exv10w1



 





EXECUTION
VERSION



MASTER AGREEMENT AND PLAN OF MERGER




among




HOST MARRIOTT CORPORATION,




HOST MARRIOTT, L.P.,




HORIZON SUPERNOVA MERGER SUB, L.L.C.,




HORIZON SLT MERGER SUB, L.P.,




STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,




STARWOOD HOTELS & RESORTS,




SHERATON HOLDING CORPORATION




and




SLT REALTY LIMITED PARTNERSHIP




DATED AS OF NOVEMBER 14, 2005




 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE 1. THE MERGERS; CONVERSION OF SECURITIES	 	 	2	 
	 

	 	Section 1.1
	 	The Mergers
	 	 	2	 
	 

	 	Section 1.2
	 	Closing
	 	 	3	 
	 

	 	Section 1.3
	 	Effective Time
	 	 	3	 
	 

	 	Section 1.4
	 	Effects of the Mergers; Declaration of Trust and Bylaws; SLT Limited
Partnership Agreement
	 	 	3	 
	 

	 	Section 1.5
	 	Trustees and Officers of Trust
	 	 	4	 
	 

	 	Section 1.6
	 	Effect on Shares of Beneficial Interest
	 	 	4	 
	 

	 	Section 1.7
	 	Effect on Partnership Units
	 	 	6	 
	 

	 	Section 1.8
	 	Appraisal or Dissenters Rights
	 	 	8	 
	 

	 	Section 1.9
	 	Exchange of Certificates; Pre-Closing Dividends; Fractional Shares
	 	 	8	 
	 

	 	Section 1.10
	 	Certain Adjustments
	 	 	13	 
	 

	 	Section 1.11
	 	Tax Treatment
	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 2. OTHER CLOSING TRANSACTIONS	 	 	13	 
	 

	 	Section 2.1
	 	Other Closing Transactions
	 	 	13	 
	 

	 	Section 2.2
	 	Other Closing Transactions; Consideration
	 	 	16	 
	 

	 	Section 2.3
	 	[Intentionally Omitted.]
	 	 	17	 
	 

	 	Section 2.4
	 	Other Closing Transactions; Closing Deliveries
	 	 	17	 
	 

	 	Section 2.5
	 	Purchase Price Allocations
	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SUN AND TRUST	 	 	19	 
	 

	 	Section 3.1
	 	Organization, Standing and Power
	 	 	19	 
	 

	 	Section 3.2
	 	Capital Structure
	 	 	20	 
	 

	 	Section 3.3
	 	Other Capitalization Matters
	 	 	22	 
	 

	 	Section 3.4
	 	Authority; Noncontravention; Consents
	 	 	22	 
	 

	 	Section 3.5
	 	SEC Documents; Financial Statements; Corporate Governance
	 	 	24	 
	 

	 	Section 3.6
	 	Absence of Certain Changes or Events
	 	 	27	 
	 

	 	Section 3.7
	 	Litigation
	 	 	27	 
	 

	 	Section 3.8
	 	Properties
	 	 	28	 
	 

	 	Section 3.9
	 	Environmental Matters
	 	 	30	 
	 

	 	Section 3.10
	 	Affiliate Transactions; Intercompany Liabilities
	 	 	32	 
	 

	 	Section 3.11
	 	Employee Benefits
	 	 	33	 
	 

	 	Section 3.12
	 	Employment and Labor Matters
	 	 	33	 
	 

	 	Section 3.13
	 	Intellectual Property
	 	 	34	 
	 

	 	Section 3.14
	 	Taxes
	 	 	34	 
	 

	 	Section 3.15
	 	No Brokers
	 	 	38	 
	 

	 	Section 3.16
	 	Compliance with Laws; Permits
	 	 	38	 
	 

	 	Section 3.17
	 	Contracts
	 	 	39	 
	 

	 	Section 3.18
	 	Guarantees; Letters of Credit
	 	 	42	 
	 

	 	Section 3.19
	 	Assets
	 	 	42	 
	 

	 	Section 3.20
	 	Insurance
	 	 	43	 






ii









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	Section 3.21
	 	[Intentionally Omitted
	 	 	43	 
	 

	 	Section 3.22
	 	Opinion of Financial Advisor
	 	 	43	 
	 

	 	Section 3.23
	 	State Takeover Statutes
	 	 	43	 
	 

	 	Section 3.24
	 	No Vote Required
	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE HORIZON PARTIES	 	 	44	 
	 

	 	Section 4.1
	 	Organization, Standing and Power
	 	 	44	 
	 

	 	Section 4.2
	 	Horizon Subsidiaries
	 	 	44	 
	 

	 	Section 4.3
	 	Capital Structure
	 	 	45	 
	 

	 	Section 4.4
	 	Other Interests
	 	 	46	 
	 

	 	Section 4.5
	 	Authority; Noncontravention; Consents
	 	 	46	 
	 

	 	Section 4.6
	 	SEC Documents; Financial Statements; Corporate Governance
	 	 	48	 
	 

	 	Section 4.7
	 	Absence of Certain Changes or Events
	 	 	49	 
	 

	 	Section 4.8
	 	Taxes
	 	 	49	 
	 

	 	Section 4.9
	 	No Brokers
	 	 	51	 
	 

	 	Section 4.10
	 	Litigation
	 	 	51	 
	 

	 	Section 4.11
	 	Opinion of Financial Advisor
	 	 	51	 
	 

	 	Section 4.12
	 	Horizon Stockholder Approval
	 	 	51	 
	 

	 	Section 4.13
	 	Ownership of REIT Merger Sub and SLT Merger Sub; No Prior Activities
	 	 	52	 
	 

	 	Section 4.14
	 	Compliance with Laws; Permits
	 	 	52	 
	 

	 	Section 4.15
	 	Environmental Matters
	 	 	53	 
	 

	 	Section 4.16
	 	Contracts.
	 	 	54	 
	 

	 	Section 4.17
	 	Insurance.
	 	 	54	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 5. COVENANTS	 	 	54	 
	 

	 	Section 5.1
	 	Conduct of the Sun Parties Pending the Closing
	 	 	54	 
	 

	 	Section 5.2
	 	Conduct of the Horizon Parties’ Business Pending the Closing
	 	 	59	 
	 

	 	Section 5.3
	 	No Solicitation
	 	 	61	 
	 

	 	Section 5.4
	 	Control of Other Party’s Business
	 	 	63	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 6. ADDITIONAL COVENANTS	 	 	63	 
	 

	 	Section 6.1
	 	Proxy Statement/Prospectus; Registration Statement; Horizon Stockholders Meeting
	 	 	63	 
	 

	 	Section 6.2
	 	Access to Information; Confidentiality; Monthly Meetings
	 	 	65	 
	 

	 	Section 6.3
	 	Support of Transaction; Notification
	 	 	67	 
	 

	 	Section 6.4
	 	Further Assurances; Books and Records
	 	 	68	 
	 

	 	Section 6.5
	 	Intercompany Accounts
	 	 	69	 
	 

	 	Section 6.6
	 	Guarantees; Letters of Credit
	 	 	70	 
	 

	 	Section 6.7
	 	Delivery of Financial Statements
	 	 	71	 
	 

	 	Section 6.8
	 	Non-Assignment
	 	 	72	 
	 

	 	Section 6.9
	 	Public Announcements
	 	 	76	 
	 

	 	Section 6.10
	 	Listing
	 	 	77	 
	 

	 	Section 6.11
	 	Reserved
	 	 	77	 
	 

	 	Section 6.12
	 	Comfort Letters
	 	 	77	 
	 

	 	Section 6.13
	 	Cooperation with Financing
	 	 	77	 






iii









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	Section 6.14
	 	Auditor’s Consent and Cooperation
	 	 	78	 
	 

