##### 



Exhibit 10.6




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Table of Contents
 PageARTICLE I DEFINITIONS
    
    
    1SECTION 1.1. Defined Terms
    
    
    1ARTICLE II SALE, PURCHASE PRICE AND CLOSING
    
    
    8SECTION 2.1. Sale of Asset
    
    
    8SECTION 2.2. Purchase Price
    
    
    10SECTION 2.3. Earnest Money
    
    
    11SECTION 2.4. The Closing
    
    
    11ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
    
    
    12SECTION 3.1. General Seller Representations and Warranties
    
    
    12SECTION 3.2. Representations and Warranties of the Seller as to the Asset
    
    
    14SECTION 3.3. Limitations on Representations and Warranties of the Seller
    
    
    16SECTION 3.4. Covenants of the Seller Prior to Closing
    
    
    16SECTION 3.5. Amendment to Schedules
    
    
    17ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER
    
    
    17SECTION 4.1. Representations and Warranties of the Buyer
    
    
    17SECTION 4.2. Covenants of the Buyer Prior to Closing
    
    
    19SECTION 4.3. Employee Matters
    
    
    20SECTION 4.4. Bookings
    
    
    21SECTION 4.5. Franchise Agreement
    
    
    21SECTION 4.6. Manager Defaults
    
    
    22ARTICLE V CONDITIONS PRECEDENT TO CLOSING
    
    
    24SECTION 5.1. Conditions Precedent to the Sellers Obligations
    
    
    24SECTION 5.2. Conditions to the Buyers Obligations
    
    
    24SECTION 5.3. Waiver of Conditions Precedent
    
    
    25ARTICLE VI CLOSING DELIVERIES
    
    
    25SECTION 6.1. The Buyer Closing Deliveries
    
    
    25SECTION 6.2. The Seller Closing Deliveries
    
    
    26ARTICLE VII INSPECTIONS; RELEASE
    
    
    28SECTION 7.1. Right of Inspection
    
    
    28SECTION 7.2. Examination; No Contingencies
    
    
    28SECTION 7.3. Release
    
    
    31
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PageARTICLE VIII TITLE AND PERMITTED EXCEPTIONS
    
    
    32SECTION 8.1. Title Insurance and Survey
    
    
    32SECTION 8.2. Title Commitment; Survey
    
    
    32SECTION 8.3. Delivery of Title
    
    
    32SECTION 8.4. Cooperation
    
    
    33ARTICLE IX TRANSACTION COSTS; RISK OF LOSS
    
    
    33SECTION 9.1. Transaction Costs
    
    
    33SECTION 9.2. Risk of Loss
    
    
    34ARTICLE X ADJUSTMENTS
    
    
    35SECTION 10.1. Adjustments
    
    
    35SECTION 10.2. Re-Adjustment
    
    
    38SECTION 10.3. Accounts Receivable
    
    
    39SECTION 10.4. Interstate Letter Agreement
    
    
    40ARTICLE XI INDEMNIFICATION
    
    
    40SECTION 11.1. Indemnification by the Seller
    
    
    40SECTION 11.2. Indemnification by the Buyer
    
    
    40SECTION 11.3. Limitations on Indemnification
    
    
    41SECTION 11.4. Survival
    
    
    41SECTION 11.5. Indemnification as Sole Remedy
    
    
    41ARTICLE XII DEFAULT AND TERMINATION
    
    
    42SECTION 12.1. The Sellers Termination
    
    
    42SECTION 12.2. The Buyers Termination
    
    
    43ARTICLE XIII TAX CERTIORARI PROCEEDINGS
    
    
    43SECTION 13.1. Prosecution and Settlement of Proceedings
    
    
    43SECTION 13.2. Application of Refunds or Savings
    
    
    44SECTION 13.3. Survival
    
    
    44ARTICLE XIV MISCELLANEOUS
    
    
    44SECTION 14.1. Use of Blackstone Name and Address
    
    
    44SECTION 14.2. Exculpation of the Seller
    
    
    44SECTION 14.3. Brokers
    
    
    44SECTION 14.4. Confidentiality; Press Release; IRS Reporting Requirements
    
    
    45SECTION 14.5. Escrow Provisions
    
    
    46SECTION 14.6. Successors and Assigns; No Third-Party Beneficiaries
    
    
    46SECTION 14.7. Assignment
    
    
    47SECTION 14.8. Further Assurances
    
    
    47SECTION 14.9. Notices
    
    
    47SECTION 14.10. Entire Agreement
    
    
    49SECTION 14.11. Amendments
    
    
    49
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PageSECTION 14.12. No Waiver
    
