Money 
Deposit and all rights and obligations of Sellers and 
Purchasers hereunder (except those rights and obligations set 
forl--h herein whi-ch expressly survive a te=ination of this 
Agreement) shall terminate immediately.



(b)	If, prior to Closing, there shall occur any 
damage or destruction to the Property that would require less 
than: (i) ten percent (100-o), by value, of South Seas 
Plantation, Best Western Sanibel, Song of the Sea, the Dunes 
Club and Marco Radisson, taken as a whole, (ii) ten percent 
(lo@), by value, of South Seas Plantation, or (iii) twenty 
percent (20'-.), by value, of Best Western Sanibel, Song of 
the Sea, the Dunes Club or Marco Radisson, taken 
individually, and take not longer than three hundred sixty-
five (365) days to repair, Purchasers shall not have the 
option to terminate this Agreement, but Closing shall proceed 
pursuant to Section 10.2(a)(ii) unless Sellers, insurance 
company has in good faith denied coverage and SSPC is 
unwilling to pay for the cost (or estimated cost) to repair 
or restore the damaged Property through a reduction in the 
Contribution ConsideraL-ion.  If Sellers, insurance company 
denies coverage and SSPC is unwilling to pay for the cost (or 
estimated cost) to repair or restore the damaged Property 
through a reduction in the Contribution Consideration, 
Purchasers may elect to terminate thi-s Agreement by giving 
Sellers written notice thereof prior to the Closing, the 
Earnest Money Deposit shall be promptly returned to CapStar 
and all rights and obligations of Sellers and Purchasers 
hereunder (except those rights and obligations set forth 
herein which expressly survive a termination of this 
Agreement) shall terminate immediately.  Purchasers 
acknowledges that Sellers make no reuresentation or warranty 
as to the amount of any insurance policy proceeds, if any, 
that will be available to Purchasers in the event of a 
Closing pursuant to Section 10.2(a)(ii) or this Section 
10.2(b). If Sellers' insurance



42

comvany denies coverage and SSPC pays for the cost or 
estimated cos@ to repair or restore the damaged Property 
through a reduction in the Contribution Consideration, SSPC 
shall be entitled to collect and receive any insurance 
proceeds ultimately determined to be due and owing by 
Sellers, insurance company in respect of such damage.



Section 10.3 Inability to Deliver South Seas 
Plantation. Subject to the provisions of Section 10.1 and 
Section 10.2 hereof, if Sellers are unable to deliver title 
to South Seas Plantation to CapStar Management as required by 
the te=s of this Agreement, then either Sellers or Purchasers 
shall have the right to terminate this Agreement.  Upon any 
termination of this Agreement under this Section 10.3, the 
Escrow Agent shall return to Purchasers,the Earnest Money 
Deposit and all rights and obligations of Sellers and 
Purchasers hereunder (except those rights and obligations set 
forth herein which expressly survive a termination of this 
Agreement) shall terminate immediately.



Section 10.4 'Inability to Deliver any Pro-perty 
Other
than South Seas Plantation. SubjecL-- to the provisions of 
Section 10.1 and Section 10.2 hereof, if: (i) Sellers are 
unable to deliver to CapStar Management title to any Property 
(other than South Seas Plantation, which shall be governed by 
the provisions of Section 10.3) as required by the terms of 
this Agreement, or (ii) any of the representations and 
warranties of Sellers set forth in Article V hereof shall at 
the Time of Closing be untrue in any material respect with 
respect to a particular Property, or (iii) Sellers are unable 
to deliver any Pror)erty (other than South Seas Plantation) 
by reason of any condemnation, damage or destruction with 
respect to a particular Property that would allow Purchasers 
to terminate this Agreement under Sections 10.1 or 10.2, then 
Purchasers shall be entitled to eliminate from this Agreement 
the Property or Properties so affected and the Contribution 
Consideration shall be adjusted by deducting the amount or 
amounts shown in Exhibit C for the Property or Properties to 
be eliminated.  If the Con(-ribution Consideration declines 
below $135,000,000 as a result of the elimination of 
Properties other than the Marco Radisson or below 
$120,000,000 as a result of the elimination o'L the Marco 
Radisson and any other Property, Sellers may terminate this 
Agreement by written notice to Purchasers delivered at any 
time after the elimination of the Property or Properties 
which results in the Contribution Consideration declining 
below such amount.  Notwithstanding Sections 8.3(b) and 
8.3(c), if a Property is eliminated pursuant to this Section 
10.4, CapStar's obligations under Sections 8.3(b) and 8.3(c) 
and Sellers, obligations under Section 8.2(c) shall cease and 
terminate with respect to the Employees of Sellers relating 
to the Property eliminated under this Section 10.4.



43

ARTICLE XI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
TERMINATION RIGHTS



Section 11.1 Survival of Representations and 
Warranties. The representations and warranties of Sellers and 
Purchasers shall survive the Closing for a period of one (1) 
year commencing on the Closing Date (the "Indemnity 
ExT)iration Date").  To the extent any Indemnitee is seeking 
indemnification, the Indemnitee shall be entitled to 
indemnity only for those matters as to which the Indemnitee 
has given written notice thereof to the other party prior to 
the expiration of the one (1) year period commencing on the 
Closing Date.



Section 11.2 Inde=ification b-y Purchasers. 
Purchasers hereby jointly and severally indemnify and hold 
Sellers, their partners, their respective Affiliates and the 
officers, directors, employees, agents, advisers and 
representatives of each of the foregoing (individually, a 
"Seller Indemnitee", and collectively, the "Seller 
Indemnitees") harmless from and againsl-- any and all claims, 
costs, penalties, damages, losses, liabilities and expenses 
(including reasonable attorneys' fees) (individually, an 
"Indemnification Loss", and collectively, the 
"Indemnification Losses") that may aL-- any time be incurred 
by any Seller Indemnitee, whether before or after Closing, as 
a result of: (i-) any inaccuracy or breach by Purchasers of 
any of their representations, warranties, covenants or 
obligations set forth herein, (ii) the non-payment or non-
performance of any Assumed Liabilities, (iii) the conduct of 
the Business after the Closing Date, (iv) any untrue 
statement of a material fact relating to Purchasers in the 
Tender Offer Materials and provided by Purchasers in writing 
to SSPC specifically for inclusion therein (the "Purchaser 
Information") or any omission by Purchasers to state a 
material fact relating to Purchasers in the Tender offer 
Materials necessary in order to make the statements made by 
Purchasers in the Tender Offer Materials, in light of the 
circumstances under which they were made, not misleading, and 
(v) any action taken by Purchasers or omitted to he taken by 
Purchasers in connection with the Tender Offer.



Section 11.3 Indemnification b)r Sellers. Sellers 
hereby jointly and severally indemnify and hold Purchasers, 
their partners, their respective Affiliates and the officers, 
directors, employees, agents, advisers and representatives of 
each such person (individually, a "Purchaser Indemnitee", 
andcollectively, the "Purchaser Indemnitees") harmless from 
and against any and all claims, costs, penalties, damages, 
losses, liabilities and expenses (including reasonable 
attorneys, fees) (individually, an "Indemnification Loss", 
and collectively, the "Indemnitication Losses") that may at 
any time be incurred by any Purchaser Indemnitee, whether 
before or after Closing, as a result of: (i) any inaccuracy 
or breach by Sellers of any of the representations, 
warranties, covenants or obligations set forth



44

herein (except for any breach or inaccuracy of any 
representation cr warranty as to which either Purchaser had 
Knowledge prior to the Closing and nevertheless elected to 
consummate the Closing), (ii) Sellers, failure to timely 
discharge or satisfy any Excluded Liabilities, (iii) any 
untrue statement of a material fact (other than Purchaser 
Information) in the Tender O'Lfer Materials or any omission 
to state a material fact in the Tender Offer Materials 
necessary in order to make the statements made in the Tender 
Offer Materials, in light of the circumstances under which 
they were made, not misleading, and (iv) any action taken by 
Sellers or omitted to be taken by Sellers in connection with 
the Tender Offer.  Sellers, obligations under this Section 
11.3 with respect to indemnity under clause (i) hereof shall 
terminate on the one year anniversary of the Closing Date, on 
the second year anniversary of the Closing Date with respect 
to indemnity under clause (ii) hereof and upon expiration of 
the applicable statute of limitations period with respect to 
indemnity under clauses
(iii)	and (iv) hereof.



Section 11.4 Limitations on Inde=ification.

(a)	Notwithstanding anything in Section 11.3 
hereof to the contrary, to the extent indemnification is 
sought by any Purchaser Indemnitee under clause (i) of 
Section 11.3 hereof or under clause (i) of Section 11.3 of 
the Other Agreement, Sellers shall be required to provide 
indemnification only to the extent the aggregate amount of 
all Indemnification Losses under clause
(i)	of Section 11.3 of this Agreement and clause (i) of 
Section
11.3	of the Other Agreement exceed Seven Hundred Fifty 
Thousand
Dollars ($750,000) and not for any amounts up thereto (the
"Indemnity Deductible").  Indemnification under clause (ii) 
of
Section 11.3 hereof shall not be subject to the Indemnity
Deductible.