	 	Section 6.15
	 	Ground Lease Estoppel Certificates
	 	 	79	 
	 

	 	Section 6.16
	 	Ancillary Agreements
	 	 	79	 
	 

	 	Section 6.17
	 	[Intentionally Omitted]
	 	 	80	 
	 

	 	Section 6.18
	 	Deferral Triggers; Deferred Assets
	 	 	80	 
	 

	 	Section 6.19
	 	Indebtedness
	 	 	87	 
	 

	 	Section 6.20
	 	Interest Total Certificate
	 	 	88	 
	 

	 	Section 6.21
	 	Liquor Licenses
	 	 	89	 
	 

	 	Section 6.22
	 	Sun Indenture
	 	 	89	 
	 

	 	Section 6.23
	 	Title Insurance and Surveys
	 	 	89	 
	 

	 	Section 6.24
	 	Rule 145 Affiliate Agreements
	 	 	90	 
	 

	 	Section 6.25
	 	Horizon Common Stock Transactions
	 	 	90	 
	 

	 	Section 6.26
	 	Sun Restructuring
	 	 	91	 
	 

	 	Section 6.27
	 	Employment Matters
	 	 	91	 
	 

	 	Section 6.28
	 	Sun Intellectual Property
	 	 	91	 
	 

	 	Section 6.29
Section 6.30
	 	Certain Contribution Agreements

Increased Share Amount
	 	 	92

92	 
	 

	 	Section 6.31
	 	SLT Provisions.
	 	 	93	 
	 

	 	Section 6.32
	 	Recapture Provisons.
	 	 	93	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 7. CONDITIONS	 	 	95	 
	 

	 	Section 7.1
	 	Conditions to Each Party’s Obligation to Effect the Closing Transactions
	 	 	95	 
	 

	 	Section 7.2
	 	Conditions to Obligations of Horizon and Horizon OP
	 	 	96	 
	 

	 	Section 7.3
	 	Conditions to Obligations of Sun and Trust
	 	 	99	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 8. CERTAIN ADJUSTMENTS AND EXPENSES.	 	 	101	 
	 

	 	Section 8.1
	 	Sun Capital Budget
	 	 	101	 
	 

	 	Section 8.2
	 	Casualty and Condemnation
	 	 	102	 
	 

	 	Section 8.3
	 	Transaction Expenses
	 	 	103	 
	 

	 	Section 8.4
	 	Closing Working Capital; Adjusted Indebtedness; Determination of
Adjustments
	 	 	104	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 9. TERMINATION, AMENDMENT AND WAIVER	 	 	108	 
	 

	 	Section 9.1
	 	Termination
	 	 	108	 
	 

	 	Section 9.2
	 	Effect of Termination
	 	 	110	 
	 

	 	Section 9.3
	 	Deferral Provisions to Insure Compliance with REIT Gross Income Tests
	 	 	111	 
	 

	 	Section 9.4
	 	Amendment
	 	 	112	 
	 

	 	Section 9.5
	 	Extension; Waiver
	 	 	112	 
	 

	 	Section 9.6
	 	Procedure for Termination
	 	 	113	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 10. GENERAL PROVISIONS	 	 	113	 
	 

	 	Section 10.1
	 	Definitions
	 	 	113	 
	 

	 	Section 10.2
	 	Survival of Representations, Warranties and Covenants
	 	 	124	 
	 

	 	Section 10.3
	 	Notices
	 	 	125	 
	 

	 	Section 10.4
	 	Interpretation
	 	 	126	 






iv









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	Section 10.5
	 	Counterparts; Facsimile
	 	 	127	 
	 

	 	Section 10.6
	 	Entire Agreement; No Third-Party Beneficiaries
	 	 	127	 
	 

	 	Section 10.7
	 	Governing Law; Consent to Jurisdiction
	 	 	127	 
	 

	 	Section 10.8
	 	Assignment
	 	 	128	 
	 

	 	Section 10.9
	 	Specific Performance
	 	 	128	 
	 

	 	Section 10.10
	 	Severability
	 	 	128	 
	 

	 	Section 10.11
	 	Joint and Several Obligations
	 	 	129	 
	 

	 	Section 10.12
	 	Mutual Drafting
	 	 	129	 
	 

	 	Section 10.13
	 	Waiver of Jury Trial
	 	 	129	 
	 

	 	Section 10.14
	 	No Agreement Until Executed
	 	 	129	 
	 

	 	Section 10.15
	 	Bulk Transfer Laws
	 	 	129	 






v









 








EXHIBITS




	 	 	 	 	 
	Exhibit A

	 	—
	 	Sun Restructuring Steps and Restructuring Parameters
	 
	 	 	 	 
	Exhibit B

	 	—
	 	Closing Restructuring Steps
	 
	 	 	 	 
	Exhibit C

	 	—
	 	Form of REIT Articles of Merger
	 
	 	 	 	 
	Exhibit D

	 	—
	 	Form of Assumption Agreement
	 
	 	 	 	 
	Exhibit E

	 	—
	 	Allocation Schedule
	 
	 	 	 	 
	Exhibit F

	 	—
	 	Examples of Revisions to the Allocation Schedule
	 
	 	 	 	 
	Exhibit G

	 	—
	 	Form of Registration Rights Agreement
	 
	 	 	 	 
	Exhibit H

	 	—
	 	Form of Right of First Offer Agreement
	 
	 	 	 	 
	Exhibit I

	 	—
	 	Form of Indemnification Agreement
	 
	 	 	 	 
	Exhibit J

	 	—
	 	Form of Sublease Agreement
	 
	 	 	 	 
	Exhibit K

	 	—
	 	Form of Lease Agreement
	 
	 	 	 	 
	Exhibit L

	 	—
	 	Form of Master Reserve Fund Agreement
	 
	 	 	 	 
	Exhibit M

	 	—
	 	Form of Operating Agreement
	 
	 	 	 	 
	Exhibit N

	 	—
	 	Form of License Agreement
	 
	 	 	 	 
	Exhibit O

	 	—
	 	Form of Working Capital Concentration Account Agreement
	 
	 	 	 	 
	Exhibit P

	 	—
	 	Form of Compensating Balance Agreement
	 
	 	 	 	 
	Exhibit Q

	 	—
	 	Form of Termination Upon Sale Agreement
	 
	 	 	 	 
	Exhibit R

	 	—
	 	Form of Tax Sharing and Indemnification Agreement
	 
	 	 	 	 
	Exhibit S

	 	—
	 	Form of Financing Cooperation Indemnification Agreement
	 
	 	 	 	 
	Exhibit T

	 	—
	 	Form of Corporate-Level Agreement
	 
	 	 	 	 
	Exhibit U

	 	—
	 	Form of Growth Plan Agreement
	 
	 	 	 	 
	Exhibit V

	 	—
	 	Form of Interim Liquor Agreement






vi









 