    
    49SECTION
14.13. Governing Law
    
    
    49SECTION 14.14. Intentionally Omitted
    
    
    49SECTION
14.15. Severability
    
    
    49SECTION
14.16. Section Headings
    
    
    49SECTION 14.17. Counterparts
    
    
    49SECTION
14.18. Acceptance of Deed
    
    
    49SECTION 14.19. Construction
    
    
    49SECTION
14.20. Recordation
    
    
    49SECTION 14.21. Waiver of Jury Trial
    
    
    50SECTION 14.22. Time is of the Essence
    
    
    50
 Schedules
 Schedule A
    
    
    
    LandSchedule 1.1
    
    
    
    Title CommitmentSchedule 3.l(c)
    
    
    
    ConsentsSchedule 3.2(a)
    
    
    
    Operating AgreementsSchedule 3.2(c)
    
    
    
    Tenant LeasesSchedule 3.2(d)
    
    
    
    Brokerage CommissionsSchedule 3.2(f)
    
    
    
    LitigationSchedule 3.2(g)
    
    
    
    BookingsSchedule 10.4
    
    
    
    Interstate Payment
 Exhibits
 Exhibit A
    
    
    
    Form of Assignment of LeasesExhibit B
    
    
    
    Form of Assignment of ContractsExhibit C
    
    
    
    Form of Special Warranty DeedExhibit D
    
    
    
    Form of Bill of SaleExhibit E
    
    
    
    Form of Assignment of IntangiblesExhibit F
    
    
    
    Form of FIRPTA CertificateExhibit G
    
    
    
    Form of Title AffidavitExhibit H
    
    
    
    Form of Memorandum of Sale




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AGREEMENT OF PURCHASE AND SALE
 Agreement th Seller Buyer
 Background
 Schedule A Land Hotel Asset
  AGREEMENT
   DEFINITIONS
 Defined Terms
 Accounts
Receivable
 Agreement
 Allocation




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Anti-Money Laundering and Anti-Terrorism Laws
 Asset
 Asset File
 Asset-Related Property
 Assigned Accounts Receivable
 Assignment of Contracts
 Assignment of Intangibles
 Assignment of Leases
 Basket Limitation
 Bill of Sale
 Bookings
 Books and Records
 Brookhollow Estoppel
 Business Day
 Buyer
 Buyer-Related Entities
 Buyers Knowledge
 Buyer Waived Breach
 2




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Cap Limitation
 Claims
 Closing
 Closing Date
 Closing
Documents
 Code
 Condition
of the Asset
 Cut-Off Time
 Deed
 Earnest Money
 Employees
 Environmental Laws
 Equipment Leases
 Escrow Account
 Escrow Agent
 Executive Order
 Existing Survey
 Extension Option
 FIRPTA
 Financing Liens
 3




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FF&E
 Franchise Agreement
 Franchisor
 Governmental Authority
 Government List
 Guest Ledger
 Hazardous Materials
 Hotel
 Intangible Property
 Interstate Letter
 Interstate Payment
 Inventories
  Inventories
  IRS Reporting Requirements
 Land
 Licenses and Permits
 Liquor Holder
 4




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Liquor Authorities


Memorandum of Sale


Losses


Management Agreement


Manager


Material Casualty


Material Condemnation


Miscellaneous Personal Property


Natural Hazard Expert


Operating Agreements


Outside Closing Date


Permitted Exceptions Schedule 3.2(c)


5




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Person


Post Effective Date Monetary Encumbrance


Post Effective Date Seller Encumbrance


Property


Property and Equipment


Purchase Price


Releasees


Reporting Person


Retail Merchandise


Retained Accounts Receivable


Seller


Seller-Related Entities


Sellers Knowledge


6




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Survival Period
 Tax Clearance Certificates
 Tax Liens
 Tenant
Leases
 Termination Option
 Title Company
 Title Commitment
 Title Policy
 Trade Payables
 Transferred Employees
 UCC
 Uniform System of Accounts
 WARN Act et seq.,
 7




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SALE, PURCHASE PRICE AND CLOSING
 Sale of Asset
  Asset-Related Property
  FF&E
 Licenses and Permits
   8




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Tenant Leases
 Equipment Leases
 Bookings
  Uniform System of
Accounts Property and Equipment
 Inventories
 Retail
Merchandise
  9




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Intangible
Property
 Intentionally Omitted
 Miscellaneous
Personal Property
 Books and Records provided, however,
 Excluded Property
 Cash
 Third Party Property Schedule 2.1(c)
 Purchase Price
 Purchase Price provided
 10