(b)	Notwithstanding anything in Section 11.3 
hereof to the contrary, the maximum amount payable for 
indemnification under clause (i) of Section 11.3 hereof and 
under clause (i) of Section 11.3 of the Other Agreement shall 
not in the aggregate exceed Seven Million Five Hundred 
Thousand Dollars ($7,500,000) and the maximum amount payable 
by Sellers for all claims for indemnification under Section 
11.3 hereof and under Section 11.3 of the Other Agreement 
shall not in the aagregate exceed Ten Million Dollars 
($10,000,000).



(c)	The amount of any Indemnification Loss for 
which indemnification is ldrovided under this Article XI 
shall be net of any tax benefits or insurance proceeds 
actually realized by the indemnified party as a result 
thereof.



Section 11.5 Indemnification Procedure. In the 
case of any claim asserted by a third party against a party 
entitled to indemnification under this Agreement (the 
"Indemnified Party"), notice shall be given by the 
Indemnified Party to the



45

party required to provide indemnification (the "Indemnifying 
Party") promptly after such Indemnified Party has actual 
knowledge of any claim as to which indemnification may be 
sought, and the Indemnified Party shall permit the 
Indemnifying Party (at the expense of the Indemnifying Party) 
to assume the defense of any claim or any litigation 
resulting therefrom@ provided, that (i) the counsel for the 
Indemnifying Party who shall conduct the defense of the claim 
or litigation shall be reasonably satisfactory to the 
Indemnified Party, (ii) the Indemnified Party may participate 
in the defense at the Indemnified Party's expense, and (iii) 
the failure by any Indemnified Party to give notice as 
provided herein shall not relieve the Indemnifying Party o'L 
its indemnification obliaation under this Agreement, except 
to the extent that such om@ission results in a failure of 
actual notice to the Indemnifying Party and such Indemnifying 
Party is materially damaged as a result of such failure to 
give notice.



Section 11.6 Exclusive Remedy. Subject to Section
11.7	and Section 11.10 below, the indemnification provisions 
of this Article Xi shall be the sole and exclusive remedy of 
the Seller Indemnitees and the Purchaser Indemnitees with 
respect to any claim for monetary relief based upon or 
arising ouL-- of this Agreement.



Section 11.7 Termination by Purchasers. If Sellers 
default in any material respect in the performance of any of 
their obligations hereunder and if Sellers fail to cure that 
default within ten (10) business days after notice thereof 
from Purchasers (or such other time period as may be 
explicitly provided for herein), Purchasers, shall have the 
right to exercise any a-nd all legal and equitable remedies 
which Purchasers may have against Sellers, including, without 
limitation, the right to require that Sellers specifically 
perform their respective obligations under this Agreement.



Section 11.8 Te=ination by Sellers.  If Purchasers 
default in any material respect in the performance of any of 
their obligations hereunder and if Purchasers fails to cure 
that dei'-ault within ten (10) business days after notice 
thereof from Sellers (or such other time period as may be 
explicitly provided for herein), Sellers may either: (i) 
te=inate this Agreement in which event the Earnest Money 
Deposit (together with any interest earned thereon) shall be 
retained by Sellers and all other rights and obligations of 
Sellers and Purchasers hereunder (except those rights and 
obligations set forth herein which expressly survive a 
termination of this Agreement) shall terminate immediately, 
or
(ii)	proceed to Closing.



       Section 11.9 Te=ination by Either Sellers or
Purchasers. If the Closing shall not have occurred before
November 1, 1998, any party hereto may elect to terminate 
this
Agreement, in which event (i) the Earnest Money De-oosit 
(together



46

with any interest earned thereon) shall promptly be returned 
to CaDSta . r, and (ii) all other rights and obligations of 
Sellers and Purchase--s hereunder (except those rights and 
obligations set forth herein which expressly survive a 
termination of this Agreement) shall terminate immediately.  
In connection with any such te=ination, each party shall pay 
its own costs and expenses incurred in connection with the 
transaction contemplated hereby.



Section 11.10 Licruidated Damacres.  SELLERS AND 
PURCRASERS AGREE THAT, IN THE EVENT OF TERMINATION OF THIS 
AGREEMENT AS CONTEMPLATED BY SECTION 11.8 HEREOF OR UNDER THE 
CIRCUMSTANCES DESCRIBED IN SECTION 3.4 HEREOF, THE DAMAGES 
THAT SELLERS WOULD SUSTAIN AS A RESULT THEREOF WOULD BE 
DIFFICULT IF NOT IMPOSSIBLE TO ASCERTAIN.  THEREFORE, SELLERS 
AND PURCHASERS AGREE TRAT SELLERS SHALL RETAIN THE EARNEST 
MONEY DEPOSIT AS FULL AND COMPLETE LIQUIDATED DAMAGES AND AS 
SELLERS' SOLE REMEDY.



ARTICLE XII
PRORATIONS; TRANSACTION COSTS AND A.DJUSTMENTS



Section 12.1 Prorations. The following matters and 
items pertaining to the Business and each Property shall be 
apportioned between Sellers, on the one hand, and Purchasers, 
on the other hand or, where applicable, credited in total to 
Sellers or Purchasers, as of midnight on the day preceding 
the Closing Date (the "Cutoff Time").  Net credits i-n favor 
of Purchasers shall be deducted from the Contribution 
Consideration and net credits in favor of Sellers shall be 
added to the Contribution Consideration.  Unless otherwise 
indicated below, Purchasers shall receive a credit for any of 
the following items to the extent the same are accrued but 
unpaid as of the Cutoff Time (whether or not due, owing or 
delinquent as of the Cutoff Time), and Sellers shall receive 
a credit to the extent any of the following items shall have 
been paid prior to the Closing Date to the extent the payment 
thereof relates to any period of time after the Cutoff Time:



(a)	All Taxes (other than federal, state, local 
and foreign income, capital stock, windfall profits and 
franchise L--axes) shall be prorated as of the Cutoff Time 
between Purchasers and Sellers.  Sellers shall be charged 
with such Taxes accrued or payable as of the Cutoff Time, 
which shall be credited to Purchasers as a reduction of the 
Contribution Consideration.  If the amount of any such item 
is not ascertainable on the Closing Date, the credit therefor 
shall be based on the most recent available bill and adjusted 
as necessary post-closing, as contemplated in Section 12.3.



(b)	Any amounts prepaid, accrued or payable under 
the Indenture shall be prorated as of the Cutoff Time between 
Purchasers and Sellers.  All amounts accrued or payable under 
the Indenture with reference to periods prior to the Closing 
Date shall be credited to Purchasers as a reduction of L-he



47

Contribution Consideration.  All amounts paid under the 
Indenture with reference to periods after the Closing Date 
shall be added to the Contribution Consideration.



(c)	Any amounts prepaid, accrued or due and 
payable under the Contracts (including any deposits payable 
thereunder, but excluding any Contracts for utilities which 
proration is addressed separately in Section 12.1(i)) shall 
be prorated as of the Cutoff Time between Purchasers and 
Sellers.  All amounts accrued or payable under the Contracts 
with reference to periods prior to the Closing Date shall be 
credited to Purchasers as a reduction of the Contribution 
Consideration.  All amounts paid under the Contracts with 
reference to periods after the Closing Date shall be added to 
the Contribution Consideration.
Notwithstanding the foregoing, Sellers shall pay off at or 
prior to Closing all Equipment Leases which are treated as 
capital leases (as opposed to operating leases) under GAAP, 
including, without limitation, the Equipment Leases with 
respect to the computer, telephone and reservations systems 
and equipment used at the Vacation Planning Center.



(d)	Any amounts prepaid, accrued or due and 
payable under the Leases (including any deposits payable 
thereunder) shall be prorated as of the Cutoff Time between 
Purchasers and Sellers.  All amounts accrued or payable under 
the Leases with reference to periods prior to the Closing 
Date shall be credited to Purchasers as a reduction of the 
Contribution Consideration.  All amounts paid under the 
Leases with reference to periods after the Closing Date shall 
he added to the Contribution Consideration.



(e)	Any Compensation for the following specific 
items:
direct salaries and wages; (ii) incentive compensation; 
(iii) employer's contributions under the Federal Insurance 
Contribution Act, unemployment compensation and other 
employment taxes; (iv) accrued vacation pay with respect to 
the Transferred Employees (A) which are due and payable at 
Closing, or (B) with respect to which the right to receive 
such Compensation first arises or accrues prior to Closing 
(without regard to when such Compensation is paid or becomes 
due and payable) shall be prorated as of the Cutoff Time 
between Purchasers and Sellers.  All Compensation with 
reference to periods prior to the Closing Date shall be 
credited to Purchasers as a reduction of the Contribution 
Consideration.



(f)	All fees and charges paid for transferable 
Permits the current period for which Permit includes the 
Closing Date shall be prorated as of the Cutoff Time between 
Purchasers and Sellers.  All amounts accrued or payable under 
such Permits with reference to periods prior to the Closing 
Date shall be credited to Purchasers as a reduction of the 
Contribution Consideration.  All amounts paid under such 
Permits with reference to periods



4 8

after the Closing Date shall be added to the Contribution
Consideration.



(g)	The Contribution Consideration shall be 
reduced by the amount of all accounts for current guests at 
the Properties including items charged to such accounts by 
guests reflected on the ledger of each Property as of the 
Cutoff Time in an amount equal to fifty percent (500-o) of 
all of such room charges for such night, plus all other guest 
ledger charges for such night.