	 	 	 	 	 
	Exhibit W

	 	—
	 	Form of Rule 145 Affiliate Agreement
	 
	 	 	 	 
	Exhibit X

	 	—
	 	Horizon Transactions
	 
	 	 	 	 
	Exhibit Y-1

	 	—
	 	Form of Local Purchase Agreement (Westin Palace Madrid)
	 
	 	 	 	 
	Exhibit Y-2

	 	—
	 	Form of Local Purchase Agreement (Westin Europa & Regina)
	 
	 	 	 	 
	Exhibit Y-3

	 	—
	 	Form of Local Purchase Agreement (Sheraton Roma Hotel &
Convention Centre / Westin Palace Milan)






vii









 








SCHEDULES




	 	 	 	 	 
	Schedule 1.7(a)(ii)

	 	—
	 	Class A RP Units
	 
	 	 	 	 
	Schedule 2.1(a)

	 	—
	 	Global Entity Sellers
	 
	 	 	 	 
	Schedule 2.1(b)

	 	—
	 	Global Asset Sellers
	 
	 	 	 	 
	Schedule 2.1(c)

	 	—
	 	Local Entity Sellers; Local Stock Transfer Shares
	 
	 	 	 	 
	Schedule 2.1(d)

	 	—
	 	Local Asset Sellers
	 
	 	 	 	 
	Schedule 2.5

	 	—
	 	Purchase Price Allocations
	 
	 	 	 	 
	Schedule 6.2(d)

	 	—
	 	Transitional Working Group Members
	 
	 	 	 	 
	Schedule 6.3(a)(i)

	 	—
	 	International Filings and Other Actions
	 
	 	 	 	 
	Schedule 6.3(a)(ii)

	 	—
	 	Non-Transferable Permits
	 
	 	 	 	 
	Schedule 6.5

	 	—
	 	Intercompany Accounts
	 
	 	 	 	 
	Schedule 6.16(vi)

	 	—
	 	Deviations from Form of Operating Agreement
	 
	 	 	 	 
	Schedule 6.16(vii)

	 	—
	 	Deviations from Form of License Agreement
	 
	 	 	 	 
	Schedule 6.18(a)(i)

	 	—
	 	Identified Consents
	 
	 	 	 	 
	Schedule 6.18(a)(vi)

	 	—
	 	Canadian Tax Treatment
	 
	 	 	 	 
	Schedule 6.19(b)

	 	—
	 	SHC Indebtedness
	 
	 	 	 	 
	Schedule 6.23

	 	—
	 	Form of Title Affidavit
	 
	 	 	 	 
	Schedule 6.31

	 	—
	 	Required Amendments to SLT Agreements
	 
	 	 	 	 
	Schedule 7.2(a)

	 	—
	 	Certain Financial Statement Line Items
	 
	 	 	 	 
	Schedule 7.2(e)(1)

	 	—
	 	Single-Trigger Acquired Hotels
	 
	 	 	 	 
	Schedule 7.2(e)(2)

	 	—
	 	Double-Trigger Acquired Hotels
	 
	 	 	 	 
	Schedule 7.3(f)

	 	—
	 	Sun Deferral Trigger Acquired Hotels
	 
	 	 	 	 
	Schedule 8.4(a)

	 	—
	 	Closing Working Capital
	 
	 	 	 	 
	Schedule 10.1(c)

	 	—
	 	Acquired Entities






viii









 






	 	 	 	 	 
	Schedule 10.1(d)

	 	—
	 	Acquired Hotels
	 
	 	 	 	 
	Schedule 10.1(e)

	 	—
	 	Acquired Hotel Agreed Amounts
	 
	 	 	 	 
	Schedule 10.1(y)

	 	—
	 	Excluded Assets
	 
	 	 	 	 
	Schedule 10.1(aa)

	 	—
	 	Excluded Hotels
	 
	 	 	 	 
	Schedule 10.1(kk)

	 	—
	 	Specified Fixtures
	 
	 	 	 	 
	Schedule 10.1(ccc)

	 	—
	 	Acquired Names
	 
	 	 	 	 
	Schedule 10.1(ddd)

	 	—
	 	Post-Closing Deferral Deadlines
	 
	 	 	 	 
	Schedule 10.1(mmm)

	 	—
	 	Specified Retained Liabilities
	 
	 	 	 	 
	Schedule 10.1(ttt)

	 	—
	 	Specified Indebtedness
	 
	 	 	 	 
	Schedule 10.1(vvv)

	 	—
	 	2005 Sun Capital Budget






ix









 








INDEX OF DEFINED TERMS




	 	 	 
	2004 10-K

	 	 3.5(b) 
	2005 Audited Financial Statements

	 	 6.7(d) 
	2015 SHC Indebtedness

	 	 8.3(b) 
	2025 SHC Indebtedness

	 	 8.3(b) 
	Acquired Assets

	 	 10.1(a) 
	Acquired Business

	 	 10.1(b) 
	Acquired Business Credit Support

	 	 3.18(a) 
	Acquired Entities

	 	 10.1(c) 
	Acquired Hotel

	 	 10.1(d) 
	Acquired Hotel Agreed Amount

	 	 10.1(e) 
	Acquired Hotels

	 	 10.1(d) 
	Acquired Names

	 	 10.1(bbb) 
	Acquired Properties

	 	 10.1(f) 
	Acquired Property

	 	 10.1(f) 
	Acquisition Proposal

	 	 5.3(a)(i) 
	Actual EBITDA Amount

	 	 6.32(d) 
	Additional EBITDA Amount

	 	 6.32(b), 6.32(a)(ii) 
	Adjusted Indebtedness

	 	 8.4(g) 
	Affiliate

	 	 3.10 
	Agreement

	 	 Preamble 
	AICPA

	 	 6.7(b) 
	Allocation Schedule

	 	 2.5 
	Alternative Tax Letter

	 	 9.3 
	Ancillary Agreements

	 	 6.16 
	Apportionment Time

	 	 10.1(g) 
	Asset Sellers

	 	 Recitals 
	Assets

	 	 10.1(h) 
	Assignee

	 	 2.1(f) 
	Assumed Liabilities

	 	 10.1(i) 
	Assumption Agreement

	 	 2.1(e) 
	Audited Combined Historical Financial Statements

	 	 3.5(c) 
	Baseline Restructuring Steps

	 	 Recitals 
	Bear, Stearns

	 	 3.15 
	Books and Records

	 	 6.4(a) 
	C Corporation Earnings and Profits

	 	 10.1(j) 
	Cash Amount

	 	 2.2(a) 
	Casualty Adjustment Amount

	 	 8.4(a) 
	CERCLA

	 	 3.9(a) 
	Certificates

	 	 1.9(a) 
	Change in Recommendation

	 	 6.1(b) 
	Class A Cash Consideration

	 	 10.1(k) 
	Class A EPS

	 	 1.6(a)(iii) 
	Class A EPS Horizon Cash Amount

	 	 1.6(a)(iii)(A) 
	Class A EPS Sun Cash Amount

	 	 1.6(a)(iii)(A) 






x









 