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Allocation
 Earnest Money
 Escrow Agent Earnest Money
  The Closing
 Closing Closing Date Time Being Of The Essence
 11




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with respect to the Buyers and the Sellers obligations hereunder on the Closing Date,
 Extension Option
 &
   REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
 General Seller Representations and Warranties
 Formation; Existence
 Power and Authority
 12




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No Consents Schedule 3.1(c)
 No Conflicts
 Foreign Person
 Anti-Terrorism Laws
 Executive Order Anti-Money Laundering and Anti-Terrorism Laws
   13




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Representations and Warranties of the Seller as to the Asset
 Operating Agreements Schedule 3.2(a)
 Employees
 Tenant Leases and Equipment Leases Schedule 3.2(c) Schedule 3.2(c),
 14




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Brokerage Commissions Schedule 3.2(d) Schedule 3.2(d)
 Condemnation
 Litigation Schedule
3.2(f)
 Bookings Schedule 3.2(g)
 Environmental Matters Environmental Laws
 Title to Personal Property
 Franchise Agreement
 Violation of Law
 Liquor Holder
 15




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Limitations on Representations and Warranties of the Seller
 Covenants of the Seller Prior to Closing
 Insurance
 New Operating Agreements Schedule 3.2(a) Schedule
3.2(a)
 New Tenant Leases Schedule 3.2(c) Schedule 3.2(c)
 16




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Franchise Agreement
 Assets
 Operation
 Management Agreement
 Amendment to Schedules provided, however
  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER
 Representations and Warranties of the Buyer
 Formation: Existence
 17




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Power; Authority
 No Consents
 No Conflicts
 Anti-Terrorism Laws
    18




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Covenants of the Buyer Prior to Closing
 Licenses and Permits
  Liquor
Holder Exhibit H Memorandum of Sale
 19




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Liquor
Authorities
 Operating Agreements and Equipment Leases provided
 Employee Matters
 Employees
 Continuity of Employees Transferred
Employees
 20




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Indemnity
 WARN Act
 Survival
 Bookings
 Franchise Agreement
  21




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Outside Closing Date Termination Option
 Manager Defaults
 22




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Tax Clearance Certificates; Etc
 Tax Clearance
Certificates
 Brookhollow Estoppel
  23




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CONDITIONS PRECEDENT TO CLOSING
 Conditions Precedent to the Sellers Obligations
        Conditions to the Buyers Obligations
  24




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Schedule
3.1(c)
   Waiver of Conditions Precedent
  CLOSING DELIVERIES
 The Buyer Closing Deliveries
   25




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Assignment of Leases Exhibit A
 Assignment of Contracts Exhibit
       The Seller Closing Deliveries
   Deed Exhibit C
 26




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Bill of Sale Exhibit D
   Assignment of Intangibles Exhibit E
  Exhibit F FIRPTA
        27




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INSPECTIONS; RELEASE
 Right of Inspection
 Examination; No Contingencies
  28




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Condition of the Asset
 Physical Condition of the Property
 29




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Hazardous Materials
 Adequacy of the Asset
 Legal Compliance of the Asset
 Matters Disclosed in the Schedules and the Asset File
 Insurance
 Condition of Title
 30




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RELEASE RELEASEES CLAIMS
 31




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SELLERS INITIALS:
    
    
    
    BUYERS INITIALS:
  TITLE AND PERMITTED EXCEPTIONS
 Title Insurance and Survey
  Title Commitment; Survey.
  Delivery of Title
 Financing Liens Tax Liens Post Effective Date Seller Encumbrance
  32




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Post Effective Date Monetary Encumbrances
 Cooperation Exhibit G
  TRANSACTION COSTS; RISK OF LOSS
 Transaction Costs
  33




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Risk of Loss
   34




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Material Casualty Material
Condemnation
   ADJUSTMENTS
 Adjustments Cut-Off Time
 Taxes and Assessments provided however
 35




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Water and Sewer Charges, Utilities
 Operating Agreements and Equipment Leases
 Miscellaneous Revenues
 Inventory
 Tenant Leases
 Licenses and Permits
 Deposits for Bookings
 36




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Restaurants and Bars, Etc
 Vending Machines
 Trade Payables Trade Payables
 Cash provided however
 Employee Compensation
 37




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Other
  Re-Adjustment
   38




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Accounts Receivable
 Guest Ledger
 Accounts Receivable (Other than Guest Ledger)
 Assigned Accounts Receivable
 Retained Accounts Receivable
   39