(h)	Purchasers shall receive a credit as a 
reduction in the Contribution Consideration for all prepaid 
deposits for Reservations scheduled for accommodations or 
events on or after the Closing Date.



(i)	All utility services, including, without 
limitation, telephone and telex contracts and contracts for 
the supply of heat, steam, electric power, gas, water, sewer 
and lighting, shall be prorated as of the Cutoff Time between 
Purchasers and Sellers by the Escrow Agent.  Where possible, 
cutoff readings will be secured for all utilities as of the 
Cutoff Time.  To the extent they are not available, the cost 
of such utilities shall be apportioned between the parties by 
estimating such cost on the basis of the latest actual (not 
estimated) bill for such service.  All such amounts which are 
payable or estimated to have accrued for such utility 
services with reference to periods prior to the Closing Date 
shall be credited to Purchasers as a reduction of the 
Contribution Consideration.  All amounts paid for such 
utility services with reference to periods after the Closing 
Date shall be added to the Contribution Consideration.  
Sellers shall receive a credit for all deposits, if any, made 
by Sellers as security under any such public service 
contracts if the same are transferable and provided such 
deposits remain on deposit for the benefit of Purchasers.



(i)	vending machine, laundry machine, pay 
telephone and other coin-operated equipment monies will be 
removed by Sellers as of the Cutoff Time for the benefit of 
Sellers (subject to the payment by Sellers of any amounts 
owed third parties in connection with such vending machines, 
laundry machines, pay telephones and other coin-operated 
equipment).



(k)	The Contribution Consideration shall be 
increased in an amount equal to the amount of all Accounts 
Receivable generated from the Business prior to the Cutoff 
Time which as of .the Cut-O'Lf Time have been unpaid for not 
more than ninety (90) days (the "Transferred Accounts 
Receivable"), and Purchasers shall be entitled to collect and 
retain all such Accounts Receivables as they are received.  
If Purchasers are unable to collect the Transferred Accounts 
Receivable within ninety (90) days following the Closing 
Date, Sellers shall repurchase at the face value thereof 
those Transferred Accounts Receivable that



4 9

Purchasers are unable to collect.  No adjustment shall be 
made for any Accounts Receivable generated from the Business 
prior to the Cut-Off Time which as of the Cut-Off Time shall 
have been unpaid for ninety (90) days or more, and Sellers 
shall be entitled to collect and retain all such @ccounts 
Receivable.  Sellers shall deliver to Purchasers on the 
Closing Date a true, correct and complete schedule listing 
all of the Transferred Accounts Receivable.



(1)	The Contribution Consideration shall be 
increased by the amount paid by Sellers for the items of 
Consumables and SuDDly Inventory shown on the Financial 
Statements as follows to the extent such items have not been 
expensed prior to the Cutoff
Time:	(i) unopened liquor and wine inventory; (ii) golf pro 
shop;
(iii)	retail (gifts, groceries, etc); (iv) marina - 
gas/oil; (v)
Ships store; (vi) general store; (vii) Shades of Captiva; 
(viii) Reflections; (ix) gift shop; (x) pizza parlor; (xi) 
Uncle Bob,s Ice Cream Shop; (xii) Bayside Outrigger; (xiii) 
Warehouse Storage; (xiv) Bayside Marina - Grocery; (xv) 
tennis pro shop; (xvi) maintenance supplies; (xvii) food 
service supplies; (xviii) office and vending equipment; (xix) 
computer equipment (which shall be limited to Sellers' on-
hand supply of computer replacement parts ana replacement 
equipment); (xx) gas station; and (xx-L) items customarily 
included in the "miscellaneous" category.  Notwithstanding 
this Section 12.1(1), CapStar shall have the right to advise 
SSPC no later than thirty (30) days prior to the Closing Date 
that CapStar elects not to purchase certain beverage 
inventory (in which case no proration for such excluded 
inventory shall be made hereunder).  If CapSL--ar so notifies 
SSPC, the beverage inventory that CapStar elects not to 
purchase shall not be transferred to CapStar.



(m)	The Contribution Consideration shall be 
decreased by the outstanding accounts payable and accrued 
expenses of Sellers as of the Cutoff Time to the extent that 
such accounts payable and accrued expenses have not otherwise 
been deducted from the Contribution Consideration pursuant to 
this Section 12.1.



(n) All prepaid expenses (including, without
limitation, property, casualty, workers, compensa-ion or 
health

L-
insurance premiums) which are required for operation of the 
Properties and which have not otherwise been prorated 
pursuant to this Article XII and which relate to a period of 
more than one year shall be prorated as of the Cutoff Time 
between Purchasers and Sellers.



Section 12.2 Settlement Statement and Closing Date
Calculation.



(a)	Sellers and Purchasers, through their 
respective accountants or representatives, together shall 
make such examinations and inventories of Sellers as may be 
necessary to



5 0

make the adjustments and prorations and allocations of 
Contribution Consideration among the Contributed Assets under 
this Article XII or under any other provisions of this 
Agreement Sellers and Purchasers jointly shall prepare no 
later than the Closing Date a settlement statement (the 
"Settlement Statement") that is based upon (i) the last 
available month-end balance sheet and income statement of 
Sellers (such month-end statements are generally prepared by 
Sellers within twenty days following the prior month-end), 
and (ii) the examinations and inventories described in the 
preceding sentence.  The Settlement Statement shall contain 
Sellers' and Purchasers' best estimate of the amounts of the 
items requiring the prora-Lions and adjustments in this 
Agreement and shall segregate such items on a Property by 
Property basis to the extent applicable.  The amounts set 
forth on the Settlement Statement shall be the basis upon 
which the prorations and adjustments vrovided for herein 
shall be made at the Closing.  Subject to Sections 12.2(b) 
and (c), the Settlement Statement shall be binding and 
conclusive on all parties hereto to the extent of the items 
covered by the Settlement Statement.



(b)	In the event that, at any time within nine 
(9) months after the Closing Date, either party discovers any 
items (other than the items set forth in Sections 12.1(k), 
(1) and (m)) which should have been included in the 
Settlement Statement but were omitted therefrom, such items 
shall be adjusted in the same manner as if their existence 
had been known at the time of the preparation of the 
Settlement Stat--ement.



(c)	With respect to the items set forth in 
Sections 12.1(k), (1) and (m), within one hundred twenty 
(120) days after the Closing Date, Sellers shall prepare a 
calculation of such items as of the Closing Date (the 
"Clcsing Date Calculation") and sha ' 11 segregate such items 
therein on a Property by Property basis to the extent 
applicable.  The Closing Date calculation shall also set 
forth any adjustments to the prorations and adjustments set 
forth in the Settlement Statement.  If Purchasers have any 
objections to the Closing Date Calculation, Purchasers shall 
deliver a detailed statement describing its objections to 
Sellers within thirty (30) days a-fter receiving the Closing 
DaL--e Calculati-on.  Purchasers and Sellers shall use 
reasonable efforts to resolve any such objections themselves.  
If Sellers and Purchasers do not obtain a final resolution 
within thirty (30) days after Sellers have received the 
statement of objections,

Sellers and Purchasers shall select an accounting firm 
mutually acceptable to them to resolve any remaining 
objections.  If

Purchasers and Sellers are unable to agree on the choice of 
an accounting fi=, they will select a nationally-recognized 
accounting firm by lot (after excluding their respective 
regular outside accounting firms) . The determination of any 
accounting firm so selected will be set forth in writing and 
will be conclusive and binding upon Purchasers and Sellers.  
U-pon resolution of all objections to the Closing Date 
Calculation, Sellers promptly shall revise the Closing Date 
Calculation to



51

reflect such resolution of objections.  Purchasers or 
Sellers, as the case may be, shall promptly pay the other 
party the amount of any additional adjustment required under 
such revised Closing Date Calculation (or as required under 
the initial Closing Date Calculation if Purchasers do not 
notify Sellers bf any objections within the applicable 
thirty-day period).  Purchasers and Sellers shall split the 
costs and expenses of the accounting firm referenced above.  
Sellers shall make the work papers and back-up materials used 
in preparing the Closing Date Calculation available to 
Purchasers and its accountants and other representatives at 
reasonable times and upon reasonable notice at any time 
during (i) the preparation by Sellers of the Closing Date 
Calculation, (ii) the review by Purchasers of the Closing 
Date Calculation, and (iii) the resolution by Purchasers and 
Sellers of any objections thereto.



Section 12.3 Transaction Costs.

(a)	Sellers shall pay for the following costs 
associated with this transaction: (i) the fees and expenses 
of NationsBanc Montgomery Securities, (ii) the fees and 
expenses of its accountants and attorneys, and (iii) the 
costs and expenses of any mortgage or other releases 
associated with the pay off and release of existing mortgages 
and other non-permitted encumbrances.



(b)	Purchasers shall pay for the following costs 
associated with this transaction: (i) the fees and expenses 
of its investment bankers or advisers; (ii) the fees and 
expenses of .its accountants and attorneys; (iii) appraisal 
fees and charges, (iv) the fees, charges and expenses 
incurred in connection with any third party reports obtained 
by either Purchaser (including, without l-LmiL-ation, 
environmental, structural engineering and marketing reports), 
(v) application and/or transfer fees relating to the 
Franchise Agreements or any other franchise affiliations 
Purchasers desire to obtain, and (vi) fees and expenses 
relating to the transfer of all liquor licenses for the 
Properties.