	 	 	 
	Class A RP Units

	 	 1.7(a)(ii) 
	Class A Shares

	 	 1.6(a)(i) 
	Class A Stock Consideration Per Share

	 	 1.6(a)(i) 
	Class B Cash Amount

	 	 1.6(a)(ii) 
	Class B Cash Consideration

	 	 10.1(l) 
	Class B EPS

	 	 3.2(b) 
	Class B Excess Dividend Amount

	 	 10.1(m) 
	Class B Share Total

	 	 1.6(a)(i) 
	Class B Shares

	 	 1.6(a)(ii) 
	Closing

	 	 1.2 
	Closing Date

	 	 1.2 
	Closing Net Adjustment Amount

	 	 8.4(a) 
	Closing Notice

	 	 1.2 
	Closing Restructuring Steps

	 	 10.1(n) 
	Closing Statement Principles

	 	 10.1(o) 
	Closing Transactions

	 	 2.1 
	Closing Working Capital

	 	 8.4(a) 
	CMBS Indebtedness

	 	 10.1(p) 
	Code

	 	 10.1(q) 
	Commitment

	 	 5.1(j) 
	Compensating Balance Agreement

	 	 6.16 
	Confidentiality Agreement

	 	 6.2(a)(ii) 
	Consent Costs

	 	 8.3(b) 
	Consolidated Group

	 	 10.1(r) 
	Contract

	 	 10.1(s) 
	Contribution Agreement

	 	 3.14(e) 
	Corporate-Level Agreement

	 	 6.16 
	Deferral Trigger

	 	 6.18(a) 
	Deferred Asset

	 	 6.18(d) 
	Deferred International Hotels

	 	 6.18(a)(ix) 
	Department

	 	 1.3 
	Determination Time

	 	 1.6(a)(i) 
	Directly Acquired Assets

	 	 10.1(t) 
	Directly Acquired Assets Owner

	 	 10.1(u) 
	DRULPA

	 	 1.1(b) 
	E&Y

	 	 3.5(c) 
	EAT

	 	 2.1(f) 
	EC Merger Regulations

	 	 10.1(v) 
	Effective Times

	 	 1.3 
	Employee Plan

	 	 3.11 
	Encumbrance

	 	 10.1(w) 
	Entity Sellers

	 	 Recitals 
	Environmental Law

	 	 3.9(a) 
	Environmental Permits

	 	 3.9(b)(v) 
	Environmental Reports

	 	 3.9(a) 
	Equity Awards

	 	 1.6(c) 






xi









 






	 	 	 
	Equity Plans

	 	 1.6(c) 
	ERISA

	 	 3.11 
	Estimated Adjustment Amount

	 	 8.4(b) 
	Estimated Closing Statement

	 	 8.4(b) 
	Estimated EBITDA Amount

	 	 6.32(b) 
	Excess Dividend Amount

	 	 10.1(x) 
	Excess Preferred Shares

	 	 3.2(b) 
	Excess Shares

	 	 3.2(b) 
	Excess Trust Shares

	 	 3.2(b) 
	Exchange Act

	 	 3.4(c) 
	Exchange Agent

	 	 1.9(a) 
	Exchange Fund

	 	 1.9(b)(iii) 
	Exchange Ratio

	 	 1.6(a)(ii) 
	Excluded Assets

	 	 10.1(y) 
	Excluded Business

	 	 10.1(z) 
	Excluded Hotel

	 	 10.1(aa) 
	Excluded Hotels

	 	 10.1(aa) 
	Existing Survey

	 	 3.8(a) 
	Existing Surveys

	 	 3.8(a) 
	Existing Title Policies

	 	 3.8(a) 
	Existing Title Policy

	 	 3.8(a) 
	FF&E

	 	 10.1(ccc) 
	FF&E Agreement

	 	 6.16 
	FF&E Reserves

	 	 10.1(bb) 
	Filed Trust SEC Documents

	 	 3.5(a) 
	Final Adjustment Amount

	 	 8.4(e) 
	Final Closing Statement

	 	 8.4(e) 
	Financing Indemnification Agreement

	 	 6.16 
	Financings

	 	 6.13 
	Form S-4

	 	 6.1(a) 
	GAAP

	 	 3.5(a) 
	Global Asset Sellers

	 	 2.1(b) 
	Global Directly Acquired Assets

	 	 2.1(b) 
	Global Entity Sellers

	 	 2.1(a) 
	Global Other Closing Transaction Purchase Price

	 	 2.2(a) 
	Global Stock Transfer Shares

	 	 2.1(a) 
	Governmental Entity

	 	 10.1(cc) 
	Ground Leases

	 	 3.8(e) 
	Growth Plan Agreement

	 	 6.16 
	GS&Co.

	 	 4.9 
	Guest Ledger

	 	 10.1(dd) 
	Hazardous Materials

	 	 3.9(a) 
	Horizon

	 	 Preamble 
	Horizon Bylaws

	 	 4.1(b) 
	Horizon Charter

	 	 4.1(a) 
	Horizon Class C Preferred Stock

	 	 4.3(a) 






xii









 






	 	 	 
	Horizon Class E Preferred Stock

	 	 4.3(a) 
	Horizon Common Stock

	 	 1.6(a)(i) 
	Horizon Convertible Preferred Securities

	 	 4.3(a) 
	Horizon Deferral Triggers

	 	 6.18(c) 
	Horizon Disclosure Letter

	 	 Article 4 
	Horizon Equity Plan

	 	 4.3(a) 
	Horizon Exchangeable Debentures

	 	 4.3(a) 
	Horizon Financial Statement Date

	 	 4.7 
	Horizon Foreign Currency REIT

	 	 10.1(ee) 
	Horizon Material Adverse Effect Horizon
Material Contract

	 	 10.1(ff)  4.16 
	Horizon OP

	 	 Preamble 
	Horizon OP Agreement

	 	 4.2(b) 
	Horizon OP Units

	 	 4.2(b) 
	Horizon Other Interests

	 	 4.4 
	Horizon Parties

	 	 Preamble 
	Horizon Preferred Stock

	 	 4.3(a) 
	Horizon Property

	 	 4.15(a) 
	Horizon Representatives

	 	 6.2(a)(i) 
	Horizon SEC Documents

	 	 4.6(a) 
	Horizon Senior Executive

	 	 6.2(a)(iii) 
	Horizon Series A Preferred Stock

	 	 4.3(a) 
	Horizon Stock Options

	 	 4.3(a) 
	Horizon Stock Rights

	 	 4.3(a) 
	Horizon Stockholder Approval

	 	 6.1(b) 
	Horizon Stockholders Meeting

	 	 6.1(b) 
	Horizon Subject Foreign Currency REIT

	 	 10.1(gg) 
	Horizon Subsidiaries

	 	 10.1(hh) 
	Horizon Taxpayer

	 	 4.8(a) 
	Horizon Transactions

	 	 10.1(ii) 
	Hotel

	 	 10.1(jj) 
	Hotel EBITDA

	 	 6.32(a)(i) 
	HSR Act

	 	 3.4(c) 
	Improvements

	 	 10.1(kk) 
	Increased Share Amount

	 	 6.30(a) 
	Indebtedness

	 	 10.1(ll) 
	Indemnification Agreement

	 	 6.16 
	Independent Accounting Firm

	 	 8.4(e) 
	Intellectual Property

	 	 10.1(mm) 
	Interests

	 	 10.1(nn) 
	Interim Liquor Agreement

	 	 6.21 
	Intermediary

	 	 2.1(f) 
	JAMS

	 	 6.18(c) 
	Knowledge

	 	 10.1(oo) 
	KPMG

	 	 6.12(a) 
	Land

	 	 10.1(pp) 






xiii









 