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Interstate Letter Agreement Interstate Agreement Schedule 10.4 Interstate Payment
  INDEMNIFICATION
 Indemnification by the Seller Buyer-Related
Entities Losses
 Indemnification by the Buyer Seller-Related Entities
 40




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Limitations on Indemnification Buyer Waived Breach
 Survival Survival Period
 Indemnification as Sole Remedy
 41




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DEFAULT AND TERMINATION
 The Sellers Termination
   provided however
 42




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The Buyers Termination
     TAX CERTIORARI PROCEEDINGS
 Prosecution and Settlement of Proceedings provided however
 43




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Application of Refunds or Savings
 Survival
  MISCELLANEOUS
 Use of Blackstone Name and Address
 Exculpation of the Seller
 Brokers
  44




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Confidentiality; Press Release: IRS Reporting Requirements
   IRS Reporting Requirements Reporting Person
 45




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Escrow Provisions
 Escrow Account
    Successors and Assigns; No Third-Party Beneficiaries
 46




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Assignment
 Further Assurances
    Notices
 To the Seller:
 
 47




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&
 To the Buyer:
 &
  &
 To the Escrow Agent/Title Company:
 
  48




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Entire Agreement
 Amendments
 No Waiver
 Governing Law
 Intentionally Omitted
 Severability
 Section Headings
 Counterparts
 Acceptance of Deed
 Construction
 Recordation
 49




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Waiver of Jury Trial
 Time is of the Essence
 Bulk Sale; Occasional Sale
 50




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SELLER:EQUISTAR ARLINGTON PARTNERS, L.P., a Delaware limited partnershipBy:
    
    MERISTAR SPE LLC, a Delaware limited partnership, its general partnerBy:
    
    /s/ Robert HarperName:
    
    Robert HarperTitle:
    
    Vice President and Assistant SecretaryBUYER:INTERSTATE ARLINGTON, LP, a Delaware limited liability companyBy:
    
    Interstate Arlington
GP, LLC, a Delaware limited liability company, its general partnerBy:
    
    Interstate Operating
Company, LP, a Delaware limited partnership, its managing memberBy:
    
    Interstate Hotels
&Resorts, Inc., a Delaware corporation, its general partnerBy:
    
    /s/ Christopher L. BennettName:

    Christopher L. BennettTitle:

    Executive Vice President and General Counsel




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nd
 Re:
    
    The Management Agreements, dated as of January 1, 2001 (as
amended, supplemented and/or modified from time to time, the Management
Agreements), by and among MeriStar Hotel Lessee LLC, a Delaware limited
liability company (f/k/a MeriStar Hotel Lessee Corp.), MeriStar SPE Leasing
LLC, a Delaware limited liability company (f/k/a MeriStar SPE Leasing Corp.),
MeriStar SPE California LLC, a Delaware limited liability company (f/k/a
MeriStar SPE California Corp.), MeriStar SPE Colorado LLC, a Delaware limited
liability company (f/k/a MeriStar SPE Colorado Corp.), MeriStar SPE North
Carolina LLC, a Delaware limited liability company (f/k/a MeriStar SPE North
Carolina LLC Corp.), MeriStar SPE Wisconsin LLC, a Delaware limited liability
company (f/k/a MeriStar SPE Wisconsin Corp.) (collectively, Owners) and
Interstate Management Company, L.L.C., a Delaware limited liability company
(f/k/a Meristar Management Company, L.L.C.) (Operator)
  Schedule A Schedule B
 1.
    
    As of the date hereof, the aggregate amount of Termination Fees owed by
Owners under the Terminated Contracts equals $13,899,760 (the Current Aggregate
Termination Fee). Schedule C attached hereto sets forth the Termination
Fee payment schedule relating to the Terminated Contracts.2.
    
    Simultaneously with the execution of this Letter, Equistar Arlington
Partners, L.P., an affiliate of Owners (Arlington Owner), and Interstate
Arlington L.P., an affiliate of Operator (Arlington Buyer) are entering into that
certain Agreement of Purchase and Sale dated as of the date hereof (the Arlington
Agreement) relating to the property located at 2401 E. Lamar Boulevard, Arlington,
Texas and commonly known as the Hilton Arlington (the Arlington Hotel).




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2 
 3.
    