(c)	Sellers and Purchaser shall split equally the 
following costs associated with this transaction: (i) 
recording fees and charges, (ii) the fees and expenses of the 
Escrow Agent, (iii) the costs of updates to the Existing 
Surveys or obtaining new surveys, (iv) transfer taxes, (v) 
documentary stamp taxes, (vi) sales and use taxes incurred by 
reason of the transfer of the Contributed Assets as 
contemplated by this Agreement, (vii) mortgage documentary or 
stamo taxes incurred in connection with the assumption of the 
Assumea Debt by Purchasers, and (viii) costs and charges 
relating to all Title Commitments and Title Policies 
(including, without limitation, any costs and charges of 
Guardi:an Title of Lee County).  All other costs and expenses 
not expressly addressed in this Section 12.3 shall be 
allocated between the parties in accordance with local custom 
for similar transactions.



52

(d)	If SSPC is able to provide CapStar with 
engineering, building condition, environmental or appraisal 
reports that are satisfactory to CapStar and for which 
CapStar can obtain reliance letters, then if CapStar elects 
to use such reports CapStar will pay to SSPC the fees CapStar 
normally would pay for such reports under its national 
contracts.
Notwithstanding the foregoing sentence, CapStar shall have no 
obligation to use and pay for reports that SSPC may be able 
to provide to CapStar.



Section 12.4 Further Increases to Contribution 
Consideration. The Contribution Consideration shall be 
increased by the amounts of the following items and such 
items shall be transferred to CapStar Management at Closing 
and, if appropriate, shall be deemed to be included in the 
Contributed Assets.



(a)	all deposits for liquor licenses, utility 
deposits and beverage deposits with respect to the liquor 
licenses, utilities and beverage services at the Properties;



(b) the prepaid usage deposit for the use of effluent
water at the golf course at the Dunes Club; and



(c)	the amount by which Sellers' Actual Base 
Capital Expenditures as of the Closing Date exceed Sellers' 
Prorated Base Budgeted Capital Expenditures plus the amount 
spent by any Seller in respect of any Approved Project 
Capital Expenditure.  The 1998 annual budgeted base capital 
expenditures for the purposes of the calculation required by 
this Section 12.4(c) and as previously submitted to CapStar 
is $4,151,000.



Section 12.5 Further Reduction to Contribution 
Consideration. The Con,--ribution Consideration shall be 
decreased by: (i) the amount by which Seller's Prorated Base 
Budgeted Capital Expendi-tures exceed Seller's Actual Base 
Capital Expenditures as of the Closing Date, and (ii) all 
amounts due and owing in order to fully discharge and payoff 
as of the Time of Closing the Capital Leases as set forth in 
the payoff letters required to be delivered under Section 
9.2(n) hereof.



53

ARTICLE XIII
MISCELLANEOUS PROVISIONS



Section 13.1 Completeness, Modification. This 
Agreement, the Exhibits and Schedules hereto and the 
documents required to be delivered hereby constitute the 
entire agreement between Sellers and Purchasers with respect 
to the transaction contemplated hereby and supersede all 
prior discussions, understandings, agreements and 
negotiations between the parties hereto.  This Agreement may 
be modified only by a written instrument duly executed by 
Sellers and Purchasers.  Each reference in this Agreement to 
an Exhibit or Schedule shall mean an Exhibit or Schedule 
attached to this Agreement and incorporated into this 
Agreement by such reference.



Section 13.2 Assiq=ent. Except in connection wi-th 
the Merger, neither any Seller nor any Purchaser shall assign 
its rights, duties or obligations hereunder without the prior 
written consent of the others.



Section 13.3 Successors and Assigns; No Third 
Party Beneficiary. This Agreement shall bind and inure to the 
benefit of the parties hereto and their respective successors 
and permitted assigns and shall not inure to the benefit o'L, 
and shall not be enforceable by, any third party.  If the 
Merger is consummated prior to consummation of this 
transaction, this Agreement shall be binding upon each 
successor entity to CapStar and CapStar Management and all 
obligations of CapStar hereunder shall thereafter be 
obligations of MeriStar Hospitality and MeriStar Hotels and 
all obligations of CapStar Management shall thereafter be 
obligations of MeriStar Hotel Operating Partnership and 
MeriStar Hospitality Operating Partnership as if such parties 
were signato--ies hereto.



Section 13.4 ' Governincr Law. This Agreement and 
all documents referred to herein shall be governed by and 
construed and interpreted in accordance with the laws of the 
State of Florida.



Section 13.5 Counterparts. To facilitate 
execution, this Agreement may be executed in as many 
counterparts as may be required.  It shall not be necessary 
that the signatures on behalf of the parties hereto appear on 
each counterpart hereof.  All counterparts hereof shall 
collectively constitute a single agreement.



Section 13.6 ' Severability. If any term, covenant 
or condition of this Agreement, or the application thereof to 
any person or circumstance, shall to any extent be invalid or 
unenforceable, the remainder of this Agreement, or the 
application of such term, covenant or condition to other 
persons or circumstances shall not be affected thereby, and 
each te=,



54

covenant or condition o'L this Agreement shall be valid and
enforceable to the fullest extent permitted by law.



Section 13.7 Notices. All notices, requests, 
demands and other communications hereunder shall be in 
writing and shall be delivered by hand, transmitted by 
facsimile transmission, sent prepaid by Federal Express (or a 
comparable overnight delivery service) or sent by the United 
States mail, certified, postage prepaid, return receipt 
requested, at the addresses and with such copies as 
designated below.  Any notice, request, demand or other 
communication delivered or sent in the manner aforesaid shall 
be deemed given or made (as the case may be) when actually 
delivered to the intended recipient.



If to Sellers:	South Seas Properties Company
Limited Partnership
12800 University Drive, Suite 350
Fort Myers, Florida 33907
Attn:	Richard E. Krichbaum
Telecopy: (941) 481-6667

With a copy to:	B aker & Hostetler LLP 1900 East Ninth 
Street, Suite 3200 Cleveland, Ohio 
44114-3485
Attn:	Albert T., Adams, Esq.
Telecopy: (216) 696-0740

If to Purchasers:    CapStar Hotel Company
1010 Wisconsin Avenue, N.W.
Washington, D.C. 20007
-Attn:	John Plunket
Telecopy: (202) 295-2230

With a copy to:      DeCampo, Diamond & Ash
805 Third Avenue
New York, New York 10022
Attn:	William H. Diamond, Esq.
Telecopy: (212) 758-1728



or to such other address as the intended recipient may have 
specified in a notice to the other party.  Any party hereto 
may change its address or designate different or other 
persons or entities to receive copies by notifying the other 
party in a manner described in this Section 13.7.



Section 13.8 Rules of Construction. The following 
rules shall apply to the construction and interpretation of 
this Agreement:



(a)	Singular words shall connote the plural 
number as well as the singular and vice versa, and the 
masculine shall include the feminine and the neuter.



55

(b)	All references herein to particular articles, 
sections, subsections, clauses or exhibits are references to 
articles, sections, subsections, clauses or exhibits of this 
Agreement.



(c)	The headings contained herein are solely for 
convenience of reference and shall not constitute a part of 
this Agreement nor shall they affect its meaning, 
construction or effect.



(d)	Each party hereto and its counsel have 
reviewed and revised (or requested revisions of) this 
Agreement and have participated in the preparation of this 
Agreement, and therefore any usual rules of construction 
requiring that ambiguities are to be resolved against a 
particular party shall not be applicable in the construction 
and interpretation of this Agreemen-L or any exhibits hereto.



Section 13.9 Sup-olements to Schedules. Any party 
may at any time, or from time to time after the date hereof, 
but not later than five (5) days prior to the Closing Date, 
supplement or amend the Schedules required by this Agreement.  
No supplement or amendment to such Schedules shall have any 
effect for the pu@uose of determining -Lhe satisfaction of 
the conditions to the obligation of the other parties under 
Article VII hereof, but any matter disclosed in an amended or 
supplemental Schedule pursuant to this Section 13.9 shall not 
form the basis for any claim for indemnification pursuant to 
this Agreement if the transaction contemplated by this 
Agreement is consummated.



Section 13.10 Radon Gas. Radon is a naturally 
occurring radioactive gas that, when it has accumulated in a 
building in sufficient quantities, may present health risks 
to persons who are exposed to it over time.  Levels of radon 
tha,-exceed federal and state guidelines have been found in 
buildings in Florida.  Additional information regarding radon 
and radon testing may be obtained from your county public 
health unit.



5 6

IN WITNESS WHEREOF, Sellers and Purchasers have 
caused this Agreement to be executed in their names by their 
respective duly authorized representatives.