	 	 	 
	Laws

	 	 10.1(qq) 
	Lease Agreement

	 	 6.16 
	Liabilities

	 	 10.1(rr) 
	License Agreement

	 	 6.16 
	Liquor Licenses

	 	 6.21 
	Local Asset Sellers

	 	 2.1(d) 
	Local Directly Acquired Assets

	 	 2.1(d) 
	Local Entity Sellers

	 	 2.1(c) 
	Local Other Closing Transaction Purchase Price

	 	 2.2(b) 
	Local Purchase Agreements

	 	 10.1(ss) 
	Local Stock Transfer Shares

	 	 2.1(c) 
	Losses

	 	 6.8(g) 
	Market Price

	 	 10.1(tt) 
	Material Contracts

	 	 3.17(a) 
	Material Sun Space Lease

	 	 10.1(uu) 
	Maximum Share Amount

	 	 1.6(a)(i) 
	Mergers

	 	 Recitals 
	Minority Equity Interest

	 	 3.2(a) 
	Miscellaneous Hotel Assets

	 	 10.1(vv) 
	Multiemployer Plan

	 	 3.11 
	National/Regional Operating Agreements

	 	 10.1(ww) 
	No Gross Income Opinion

	 	 9.3 
	Not Commenced Capital Budget Amount

	 	 8.1 
	NYSE

	 	 1.9(g)(ii) 
	Operating Agreement

	 	 6.16 
	Options

	 	 1.6(c) 
	Ordinary Course

	 	 10.1(xx) 
	Organizational Documents

	 	 10.1(yy) 
	Other Closing Transactions

	 	 2.1 
	Other Share Consideration

	 	 10.1(zz) 
	Paired Share

	 	 1.9(a) 
	Paired Share Proposal

	 	 10.1(aaa) 
	Percentage Interest

	 	 1.7(b)(ii) 
	Permits

	 	 3.16 
	Permitted Title Exceptions

	 	 3.8(a) 
	Person

	 	 10.1(bbb) 
	Personal Property

	 	 10.1(ccc) 
	Plan Modifications

	 	 Recitals 
	Post-Closing Acquisition Notice

	 	 6.18(f)(ii) 
	Post-Closing Deferral Deadline

	 	 10.1(ddd) 
	Post-Closing Horizon Transactions

	 	 10.1(eee) 
	Post-Closing Notices

	 	 6.18(f)(iii) 
	Post-Closing Sale Notice

	 	 6.18(f)(iii) 
	Post-Restructuring Time

	 	 3.2(a) 
	Pre-Closing Cap Amount

	 	 9.1(j) 
	Preliminary Adjustment Amount

	 	 8.4(c) 






xiv









 






	 	 	 
	Preliminary Closing Statement

	 	 8.4(c) 
	Pre-Merger Share Amount

	 	 1.6(a)(i) 
	Preparation Principles

	 	 3.5(b) 
	Primary Hotels

	 	 3.17(a)(iv) 
	Primary International Hotels

	 	 6.18(a)(ix) 
	Privacy Laws

	 	 10.1(fff) 
	Proxy Statement/Prospectus

	 	 6.1(a) 
	Purchaser Indemnified Parties

	 	 6.6(a) 
	Qualified Capital Expenditure Amount

	 	 8.1 
	Qualified Transfer

	 	 6.8(b) 
	Qualifying Accounting Firm

	 	 10.1(ggg) 
	Qualifying Asset

	 	 6.8(b) 
	Qualifying Income

	 	 6.8(b) 
	Reduction

	 	 6.32(b) 
	Registration Rights Agreement

	 	 6.16 
	REIT

	 	 3.14(a) 
	REIT Articles of Merger

	 	 1.3 
	REIT Entity

	 	 3.14(a) 
	REIT Merger

	 	 Recitals 
	REIT Merger Consideration

	 	 1.6(a)(iv) 
	REIT Merger Effective Time

	 	 1.3 
	REIT Merger Sub

	 	 Preamble 
	Related Property

	 	 10.1(hhh) 
	Release

	 	 3.9(a) 
	Remaining Capital Budget Amount

	 	 8.1 
	Replacement Hotels

	 	 2.1(f) 
	Representatives

	 	 10.1(iii) 
	Required Antitrust Approvals

	 	 10.1(jjj) 
	Required Capital Expenditure Amount

	 	 8.4(a) 
	Restricted Stock

	 	 1.6(c) 
	Restricted Stock Unit Awards

	 	 1.6(c) 
	Restructuring Parameters

	 	 10.1(lll) 
	Restructuring Plan

	 	 Recitals 
	Retained Liabilities

	 	 10.1(mmm) 
	Retained Subsidiary

	 	 10.1(nnn) 
	Retained Sun Business

	 	 10.1(ooo) 
	Revised EBITDA Amount

	 	 6.32(a)(iv) 
	Right of First Offer Agreement

	 	 6.16 
	RP Units

	 	 1.7(a)(i) 
	Rule 145 Affiliates

	 	 6.24 
	Rules

	 	 6.18(c) 
	Sarbanes-Oxley Act

	 	 3.5(e) 
	Satisfaction Date

	 	 1.2 
	SEC

	 	 3.4(c) 
	SEC Filings

	 	 6.14(a) 
	Secondary Hotels

	 	 3.17(a) 






xv









 






	 	 	 
	Securities Act

	 	 3.2(g) 
	Seller Indemnified Parties

	 	 6.6(a) 
	Sellers

	 	 Recitals 
	Share Value

	 	 10.1(ppp) 
	SHC

	 	 Preamble 
	SHC Indebtedness

	 	 8.3(b) 
	SLC

	 	 10.1(qqq) 
	SLC LP Agreement

	 	 10.1(rrr) 
	SLC Units

	 	 10.1(sss) 
	SLT

	 	 Preamble 
	SLT Agreements

	 	 6.31 
	SLT Cash Amount

	 	 2.2(a) 
	SLT Certificate

	 	 1.4(d) 
	SLT Certificate of Merger

	 	 1.3 
	SLT LP Agreement

	 	 1.4(d) 
	SLT Merger

	 	 Recitals 
	SLT Merger Consideration

	 	 1.7(a)(iii) 
	SLT Merger Effective Time

	 	 1.3 
	SLT Merger Sub

	 	 Preamble 
	SLT Unitholder Approvals

	 	 3.24 
	SLT Units

	 	 1.7(a)(ii) 
	Specified Indebtedness

	 	 10.1(ttt) 
	Specified REIT Requirements

	 	 9.3 
	Stated Net Adjustment Amount

	 	 8.4(a) 
	Stock Transfer Shares

	 	 Recitals 
	Structural Mold

	 	 3.9(a) 
	Subject Change

	 	 7.3(g) 
	Subject Taxes

	 	 2.1(f) 
	Sublease Agreement

	 	 6.16 
	Subsidiary

	 	 10.1(uuu) 
	Sun

	 	 Preamble 
	Sun Bylaws

	 	 3.1(b) 
	Sun Capital Budget

	 	 10.1(vvv) 
	Sun Charter

	 	 3.1(a) 
	Sun Common Share Amount

	 	 1.9(c) 
	Sun Common Stock

	 	 1.6(a)(iii)(A) 
	Sun Common Stock Value

	 	 10.1(www) 
	Sun Credit Support

	 	 3.18(b) 
	Sun Deferral Triggers

	 	 6.18(c) 
	Sun Disclosure Letter

	 	 Article 3 
	Sun Employee Plan

	 	 3.11 
	Sun Employer

	 	 3.12(a) 
	Sun Financial Statement Date

	 	 3.6 
	Sun Indenture

	 	 10.1(xxx) 
	Sun Intellectual Property

	 	 10.1(yyy) 
	Sun Material Adverse Effect

	 	 10.1(zzz) 






xvi









 