    Owners and Operator hereby agree that in lieu of Owners making the Current Aggregate
Termination Fee in accordance with the terms of the applicable Management Agreements and the
Master Fee Agreement dated as of January 1, 2001 (as amended, supplemented and/or modified from
time to time, the Master Fee Agreement) between Owners and Operator and as otherwise
described on Schedule C attached hereto, Owners shall, in full satisfaction of all such
amounts, pay to Operator upon the closing under the Arlington Agreement (the Arlington
Closing) a lump sum payment in the amount of $12,271,601, provided, if the applicable
Termination Fee payment in October 2006 has been made by Owners prior to the Arlington Closing
relating to the Terminated Contracts, such payment amount shall equal $11,667,069, and
provided, further, if the applicable Termination Fee payment in October 2006 and
November 2006 has been made by Owners prior to the Arlington Closing relating to the Terminated
Contracts, such payment amount shall equal $11,215,989 (such applicable payment being referred
to as the Final Termination Fee).4.
    
    On August 23, 2006, Owners issued a notice of their intent to terminate the Management
Agreements for the properties set forth on Schedule B attached hereto on September
30, 2006 (the Anticipated Terminated Contracts). Upon such termination, certain Termination
Fees may be payable in accordance with the terms of the applicable Management Agreements and
the Master Fee Agreement currently estimated to equal $2,540,349 (the Anticipated Aggregate
Termination Fee). Schedule D attached hereto sets forth the Anticipated Aggregate
Termination Fee payment schedule relating to the Anticipated Terminated Contracts. Owners and
Operator hereby agree that in lieu of Owners making the Anticipated Aggregate Termination Fee
in accordance with the terms of the applicable Management Agreements and the Master Fee
Agreement and as otherwise described on Schedule D attached hereto, Owners shall, in
full satisfaction of all such amounts, pay to Operator upon the Arlington Closing (in addition
to such amounts as contemplated in paragraph 3 above) a lump sum payment in the amount of
$2,086,693, provided, if the applicable Termination Fee payment in October 2006 has
been made by Owners prior to the Arlington Closing relating to the Anticipated Terminated
Contracts, such payment amount shall equal $2,051,159, and provided, further, if the
applicable Termination Fee payment in October 2006 and November 2006 has been made by Owners
prior to the Arlington Closing relating to the Anticipated Terminated Contracts, such payment
amount shall equal $2,015,328 (such applicable payment being referred to as the Additional
Final Termination Fee).5.
    
    Owners and Operator agree that the Anticipated Aggregate Termination Fee and the Additional
Final Termination Fee are preliminary amounts based on the parties best faith estimate. Owners
and Operator shall cooperate in good faith to agree upon a final amount relating to the
Anticipated Aggregate Termination Fee and the Additional Final Termination Fee upon the
availability of the information necessary to determine such final amounts. To the extent the
Additional Final




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3 Termination Fee is (i) in excess of the amount as finally determined by the parties
to be payable under paragraph 4 above, Operator shall promptly refund to Owners any
such excess amount or (ii) less than the amount as finally determined by the parties
to be payable under paragraph 4 above, Owners shall promptly pay to Operator such
deficiency.6.
    
    The obligation of the parties hereto is subject to the closing of the
purchase and sale of the Arlington Hotel pursuant to the Arlington Agreement. In
the event the Arlington Agreement is terminated pursuant to its terms, this Letter
shall be null and void and the parties hereto shall have no further rights or
obligations under this Letter.7.
    
    Operator and Owners agree that in lieu of a direct payment by Owners to
Operator of the applicable Final Termination Fee and the Additional Final
Termination Fee, Arlington Buyer shall receive a credit to the purchase price under
the Arlington Agreement upon the Arlington Closing equal to such amounts.8.
    
    The Final Termination Fee and the Additional Final Termination Fee upon
such credit shall be in full satisfaction of any and all termination fees or other
similar amounts owed by Owners or any affiliates thereof under the Terminated
Contracts and the Anticipated Terminated Contracts; provided, however, that payment
of the Final Termination Fee and the Additional Final Termination Fee shall not be
in satisfaction of amounts, if any, that may due and payable under the Terminated
Contracts and the Anticipated Terminated Contracts other than such termination or
similar fees.




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4




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5   INTERSTATE MANAGEMENT COMPANY, LLCBy:
    
    /s/ Christopher L. Bennett

Name: Christopher L. BennettTitle: EVP and General CounselACKNOWLEDGED AND AGREED:OWNERS:MERISTAR HOTEL LESSEE, LLCMERISTAR SPE LEASING LLCMERISTAR SPE CALIFORNIA LLCMERISTAR SPE COLORADO LLCMERISTAR SPE NORTH CAROLINA LLCMERISTAR SPE WISCONSIN LLCBy:
    
    /s/ Robert Harper

Name: Robert HarperTitle: Vice President and Assistant Secretary