Sellers:

SOUTH SEAS PROPERTIES COMPANY LIMITED
PARTNERSHIP, an Ohio limited partnership



By:	T&T Resorts, L.C., a Florida
limited liability company, general
partner



By:



t M. Taylor, Chai an and



R@beft-
Manager



SOUTH SEAS RESORTS COMPANY LIMITED PARTNERSHIP, a Florida 
limited partnership



By:	S.  S. Reso
Florida
general -



By:



Management, L.C.



anagement, L.C., a ,
ed liability company,
er



Robe'rt M( Taylor, Cha   an and
Manager I



SOUTH SEAS RESORT LIMITED PARTNERSHIP,
an Ohio limited partnership



By: SAN-CAP
limited



By:



57



I	L.C., a Florida
ty company



Robert
Manager



Taylor, Chai an and

MARCO SSP, LTD., a Florida limited
partnership



By:	Marco SSP.  InC., a Florida
c:ox7pora



By:           I
Its -.



SOUTH SEAS & CAFTIVA IZOPE

S, L.



By t



Resorts Realt
corporate



Inc. , a
ene-@     ar



B
I     Z/ / - @/ @



Purchasers:

CAPSTA,R NOTEL COMPANY


13Y     zi ,-@ic-,
 . Name:  14]J,,   /@ @@
Title:	si@, I/.,,



Title:   si@, z

CAPSTAR MANAGEMENT COMPANY, L.P.

By:	CapStar Hotel Company, a Delaware



corpo



ation, general partner
r,



By     I -//

74/

/,Z



Name -
Title -.



!5 8



'@ LIl-

LIST OF EXHIBITS AND SCHEDULES
TO
CONTRIBUTION AGREEMENT
Schedules to Contribution Agreement:


Schedule	1.2(a)

Schedule	1.2(1)
Schedule	1.2(j)
Schedule	1.2(1)
Schedule	1.3
Schedule	4.1(d)
Schedule	5.6
Schedule	5.7
Schedule	5.8
Schedule	5.9
Schedule	5.12
Schedule	5.13
Schedule	5.14
Schedule	5-15
Schedule	5.16
Schedule	5.21
Schedule	6.3
Schedule	6.9



Exhibits



Exhibit A
Exhibit B
Exhibit C
Exhibit D



Legal Description of Land and Addresses of
Properties
Tenant Leases
Seller Leases
Management Agreements
Excluded Assets
Title Commitments and Surveys
Financial Statements
Compliance with Applicable Laws
Litigation
Insurance
Environmental Matters
Pension and Welfare Plans
Permits
List of Condominium Lease Agreements
Equipment Leases and Material Contracts
Proprietary Rights
Purchaser's Conflicts
Capstar Management Partne--ship Agreement



to Contribution Agreement:



Definitions
Proposed Amendments to Indenture
Elimination Price Reductions
Form of Option Agreement Relating to
Tradewinds



5 9

EXHIBIT A

The following terms when used in this Agreement shall have 
the
indicated meanings:



"Accounts Receivable" has the meaning set forth in
clause (t) of the definition of Contributed Assets.



"Actual Base CaDital Expenditures" means the 
amount of base capital expenditures undertaken by Sellers for 
the period commencing January 1, 1998 and ending on the 
Closing Date.



"Additional Deposit" has the meaning set forth in
Section 3.4 of this Agreement.



"Affiliate" has the meaning set forth in Section 12b-2
of the Securities Exchange Act of 1934, as amended.



"AGTII has the meaning set forth in Recital H to this



Agreement.

"A-o-olicable Law,, means all laws, statutes, 
rules, regulations, ordinances and codes of any Governmental 
Authori-L-y and any Board of Fire Underwriters and similar 
agencies, and any judgment, injunction, order, decree or 
other judicial. requirement affecting or in any way relating 
to the Business and the operation of the Properties, 
including, without limitation, Environmental Health and 
Safety Laws and SEC Laws.



"Assumed Debt" means the Credit Lyonnais Debt, the 
Subordinated Debt and all amounts due and owing in order to 
fully discharge and payoff as of the Time of Closing the 
Capital Leases.



"Assumed Liabilities" has the meaning set forth in
Section 2.1 of this Agreement.



"Base CaDital Projects" means those normal, 
recurring projects of a capital nature that are reflected in 
Sellers' 1998 budget.



"Best Western Sanibel,, has the meaning set forth in
Recital A.1 to this Agreement.



"Bond Purchase,, has the meaning set forth in Section
8.4(e) of this A7greement.



"Books and Records" has the meaning set forth in 
clause
(r)	of the definition of Contributed Assets.



"Brokerage Business" has the meaning set forth in
Recital D to this Agreement.



60

"Business" has the meaning set forth in Recital E to
this Agreement.



"CaDital Leases" means all Leases the obligations 
of which are required to be classified and accounted for 
under GAAP as capital lease obligations on a balance sheet.



"CaDStar" has the meaning set forth in the first
paragraph of this Agreement.



"CauStar Common Stock" means the common stock, $.Ol par
value, of CapStar.



"CazStar Manaaement" has the meaning set forth in the
first paragraph of this Agreement-



"CaDStar Management Partnershin Agreement" means 
the Amended and Restated Agreement of Limited Partnership of 
CapStar Management, as the same has been amended.



"CapStar Representatives" has the meaning set forth in
Section 4.1(c) of this Agreement.



"CaDStar Shares Amount" means a whole number of 
shares of CapStar Common Stock equal to the prbduct of the 
number of Partnership Units offered for exchange, multiplied 
by the Conversion Factor,(rounded down to the nearest whole 
number in the event such product is not a whole number); 
provided that if CapStar at any time issued to all holders of 
CapStar Common Stock rights, options, warrants or convertible 
or exchangeable securities entitling the shareholders to 
subscribe for or purchase shares of CapStar Common Stock, or 
any other securities or property, wh4Lch rights have not 
expired pursuant to their terms, then the CapStar Shares 
Amount thereafter shall also include such rights that a 
holder of than number of shares of CapStar Common Stock would 
be entitled to receive.



"Cash Amount" means an amount of cash per 
Partnership Unit equal to the Value on the Valuation Date o@L 
the CapStar Shares Amount.



"Closing" has the meaning set forth in Section 9.1 of
this Agreement.



"Closing Date" has the meaning set forth in Section 9.1
of this Agreement.



"Closing Date Calculation" has the meaning set forth in
Section 12.2(c) of this Agreement.



"Closing Date Price" means: (i) if the Closing 
occurs prior to the consummation of the Merger, the average 
of the last reported sales price (regular way) of CapStar's 
Common Stock on



61

The New York Stock Exchange for the seven consecutive day 
trading period commencing ten business days and ending three 
business days prior to the Closing Date, and (ii) if the 
Closing occurs after the consummation of the Merger, the sum 
of the averages of the last reported sales prices (regular 
way) of the common stock of MeriStar Hospitality and MeriStar 
Hotels on The New York Stock Exchange for the seven 
consecutive day trading period commencing ten business days 
and ending three business days prior to the Closing Date.



"Closi:gq Documents" has the meaning set forth in
Section 9.1 of this Agreement.



"Code" means the Internal Revenue Code of 1986, as



amended.

"Collar Amount" has the meaning set forth in Section
3.2(a) of this Agreement.



"Collar Price" means whichever of the following



applies:

(a) lio-. of the Execution Date Price, if the Closing
Date Price is greater than 1100-. of the Execution Date 
Price; or



(b) 90'-. of the Execution Date Price, if the Closing
Date Price is less than 90*@ of the Execution Date Price; or



(c)	the Closing Date Price, if the Closing Date 
Price is greater than or equal to 90% but less than or equal 
to ilooi of the Execution Date Price.



"ComDarable Convertible RaL-ell has the meaning 
set for-h

t
-
in Section 8.4(h) of this Agreement.



"Com,oensation" means the direct salaries and 
wages- paid to or accrued for the benefit of the Employees, 
including incentive compensation, together with all fringe 
benefits payable to, or accrued for the benefit of, any 
executive or other employee, including employer's 
contributions under the Federal Insurance Contribution Act, 
unemployment compensation, or other employment taxes, pension 
fund contributions, workers, compensation, group life and 
accident and health insurance premiums, profit sharing, 
retirement, disability, maternity leave, and other similar 
benefits, accrued vacation pay, accrued sick pay, and all 
other contributions to, and amounts paid or accrued under, 
pension and other employee health and benefit plans, programs 
or policies, including, without limitation, as of any date, 
the right to receive any of the foregoing notwithstanding 
that such right entitles such Employee to receive payment at 
a time after the date in question.



62

"Condominium Lease Aareements" has the meaning set
forth in clause (f) of the definition of Contributed Assets.



"Confidential Information" has the meaning set forth in
Section 8.3(a) of this Agreement.



"Consent Solicitation" has the meaning set forth in
Section 8.4(b) of this Agreement.



"Consumables" has the meaning set forth in clause (d)
of the definition of Contributed Assets.



"Contracts" means, collectively, the Operating 
Agreements, Equipment Leases, Franchise Agreements, 
Management Agreements and Memberships.