	 	 	 
	Sun Material Impairment

	 	 10.1(aaaa) 
	Sun Parties

	 	 Preamble 
	Sun Representative

	 	 5.3(a)(ii) 
	Sun Restructuring Steps

	 	 10.1(bbbb) 
	Sun Rights Agreement

	 	 10.1(cccc) 
	Sun Space Lease

	 	 10.1(dddd) 
	Sun Subsidiary

	 	 2.1(e) 
	Sun Taxpayer

	 	 3.14(a) 
	Sun Trademarks

	 	 10.1(eeee) 
	Superior Proposal

	 	 10.1(ffff) 
	Surveys

	 	 6.23 
	Surviving Partnership

	 	 1.1(b) 
	Surviving Trust

	 	 1.1(a) 
	Takeover Statute

	 	 3.23 
	Target EBITDA Amount

	 	 6.32(a)(iii) 
	Tax Return

	 	 3.14(a) 
	Tax Sharing and Indemnification Agreement

	 	 6.16 
	Tax-Deferred Exchange

	 	 10.1(gggg) 
	Taxes

	 	 3.14(a) 
	Termination Date

	 	 9.1(e) 
	Termination on Sale Agreement

	 	 6.16 
	Title 4A

	 	 1.1(a) 
	Title 8

	 	 1.1(a) 
	Title Policies

	 	 6.23 
	Title Policy

	 	 6.23 
	Transaction Costs

	 	 8.3(b) 
	Transfer

	 	 5.3(a)(i) 
	Transfer Taxes

	 	 8.3(b) 
	Trust

	 	 Preamble 
	Trust Bylaws

	 	 1.4(b) 
	Trust Declaration of Trust

	 	 1.4(b) 
	Trust Preferred Shares

	 	 3.2(b) 
	Trust SEC Documents

	 	 3.5(a) 
	Trust Share Rights

	 	 3.2(c) 
	Trust Shares

	 	 3.2(b) 
	Unaudited 2005 Interim Financial Statements

	 	 6.7(a) 
	Unaudited 2006 Interim Financial Statements

	 	 6.7(e) 
	Unaudited Combined Interim Financial Statements

	 	 6.7(e) 
	Unaudited First Quarter 2006 Interim Financial Statements

	 	 6.7(e) 
	Unaudited Second Quarter 2006 Interim Financial Statements

	 	 6.7(e) 
	Unaudited Stub Period Financial Statements

	 	 6.7(c) 
	Uniform System of Accounts

	 	 10.1(ccc) 
	WD Parent

	 	 10.1(iiii) 
	Westin Transaction Agreement

	 	 10.1(hhhh) 
	Working Capital

	 	 10.1(jjjj) 
	Working Capital Concentration Account Agreement

	 	 6.16 






xvii










 






MASTER AGREEMENT AND PLAN OF MERGER




     THIS MASTER AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of November 14,
2005, among HOST MARRIOTT CORPORATION, a Maryland corporation (“Horizon”), HOST MARRIOTT,
L.P., a Delaware limited partnership (“Horizon OP”), HORIZON SUPERNOVA MERGER SUB, L.L.C.,
a Maryland limited liability company wholly owned by Horizon OP (“REIT Merger Sub”),
HORIZON SLT MERGER SUB, L.P., a Delaware limited partnership wholly owned by REIT Merger Sub, its
general partner, and Horizon OP (“SLT Merger Sub” and, together with Horizon, Horizon OP
and REIT Merger Sub, the “Horizon Parties”), STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a
Maryland corporation (“Sun”), STARWOOD HOTELS & RESORTS, a Maryland real estate investment
trust (“Trust”), SHERATON HOLDING CORPORATION, a Nevada corporation (“SHC”), and
SLT REALTY LIMITED PARTNERSHIP, a Delaware limited partnership (“SLT” and, together with
Sun, Trust and SHC, the “Sun Parties”).



RECITALS:




     A. Each of the Board of Directors of Horizon (including in its capacity as the sole general
partner of Horizon OP, Horizon OP acting individually and as sole member of REIT Merger Sub, REIT
Merger Sub acting individually and as sole general partner of SLT Merger Sub), the Board of
Directors of Sun and the Board of Trustees of Trust (including in its capacity as the sole general
partner of SLT) deems it advisable and in the best interests of its respective companies and
stockholders, shareholders, member or partners, as applicable, upon the terms and subject to the
conditions contained herein and in the Local Purchase Agreements, as applicable, that the following
transactions be consummated:




     (i) the Sun Parties shall, and shall cause the Sun Subsidiaries to (A)
complete, subject to Section 6.18, the Baseline Restructuring Steps (as
such term is defined in Exhibit A), as modified in accordance with
Exhibit A (as modified, the “Restructuring Plan”; such permitted
modifications, if any, the “Plan Modifications”) and (B) satisfy the
Restructuring Parameters to the extent contemplated by Exhibit A;




     (ii) REIT Merger Sub shall merge (the “REIT Merger”) with and into
Trust, with Trust being the Surviving Trust;




     (iii) subject to any Plan Modifications, Sun shall transfer or cause to be
transferred certain mortgage receivables to SHC;




     (iv) subject to any Plan Modifications, SHC shall distribute to Sun all
equity interests in Sheraton LLC, a limited liability company into which The
Sheraton Corporation, a Delaware corporation, shall have been converted prior to
such distribution;




     (v) Horizon OP and/or one or more Horizon Subsidiaries shall acquire from the
Global Entity Sellers and the Local Entity Sellers (together the “Entity
Sellers”), and the Entity Sellers shall sell to Horizon OP and/or one or more
Horizon Subsidiaries, all of the outstanding Interests of the Acquired Entities,



 









 







other than (a) the Interests owned beneficially and of record by other Acquired
Entities, (b) the Minority Equity Interests (other than SLT Units converted in the
SLT Merger in accordance with Section 1.7(a)) and (c) the Interests in
Trust and SLT (such Interests, other than as set forth in clauses (a),
(b) and (c), the “Stock Transfer Shares”);




     (vi) Horizon OP and/or one or more Horizon Subsidiaries shall acquire from
the Global Asset Sellers and the Local Asset Sellers (together the “Asset
Sellers”; the Entity Sellers and the Asset Sellers collectively referred to
herein as the “Sellers”), and the Asset Sellers shall sell to Horizon OP
and/or one or more Horizon Subsidiaries, all of the right, title and interest of
the Asset Sellers in and to the Directly Acquired Assets; and




     (vii) SLT Merger Sub shall merge (the “SLT Merger” and, together with
the REIT Merger, the “Mergers”) with and into SLT, with SLT being the
Surviving Partnership.



     B. The Horizon Parties and the Sun Parties desire to make certain representations, warranties,
covenants and agreements in connection with the transactions contemplated by this Agreement and the
Local Purchase Agreements and the Horizon Transactions.



     NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties,
covenants and agreements contained herein, and intending to be bound hereby, the parties hereto
hereby agree as follows:



ARTICLE 1.

THE MERGERS; CONVERSION OF SECURITIES




     Section 1.1 The Mergers.