"Contributed Assets" means the following:

(a)	The land described on Schedule 1.2(a), along 
with all appurtenant rights, easements, rights-of-way and 
privileges relating thereto and landscaping located thereon 
(the "Land");



(b)	All buildings, structures and improvements 
on or
affixed to the	Land, including fixtures constituting real
property under	Applicable Law (the "Improvements"; the 
Land and
the Improvements are referred to herein collectively as the 
"Real
Property");



(c)	All fixtures, furniture, furnishings, 
fittings, equipment, machinery, appliances, vehicles, 
computer hardware, art work and other articles of tangible 
personal property (together with all warranties and 
guaranties with respect thereto to L--he extenl-- 
transferable), which are used or usable or have been ordered 
for future use in connection with the Business or operation 
of the Properties, other than the Consumables and Supply 
Inventories (the "Fixtures and Tangible Personal Property") 
and other than the Fixtures and Tangible Personal Property 
that is being sold to Purchasers under the Other Agreement;



(d)	All food and beverages (alcoholic and 
nonalcoholic) that are held for sale, whether opened or 
unopened, which are used or held in reserve or ordered for 
future use in connection with the Business or operation of 
the Properties at normal operating levels, and including all 
resupplies and replacements in the Ordinary Course of 
Business prior to the Closing Date (the "Consumables"), other 
than the Consumables being sold to Purchasers under the Other 
Agreement;



(e)	All china, glassware, silverware; linens; 
uniforms; engineering, maintenance, cleaning and housekeeping 
supplies; matches and ashtrays; soap and other toiletries; 
stationery, menus and other printed materials; and all other



63

materials and supplies, whether in use or held in reserve or 
ordered for future use in connection with the Business or 
operation of the Properties at normal operating levels, and 
including all resupplies, substitutions and replacements in 
the Ordinary Course of Business prior to the Closing Date 
(the "Supply Inventories"), other than the Supply Inventories 
being sold to Purchasers under the Other Agreement;



(f)	All guaranteed lease agreements, rental 
agreements and other similar agreements between any Seller 
and owners of individual condominium units or private 
residences for the shortterm rental of such units or 
residences by such Seller to third parties on behalf of such 
owners at South Seas Plantation, the Sundial Beach & Tennis 
Resort and the Sanibel Inn (the "Condominium Lease 
Agreements,,);



(g)	All memberships and membership agreements for 
access to or the use of any of the facilities at the Dunes 
Club, South Seas Plantation or any other Property (the 
"Memberships,,);



(h)	All bookings and reservations for (i) guest 
rooms and conference, convention and banquet rooms or other 
facilities at the Properties, and (ii) the condominium units 
or private residences under Condominium Lease Agreements (the 
"Reservations");



,(i) The leases, subleases and similar agreements 
(including all amendments, modifications and supplements 
thereto and guaranties, extensions and renewals thereof) 
listed on Schedule 1.2(i) for the use or occupancy by third 
parties of any portion of the Real Property (other than the 
Reservations)(the "Tenant Leases");



(j)	The leases, subleases and similar agreements 
(including all amendments, modifications and supplements 
thereto and guaranties, extensions and renewals thereof) 
listed on Schedule 1.2(i) for the.use or occupancy by Sellers 
of real property (the "Seller Leases,,);



(k)	The Franchise Agreements;

(1)	The management agreements listed on Schedule
1.2(l) (the "Management Agreements");



(m)	All service and maintenance contracts, credit 
card service agreements, booking and reservation agreements, 
brokerage and commission agreements, and all other contracts 
and agreements (including all amendments, modifications and 
supplements thereto and extensions and renewals thereof, and 
all warranties and guaratties thereunder to the extent 
transferable) which are held by any Seller in connection with 
the Business or operation of the Properties, other than the 
Condominium Lease Agreements,
Memberships, Seller Leases, Tenant Leases, Franchise 
Agreements,



64

Management Agreements and Equipment Leases (the "Operating
Agreements");



(n)	All leases and purchase money security 
agreements for any Fixtures and Tangible Personal Property 
(including all amendments, modifications and supplements 
thereto and extension and renewals thereof, and all 
warranties and guaranties thereunder to the extent 
transferable) which are held by any Seller in connection with 
the Business or operation of the -Properties, other than the 
Condominium Lease Agreements, Memberships, Seller Leases, 
TenanL- Leases, Franchise Agreements, Management Agreements 
and Operating Agreements (the "Equipment Leases");



(o)	All licenses,-permits, consents, 
authorizations, approvals and certificates of any 
Governmental Authority used in connection with the Business 
or operation of the Properties (to the extent the same are 
transferable) (the "Permits");



(p)	All of the following owned by, issued to or 
licensed to any Seller and used in connection with the 
Business or operation of the Properties (to the extent the 
same are transferable): (i) trademarks, L--rade names 
(including, without limitation, the names of the Properties 
set forth in the recitals to this Agreement), service marks, 
trade dress, symbols and logos, together with all goodwill 
associated therewith, and all registrations, applications, 
renewals, adaptations, derivations and combinations thereof; 
(ii) copyrights and copyrightable works and all registration, 
applications and renewals therefor; (iii) trade secrets and 
confidential information (including, without limitation, 
ideas, drawings, specifications, designs, plans, proposals, 
financial and accounting data, business and marketing plans); 
(iv) computer software; (v) all other intellectual property 
rights; and (vi) all copies and tangible embodiments of the 
foregoing (in whatever form or medium) (the "Intellectual 
Property");



(q)	All guest lists, cusl--omer files, group 
files, sales records, sales literature and brochures and 
other written marketing materials, and all telephone numbers 
used in the Business or operation of the Properties, and all 
goodwill associated with the Properties (the "Customer and 
Marketing Information");



(r)	All books and records, ledgers, 
correspondence-and other files and documents maintained by or 
on behalf of Sellers in connection with the Business or 
operation of the Properties, and with respect to Sellers' 
Entities (as the case may be) (the "Books and Records");



(s) All blueprints, plans and specifications,
engineering and environmental reports and studies relating to 
the



65

Real Property, to the extent the same exist and are 
trans'Lerable,
(the "Property Reports");



(t)	Subject to Section 12.1(k) hereof, all trade 
accounts receivable, notes receivable and other receivables 
(the "Accounts Receivable"), and all claims, deposits, 
refunds, causes of action, rights of reconvey, rights of 
setoff, rights of recoupment and investments, and prepaid 
expenses in connection with the Business or operation of the 
Properties; and



(u)	All cash in house banks at the Properties;

(v)	All of the capital stock of DG&CC (the 'IDG&:CC



Stock") ;

(w) SSPC's interest in the Lee County Electric
Cooperative Equity Account.



"Contribution Consideration" has the meaning set forth
in Section 3.1 of this Agreement.



"Conversion Factor" means 1.0, provided that if 
CapStar (i) declares or pays a dividend on its outstanding 
shares of CapStar Common Stock in shares of CapStar Common 
Stock or makes a distribution to all holders of its 
outstanding CapStar Common Stock in shares of CapStar Common 
Stock; or (ii) combines its outstanding shares of CapStar 
Common Stock into a smaller number of shares of CapStar 
Common Stock, the Conversion Factor shall be adjusted by 
multiplying the Conversion Factor by a fraction, the 
numerator of which shall be the number of shares of CapStar 
Common Stock issued and outstanding on the record date for 
such dividend, distribution, subdivision or combination 
(assuming for such purposes that such dividend, distribution, 
subdivision or combination has occurred as of such time), and 
the denominator of which shall be the actual number of shares 
of CapStar Common Stock (determined without the above 
assumption) issued and outstanding on the record date for 
such dividend, distribution, subdivision or combination.  Any 
adjustment to the Conversion Factor shall become effective 
immediately after the effective date of such event 
retroactive to the record date, if any, for such event.



"CorDorate Offices" means the offices of Sellers 
located at 12800 University Drive, Suites 350 and 420, Fort 
Myers, Florida.



"Credit LVonnais Loan Agreement" has the meaning set
forth in section 5.20 of this Agreement.



"Credit Lyonnais Debt" means the outstanding 
principal amount, all accrued but unpaid interest, all 
prepayment costs and any other fees and charges imposed by 
Credit Lyonnais New York Branch (or the other lenders under 
the Credit Lyonnais Loan



66

Agreement) as of the Time of Closing due and owing to Credit 
Lyonnais New York Branch, Barnett Bank, N.A. and FINOVA 
Capital Corporation under the Amended and Restated Loan 
Agreement, dated as of September 26, 1996, as amended.



"Customer and Marketing Information" has the meaning
set forth in clause (q) of the definition of Contributed 
Assets.



"Cutoff Time" has the meaning set forth in Section 12.1
of this Agreement.



"Deeds and ConveVance Documents" mean the 
following documents necessary to convey and assign to CapStar 
Management all of Sellers' right, title and interest in and 
to the Property:



(a)	wi-th respect to the transf er of the Real Property 
under this Agreement, a special warranty deed in form 
and substance reasonably satisfactory to SSPC and 
CapStar, subject only to the Permitted Title Exceptions;



(b)	with respect to the transfer of the Personal Property 
(other than the Personal Property covered under clauses 
(d) , (e) and (f) of this definition) under this 
Agreement, a Bill of Sale in form and substance 
reasonably satisfactory to SSPC and CapStar;



(c)	with respect to the assignment of the Tenant Leases, 
Seller Leases and Condominium Lease Agreements under 
this Agreement, an Assignment and Assumption of Leases 
in form and substance reasonably satis-Lcack--ory to 
SSPC and CapStar;



(d)	with respect to the assignment of the Operating 
Agreements, Equipment Leases, Franchise Agreements, 
Management Agreements, Memberships and Permits under 
this Agreement, an Assignment and Assumption of 
Operating Agreements in form and substance reasonably 
satisfactory to SSPC and CapStar;



(e)	with respect to L--he transfer of any Intellectual 
Property, Reservations and other intangible
Personal Property under thi-s Agreement, an -

Assignment and Assumption Agreement in form and 
substance reasonably satisfactory to SSPC and CapStar.