          (a) Upon the terms and subject to the conditions set forth in this Agreement, and in
accordance with Title 4A of the Corporations and Associations Article of the Annotated Code of
Maryland, as amended (“Title 4A”), and Title 8 of the Corporations and Associations Article
of the Annotated Code of Maryland, as amended (“Title 8”), at the REIT Merger Effective Time, REIT Merger Sub shall be merged with and into
Trust, with Trust as the surviving real estate investment trust (the “Surviving Trust”),
and the separate limited liability company existence of REIT Merger Sub shall cease. Immediately
following the REIT Merger, Trust shall continue its real estate investment trust existence under
the laws of the State of Maryland under the name “Horizon Supernova Merger Sub Trust”.




          (b) Upon the terms and subject to the conditions of this Agreement, and in accordance with the
Delaware Revised Uniform Limited Partnership Act, as amended (the “DRULPA”), at the SLT
Merger Effective Time, SLT Merger Sub shall be merged with and into SLT, with SLT as the surviving
limited partnership (the “Surviving Partnership”) and the separate limited partnership
existence of SLT Merger Sub shall cease. SLT shall continue its limited partnership existence
under the laws of the State of Delaware under the name “Supernova Realty Partnership, L.P.”.




2









 








     Section 1.2 Closing. The closing of the Closing Transactions (the “Closing”)
will, subject to the satisfaction or waiver of the conditions set forth in Article 7, take
place at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022,
commencing at 7:00 a.m., local time, on a date to be mutually agreed upon by Horizon OP and Sun;
provided that, in the event Horizon OP and Sun are unable to mutually agree upon such a
date within two (2) business days following the date on which the conditions set forth in
Article 7 (other than (x) those conditions that, by their terms, are to be satisfied on the
Closing Date and (y) Section 7.2 with respect to the Restructuring Parameters that are
contemplated by the Restructuring Plan to be satisfied, or the Sun Restructuring Steps or the
Closing Restructuring Steps that are required to be completed by the Restructuring Plan, on or
promptly before the Closing Date) have been satisfied or waived (such date, or if after any such
date any such conditions are no longer satisfied, the first subsequent date on which all such
conditions are satisfied or waived, the “Satisfaction Date”), then such date shall be as
specified by Horizon OP in a written notice delivered to Sun (the “Closing Notice”), which
date shall be the first Monday (or, if such Monday is not a business day, the next business day)
that is at least three (3) business days following the date on which the Closing Notice is
delivered to Sun. Horizon OP shall deliver the Closing Notice no later than four (4) business days
following the Satisfaction Date. The date on which the Closing actually occurs is referred to
herein as the “Closing Date”.



     Section 1.3 Effective Time. Subject to the provisions of this Agreement, as soon as
practicable on the Closing Date, (i) Horizon OP, REIT Merger Sub and Trust shall cause to be filed
with the State Department of Assessments and Taxation of Maryland (the “Department”)
articles of merger substantially in the form of Exhibit C (the “REIT Articles of
Merger”), duly executed and so filed in accordance with Title 4A and Title 8, (ii) the
Surviving Partnership shall file with the Secretary of State of the State of Delaware a certificate
of merger in a form to be mutually agreed upon by Horizon OP and Sun (the “SLT Certificate of Merger”), duly executed and so filed in accordance with the DRULPA and
(iii) the Horizon Parties and the Sun Parties shall make all other filings and recordings required
under Title 4A and Title 8 to effect the REIT Merger, and under the DRULPA to effect the SLT
Merger. The Mergers shall become effective at such times (with respect to the REIT Merger, the
“REIT Merger Effective Time” and, with respect to the SLT Merger, the “SLT Merger
Effective Time” and, collectively, the “Effective Times”) as are provided for in this
Agreement, as further specified in the REIT Articles of Merger and the SLT Certificate of Merger or
as Horizon OP and Sun shall otherwise agree (not to exceed thirty (30) days after the REIT Articles
of Merger are accepted for record by the Department).



     Section 1.4 Effects of the Mergers; Declaration of Trust and Bylaws; SLT Limited
Partnership Agreement.



          (a) The REIT Merger shall have the effects set forth in the applicable provisions of Maryland
law.




          (b) The declaration of trust of Trust (the “Trust Declaration of Trust”) shall be
amended in accordance with the REIT Articles of Merger. The bylaws of Trust (the “Trust
Bylaws”), as in effect immediately prior to the REIT Merger Effective Time, shall be the bylaws
of the Surviving Trust until duly amended as provided for therein or under Title 8.



3









 









          (c) The SLT Merger shall have the effects set forth in the applicable provisions of the
DRULPA. The Surviving Trust shall be the sole general partner of the Surviving Partnership.




          (d) The certificate of limited partnership of SLT, as in effect immediately prior to the SLT
Merger Effective Time (the “SLT Certificate”), except as amended pursuant to the SLT
Certificate of Merger, shall be the certificate of limited partnership of the Surviving Partnership
until thereafter duly amended as permitted for in the SLT LP Agreement or under the DRULPA. The
Third Amended and Restated Limited Partnership Agreement of SLT, as in effect immediately prior to
the SLT Merger Effective Time (the “SLT LP Agreement”), shall be the limited partnership
agreement of the Surviving Partnership, until thereafter duly amended as provided for therein or
under the DRULPA. The limited partnership agreement of SLT Merger Sub, as in effect immediately
prior to the SLT Merger Effective Time, shall terminate at the SLT Merger Effective Time.




     Section 1.5 Trustees and Officers of Trust. The managers of REIT Merger Sub
immediately prior to the REIT Merger Effective Time shall be the trustees of the Surviving Trust,
until the earlier of their death, resignation or removal or until their respective successors are
duly elected and qualified, as the case may be. The officers of REIT Merger Sub immediately prior
to the REIT Merger Effective Time shall be
the officers of the Surviving Trust, until the earlier of their death, resignation or removal
or until their respective successors are duly elected and qualified, as the case may be.



     Section 1.6 Effect on Shares of Beneficial Interest. At the REIT Merger Effective
Time, by virtue of the REIT Merger and without any action on the part of any party to this
Agreement or the holders of any of the following securities:



          (a) Shares of Beneficial Interest of Trust. Except as provided in Sections
1.6(b) and 1.6(c):





     (i) Each issued and outstanding Class A Share (as such term is defined in the
Trust Declaration of Trust), par value $0.01 per share, of Trust (“Class A
Shares”), shall be converted into the right to receive (A) that number of
fully paid and nonassessable shares of common stock, par value $0.01 per share, of
Horizon (“Horizon Common Stock”), if any, equal to (the “Class A Stock
Consideration Per Share”) (1) the number of shares of Horizon Common Stock
equal to (x) 133,529,412, subject to adjustment pursuant to Section 1.10
(the “Maximum Share Amount”) minus (y) the sum (the “Pre-Merger Share
Amount”) of (i) the number of shares of Horizon Common Stock, if any, included
in the Other Share Consideration and (ii) the number equal to (a) the Exchange
Ratio multiplied by (b) the sum (the “Class B Share Total”) of (I) the
number of Class B Shares outstanding immediately prior to the REIT Merger
Effective Time (the “Determination Time”) other than Restricted Stock
converted in accordance with Section 1.6(c), (II) the number of Class B
Shares, if any, issuable upon exchange of any and all Class A EPS outstanding as
of the Determination Time (whether or not such shares of Class A EPS are then
exchangeable) and (III) the number of Class B Shares issuable upon exchange,



4








 







exercise, conversion or redemption of any and all Trust Share Rights (other than
SLT Units) outstanding as of the Determination Time (whether or not such Trust
Share Rights are then exchangeable, exercisable, convertible or redeemable), if
any, divided by (2) the number of Class A Shares outstanding as of the
Determination Time and (B) that amount of cash equal to (1) the Class A Cash
Consideration divided by (2) the number of Class A Shares outstanding as of the
Determination Time.