'IDG&CC" means The Dunes Golf & Country Club, Inc., a
Florida corporation.



67

'IDG&CC Stock" has the meaning set forth in clause (v)
of the definition of Contributed Assets.



"Dollar Amount" has the meaning set forth in Section
3.2(a) of this Agreement.



"Due Diligence Period" has the meaning set forth in
Section 4.1 of this Agreement.



"Dunes Club" has the meaning set forth in Recital A.3
to this Agreement.



"Earnest Money De-oosit" has the meaning set 'Lorth in
Section 3.4 of this Agreement.



"EmDlovees" means all employees of SSRC and SSPC
employed exclusively in connection with the Business.



"Environmental Claims" means any claim for 
reimbursement or remediation expense, contribution, personal 
injury, property damage or damage to natural resources made 
in writing by or on behalf of any third party including, 
without limitation, any Governmental Authority, relating to 
or arising out of the release of any Hazardous Substances or 
the violation of any Environmental, Health and Safety Laws.



"Environmental, Health and Safetv Laws" means any 
federal, state, or local statute, law, rule, regulation, 
ordinance and code of any Governmental Authority, and any 
judgment, injunction, order, decree or other judicial 
requirement which regulates or controls (i) pollution, 
contamination, or the condition of groundwater, surface 
water, soil, sediment, air or L-he workplace or (ii) a spill, 
leak, emission, discharge, release or disposal into 
groundwater, surface water, soil, sediment, air or the 
workplace, including without limitation the federal 
Comprehensive, Environmental Response, Compensation, and 
Liability Act ("CERCLAII), 42 U.S.C. 9601 et secr., as 
amended; the federal Resource Conservation and Recovery Act 
("RCPAll), 42 U.S.C. 6901 et seg., as amended; the 
Hazardous Materials Transportation Act (11 HMTAII), 49 U.S.C. 
1801 et sea., as amended; the Toxic Substances Control Act 
("TSCAII), 15 U.S.C. 2601 et sea., as amended; the Clean 
Air Act ("CAAII), 42 U.S.C. 7401 et sea., as amended; the 
Clean Water Act ("CWAII), 33 U.S.C. 1251 et seg., as 
amended; the Safe Drinking Water Act (IISDWAII), 42 U.S.C. 
300f et sea., as amended; the Emergency Planning and 
Community Right to Know Act ("EPCPAll), 42 U.S.C. 11001 et 
seg., as amended; the Federal, Insecticide, Fungicide and 
Rodenticide Act ("FIFRAII), 7 U.S.C. 136 et ' sea., as 
amended; the Occupational Safety and Health Act ("OSHA"), 29 
U.S.C. 651 et ' sea., as amended; the National 
Environmental Policy Act ("NEPAII), 42 U.S.C. 
4321 et sea., 
as amended; any similar state or local statutes or 
ordinances, and the regulations promulgated thereunder.



68

I., "Ecruioment Leases" has the meaning set forth in 
clause
(n)	of the definition of Contributed Assets.



"ERISAII means the EmiDloyee Retirement Income 
Security Act of 1974, as amended, and the regulations, 
interpretations and exemptions promulgated thereunder.



"Escrow Agent" has the meaning set forth in Section 3.4
of this Agreement.



"Escrow E@iration Date" has the meaning set forth in
Section 8.4(i) of this Agreement.



"Excluded Assets" has the meaning set forth in 
Section
1.3	of this Agreement.



"Excluded Liabilities" has the meaning set forth in
Section 2.2 of this Agreement.



"Execution Date Price" means $33.96.

"Executive ManacTement Employees" means the 
following individuals: Robert M. Taylor, Timothy R. Bogott, 
Richard E. Krichbaum, Brian P. Garavuso, Ralph G. Suda, 
Salvatore S. Dickinson, Fred L. Hawkins, Brett P. Smith, John 
B. Naylor and Earl Raven.



"Existing Surveys" has the meaning set forth in Section
4.1(d) of this Agreement.



"Financial Statements" has the meaning set forth in
Section 5.6 of this Agreement.



"First Extension Period" has the meaning set forth in
Section 8.4(e) of this Agreement.



"Fixtures and Tancrible Personal.  Property" has 
the meaning set forth in clause (c) of the definition of 
Contributed Assets.



"Floor Amount" has the meaning set forth in Section
3.2(a) of this Agreement.



"Franchise Aareements" means the [franchise and license
agreements for the Marco Radisson and Best Western Sanibel.



"GAAP" means generally accepted accounting principles,
consistently applied.



"Governmental Authority" means any nation or 
government, any state or other political subdivision thereof 
or any entity exercising executive, legislative, judicial, 
regulatory or administrative functions of or pertaining to



69

government, in each case to the extent the same has 
jurisdiction
over the person or property in question.



"Hazardous Substances" means any toxic substance, 
hazardous substance, hazardous waste, hazardous material, 
solid waste, residual waste, infectious waste, contaminant, 
pollutant, or constituent thereof, whether solid, semisolid, 
liquid or gaseous, which are regulated, li-sted or controlled 
by Environmental, Health and Safety Laws.



"ImDrovements" has the meaning set forth in clause (b)
of the definition of Contributed Assets.



"Indemnification Loss" or "Indemnification Losses" 
have the meaning set forth in Sections 11.2 and 11.3 of this 
Agreement.



"Indemnified Party" has the meaning set forth in
Section 11.5 of this Agreement.



"Indemnif-ving Part-y" has the meaning set forth in
Section 11.5 of this Agreement.



"Indemniteell means either a Seller IndeTnnitee or a
Purchaser Indemnitee, as the case may be.



"Indemnity ExDiration Date" has the meaning set forth
in Section 11.1 of this Agreement.



"Indenture" means the TrusL- Indenture, dated 
March 28, 1996, between Sellers and SunTrust Bank, Central 
Florida, National Association, relating to Sellers' 100-.  
Subordinated Notes due April 15, 2003, in the original 
principal amount of $43,500,000.



"Initial Deuosit" has the meaning set forth in 
Section
3.4	of.this Agreement.



"Initial Tender ExDiration Date,' has the meaning set
forth in Section 8.4(d) of L--his Agreement.



"Insurance Policies" has the meaning set forth in
Section 5.9 of this Agreement.



"Intellectual Prooertv" has the meaning set for-Lh 
inclause (p) of the definition of Contributed Assets.



"Knowledcrell means, (i) with respect to any 
Seller, the
I
current actual knowledge of Robert M. Taylor, Timothy R. 
Dogott, Richard E. Krichbaum or Judy Emens (after due inquiry 
of the general managers of the Properties) and shall not be 
construed to refer to the knowledge of any other trustee, 
partner, officer, director, agent, employee or representative 
of any Seller, or any



7 0

Affiliate of any Seller; and (ii) with respect to either 
Purchaser, the current actual knowledge of John Plunket, 
William Reynolds, Troy Furbay, Robin Kirk, John Emery and 
David McCaslin and shall not be construed to refer to the 
knowledge of any other trustee, partner, officer, director, 
agent, employee or representative of either Purchaser or any 
Affiliate of either Purchaser, or any matter disclosed by 
Sellers to Purchasers in writing pursuant to Article V or 
Article VI hereof.



"Land" has the meaning set forth in clause (a) of the
definition of Contributed Assets.



"Leases" means, collectively, the Condominium Lease
Agreements, Seller Leases and Tenant Leases.



"Letter of Credit" has the meaning set forth in 
Section
3.5	of this Agreement.



"Liabilities" means any liability, obligation, 
loss in value, damage, cost or expense of any nature 
whatsoever, whether now known or unknown, asserted or 
unasserted, accrued or unaccrued, liquidated or unliquidated, 
due or to become due, including, without limitation, any 
liability with respect to taxes of any kind whatsoever that 
relate to any of the Contributed Assets or the Business.



"Manacrement Aqreements" has the meaning set forth in
clause (1) of the definition bf Contributed Assets.



"Management Level Emolovees" means all salaried 
Employees of SSPC and SSRC having an annual salary of $25,000 
or more.



"Manaaement Transition Acrreements" has the meaning set
forth in Section 8.3(b) of this Agreement.



"Marco" has the meaning set forth in the first
paragraph of this Agreement.



"Marco Radisson" has the meaning set forth in Recital C
to this Agreement.



"Material Adverse Effect" means, with respect to 
Sellers, a material adverse effect on the business, assets, 
properties or liabilities of Sellers taken as a whole, and 
with respect to Purchasers, a material adverse effect on the 
business, assets, properties or liabilities of Purchasers 
taken as a whole.



"Material Contract" means any Operating Agreements 
and Equipment Leases requiring aggregate remaining payments 
in excess of Fifty Thousand Dollars ($50,000).



71

"Membershi-ps" has the meaning set forth in clause (g)
OIL the definition of Contributed Assets.



"Noteholders" means the holders of the Notes issued
under the Indenture.



"Mercrer" has the meaning set forth in Recital H of this



Agreement.

"Meraer Entities" has the meaning set forth in 
Section
6.1	of this Agreement.



"MeriStar Hosnitality" has the meaning Se-L forth in
Recital H of this Agreement.



"MeriStar HosDitality OPeratincT Partnershin" has the
meaning set forth in Recital H of this Agreement.



"MeriStar Hotels" has the meaning set forth in Recital
H of this Agreement.



"MeriStar Hotels Operating Partnershin" has the meaning
set forth in Recital H of this Agreement.



"Minimum Consent Reauirement" has the meaning set forth
in Section 8.4(c) of this Agreement.



"Non-Tendered Notes" has the meaning set forth in
Section 8.4(g) of this Agreement.



"Notes" means the notes issued under the Indenture.



"Overating Aareements" has the meaning set forth in
clause (m) of the definition of Contributed Assets.



"Option Agreement" means the agreement attached hereto
as Exhibit D



"Ordinarv Course of Business" means with respect 
to the Business and each Property the ordinary course of 
business consistent with past custom and practices for the 
Business and such Property.



"Other AcTreement" has the meaning set forth in Recital
G of this Agreement.



"PartnershiD Units" means: (i) if the Closing 
occurs prior to consummation of the Merger, a fractional, 
undivided share of the ownership interests in CapStar 
Management, and (ii) if the Closing occurs after consummation 
of the Merger, a fractional, undivided share of the ownership 
interests in MeriStar Hospitality Operating Partnership and 
MeriStar Hotels Operating Partnership, and in each case 
includes any and all



72

benefits to which the holder of such an interest may be 
entitled as provided in the applicable partnership agreement 
of each such partnership.



"Pension Plans" has the meaning set forth in Section
5.13(a) of this Agreement.



"Pe=its" has the meaning set forth in clause (o) of
the definition of Contributed Assets.



"Permitted Title Exce-otions" has the meaning set forth
in Section 4.1(d) of this Agreement.



"Personal ProDertV" means, collectively, all of the
Contributed Assets other than the R@al Property.



"Plans" has the meaning set forth in Section 5.13(a) of
this Agreement.



"Premium" means a spread to call of fifty (50) 
basis points over the yield to maturity of the 5.500-. coupon 
U.S. Treasury notes due April 15, 2000.



r
r
i
n
g
,

"Project Ca-pital Ex-oenditures" means all non-
recu '
extraordinary, special project capil--al expenditures (other 
than any work undertaken with the proceeds of the Unit Rehab 
Loa.n) incurred by Sellers in excess of Sellers' Base Capital 
Projects.



"Pro,oertv" and "Properties" have the meaning set forth
in Recital E to this Agreement.



"Pro,oertv Reoorts" has the meaning set forth in 
clause
(s)	of the definition of Contributed Assets.



"ProDrietary Ricrhts" has the meaning set forth in
Section 5.21 of this Agreement.



"Prorated Base Budaeted CaDital Ex-oenditures" 
means $4,151,000 multiplied by the number of full months from 
January 1, 1998 to, but not including, the month of Closi-ng.



 ."Purchaser" and "Purchasers" have the meanings set
forth in the first paragraph of this Agreement.



"Purchaser Renorts" has the meaning set, forth in
Section 6.6 of this Agreement.



"Purchaser Indemniteell and "Purchaser Indemnitees" have
the meaning set forth in Section 11.3 of this Agreement.



"Purchaser Information" has the meaning set forth in
Section 11.2 of this Agreement.



73

"Real Property" has the meaning set forth in clause (b)
o@' the defi i@tio'n of Contributed Assets.



"Reply Period" has the meaning set forth in Section
4.1(d) of this Agreement.



"Reservations" has the meaning set forth in clause (h)
of the definition of Contributed Assets.



"SEC Laws" means The Securities Act of 1933, as 
amended, The Securities Exchange Act of 1934, as amended, and 
all other federal and state laws applicable to securities.



"Second Extension Period" has the meaning set forth in
Section 8.4(f) of this Agreement.



"Seller" and "Sellers" have the meanings set forth in
the first paragraph of this Agreement.



"Seller Leases" has the meaning set forth in clause (j)
of the definition of Contributed Assets.



"Seller Indemniteell and "Seller Indemnitees" have the
meaning set forth in Section 11.2 of this Agreement.



"Settlement Statement" has the meaning set forth in
Section 12.2 of this Agreement.



"SHMC" has the meaning set forth in Recital G of this



Agreement.
"Song of the Sea" has the meaning set forth in Recital
A.2 to this Agreement.


"South Seas Plantation" has the meaning set forth in
Recital B to this Agreement.



IISS&:CPII has the meaning set forth in the first
paragraph ol' this Agreement.



IISSPCII has the meaning set forth in the first paragraph
of this Agreement.



IISSPC Owned Pro-oertv" and IISSPC Owned Prooerties" ha-ve
the meaning set forth in Recital A to this Agreement.



IISSPC Reoorts" has the meaning set forth in Section 5.6
of this Agreement.



IISSRC" has the meaning set forth in the first paragraph
of this Agreement.



74

IISSRLP" has the meaning set forth in the first
paragraph of this Agreement.



"Subordinated Debt" means the outstanding 
principal balance and all accrued but unpaid interest as of 
the Time of Closing due and owing to the Noteholders under 
the Notes and the Indenture.



"SuDDly Inventories" has the meaning set forth in
clause (e) of the definition o@L Contributed Assets.



"Taxes" means any federal, state, local or foreign 
income, gross receipts, license, payroll, employment, excise, 
severance, stamp, occupation, premium, windfall profits, 
environmental, customs duties, capital stock, franchise, 
profits, withholding,. social security, unemployment, 
disability, real property, personal property, sales, use, 
room, occupancy, beach renourishment, vault, transfer, 
registration, ad valorem, betterment assessments, value 
added, alternative or add-on minimum, estimated or other tax, 
charges or fees of any kind whatsoever, including any 
interest, penalty, or addition thereto, whether disputed or 
not, and including any obligation to indemnify or otherwise 
assume or succeed to such tax I-iability of any other person.



"Tenant Leases" has the meaning set forth in clause (i)
of the definition of Contributed Assets.



"Tender Offer'l,has the meaning set forth in Section
8.4(a) of this Agreement.



"Tender Offer Escrow Account" has the meaning set forth
in Section 8.4(h) o'L this Agreement.



"Tender Offer Materials" has the meaning set forth in
Section 8.4(a) of this Agreement.



"Tender Payment" has the meaning set forth in Section
8.4(g) of this Agreement.



"Time of Closincr" has the meaning set forth in 
Section
9.1	of this Agreement.



"Title Commitments" has the meaning set forth in
Section 4.1(d) of this Agreement.



"Title Companvll means First American Title Insurance
Company, Washington, D.C.



"Title Policies" has the meaning set forth in Section
4.1(d) of this Agreement.



75

"Transferred Emulo-yees" has the meaning set forth in
Section 8.3(c) of this Agreement.



"Unit 'Portion" has the meaning set forth in Section
3.2(a) of this Agreement.



"Valuation Date" means the date of receipt by 
CapStar of a notice of exchange or, if such date is not a 
business day, the first business day thereafter.



"Value" means, with respect to shares of CapStar 
Common Stock (or if the Merger is consummated, shares of the 
applicable Merger Entity), the average daily market price for 
the ten (10) consecutive trading days immediately preceding 
the Valuation Date.  The market- price for each such trading 
day shall be: (i) if the CapStar Common Stock is listed or 
admitted to trading on any securities exchange or the NASDAQ-
National Market System, the closing price, regular way, on 
such day, or if no such sale takes place on such day, the 
average of the closing bid and asked prices on such day; (ii) 
if the CapStar Common Stock is not listed or admitted to 
trading on any securities exchange or the NASDAQ-National 
Market System, the last reported sale price on such day or, 
if no sale takes place on such day, the average of the 
closing bid and asked prices on such day, as reported by a 
reliable quotation source designated by CapStar; or (iii) if 
the CapStar Common Stock is not listed or admitted to trading 
on any securities exchange or the NASDAQ-National Market 
System and no such last reported sale price or closing bid 
and asked prices are available, the average of the reported 
high bid and low asked prices on such day, as reported by a 
reliable quotation source designated by CapStar, or if there 
shall be no bid and asked prices on such day, the average of 
the high bid and low asked prices, as so reported, on the 
most recent day (not more than ten (10) days prior to the 
date in question) for which prices have been so reported; 
provided that if there are no bid and asked prices reported 
during the ten (10) days prior to the date in question, the 
Value of the CapStar Common Stock shall be determined by 
CapStar acting in good faith on the basis of such quotations 
and other information as it considers, in its reasonable 
judgment, appropriate.  In the event L--he CapStar Shares 
Amount includes rights that a holder of CapStar Common Stock 
would be entitled to receive, and CapStar acting in good 
faith dete=ines that the value of such rights is not 
reflected in the value of the CapStar Common Stock determined 
as aforesaid, then the Value of such rights shall be 
determined by CapStar acting in good faith on the basis of 
such quotations and other information as it considers, in its 
reasonable judgment, appropriate.



"Variable Portion" has the meaning set forth in Section
3.2(b) of this Agreement.



76

"Welfare Plans" has the meaning set forth in Section
5.13(a) of this Agreement.



RAS1372:23630:97003:RAS-13I.AGT
ras 04/07/98



77