     (ii) Each issued and outstanding Class B Share (as such term is defined in
the Trust Declaration of Trust), par value $0.01 per share, of Trust (“Class B
Shares”) shall be converted into the right to receive (A) 0.6122 fully paid
and nonassessable shares of Horizon Common Stock, subject to adjustment pursuant
to Section 1.10 (the “Exchange Ratio”) and (B) an amount of cash,
without interest, equal to the sum (“Class B Cash Amount”) of (1) $0.503
and (2) the Class B Excess Dividend Amount, subject to adjustment pursuant to
Section 1.10.




     (iii) Each issued and outstanding Class A Exchangeable Preferred Share (as
such term is defined in the Trust Declaration of Trust), par value $0.01 per
share, of Trust (“Class A EPS”) shall be converted into the right to
receive:




     (A) (1) from Sun, cash in the amount equal to (x) the number of shares
of common stock, par value $0.01 per share, of Sun (“Sun Common
Stock”) issuable upon conversion of such Class A EPS as of the
Determination Time multiplied by (y) the Sun Common Stock Value (the
aggregate amount payable by Sun to all holders of Class A EPS as of the
Determination Time, the “Class A EPS Sun Cash Amount”) and (2) from
Horizon, cash, without interest, in the amount equal to (x) the number of
Class B Shares issuable upon exchange of such Class A EPS as of the
Determination Time multiplied by (y) the Class B Cash Amount (the aggregate
amount payable by Horizon to all holders of Class A EPS as of the
Determination Time, “Class A EPS Horizon Cash Amount”), and




     (B) that number of fully paid and nonassessable shares of Horizon
Common Stock equal to (1) the number of Class B Shares issuable upon
exchange of such Class A EPS as of the Determination Time multiplied by (2)
the Exchange Ratio.




     (iv) The shares of Horizon Common Stock and Sun Common Stock and cash to be
issued or paid pursuant to this Section 1.6(a) shall collectively be
referred to as the “REIT Merger Consideration”. All Trust Shares
converted pursuant to this Section 1.6(a) shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and each
Certificate to the extent previously representing any such Trust Shares shall
thereafter represent the right to receive certificates and cash, as applicable,
representing the REIT Merger Consideration into which such Trust Shares were



5









 







converted. No fractional shares of Horizon Common Stock or Sun Common Stock shall
be issued, and in lieu thereof, a cash payment shall be made pursuant to
Section 1.9(g) hereof.



          (b) Cancellation of Certain Trust Shares. Each Trust Share held by any Horizon Party
or any wholly owned Subsidiary of any Horizon Party or by Trust or any wholly owned Subsidiary of
Trust (except, in each case, for Trust Shares held on behalf of third parties) immediately prior to
the REIT Merger Effective Time shall be canceled and extinguished without any conversion thereof
and no payment shall be made with respect thereto.




          (c) Treatment of Certain Trust Share Rights. Prior to the Closing, Sun and Trust
shall (i) take all necessary action required under Sun’s 1995 Long-Term Incentive Plan, 1999
Long-Term Incentive Compensation Plan, 2002 Long-Term Incentive Compensation Plan and 2004
Long-Term Incentive Compensation Plan and Trust’s 1995 Long-Term Incentive Plan and any other
equity incentive plans or arrangements (collectively, the “Equity Plans”) to convert (A)
all options to purchase Class B Shares (including options to purchase Paired Shares) (the
“Options”) outstanding thereunder into options to purchase shares of Sun Common Stock only
and (B) all restricted stock unit awards with respect to Class B Shares (including such awards with
respect to Paired Shares) (the “Restricted Stock Unit Awards” and, together with the
Options, the “Equity Awards”) outstanding thereunder into restricted stock unit awards with
respect to shares of Sun Common Stock only and (ii) otherwise cause there to be no Trust Share
Rights outstanding as of the REIT Merger Effective Time other than (x) SLT Units that have not been
tendered for exchange in accordance with the applicable exchange rights agreement, and (y) SLC
Units with respect to which neither Horizon nor any Horizon Subsidiary (including the Acquired
Entities) will have any Liability. Sun shall assume all Liabilities, if any, of the Acquired
Entities or Sellers relating to any Trust Share Rights converted, or caused not to exist, pursuant
to this Section 1.6(c). Notwithstanding anything to the contrary in this Agreement, each
issued and outstanding Class B Share which is subject to transfer and/or vesting restrictions under
the terms of the Equity Plans (“Restricted Stock”) shall be converted into an award with
respect to Sun Common Stock only, in accordance with the applicable Equity Plan and/or the terms of
the award agreement evidencing such Restricted Stock and immediately prior to the REIT Merger
Effective Time there will be no Restricted Stock outstanding with respect to Class B Shares. Sun
shall assume all Liabilities, if any, of the Acquired Entities or Sellers relating to any
Restricted Stock converted pursuant to this Section 1.6(c).




          (d) Membership Interests of REIT Merger Sub. Each membership interest of REIT Merger
Sub outstanding immediately prior to the REIT Merger Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable Class A Share.




     Section 1.7 Effect on Partnership Units. At the SLT Merger Effective Time, by virtue
of the SLT Merger and without any action on the part of any party to this Agreement or the holders
of any of the following securities:



          (a) SLT Units. Except as provided in Section 1.7(b):





     (i) Each RP Unit (as such term is defined in Section 4.1(c) of the SLT LP
Agreement) of SLT (“RP Units”) outstanding immediately prior to the SLT



6









 







Merger Effective Time shall be converted into the right to receive cash, without
interest, in the amount equal to (A) that number of Class B Shares issuable upon
exchange of such RP Unit immediately prior to the REIT Merger Effective Time
multiplied by (B) the sum of (1) the Class B Cash Amount and (2) the Exchange
Ratio multiplied by the Share Value.




     (ii) Each Class A RP Unit (as such term is defined in Section 4.1(c) of the
SLT LP Agreement) of SLT (“Class A RP Units” and, together with the RP
Units, “SLT Units”) outstanding immediately prior to the SLT Merger
Effective Time shall be converted into the right to receive the consideration set
forth on Schedule 1.7(a)(ii).




     (iii) The cash to be paid pursuant to this Section 1.7(a) shall be
collectively referred to as the “SLT Merger Consideration”. Except as set
forth in Schedule 1.7(a)(ii), all SLT Units converted pursuant to this
Section 1.7(a) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate (if any)
previously representing any such SLT Units shall thereafter represent the right to
receive the SLT Merger Consideration into which such SLT Units were converted in
the SLT Merger.



          (b) Treatment of Certain SLT Units and General Partner Percentage Interest.





     (i) Each SLT Unit held by any Horizon Party or any wholly owned Subsidiary of
any Horizon Party (other than the Surviving Trust or any wholly owned Subsidiary
of the Surviving Trust) (except, in each case, for SLT Units held on behalf of
third parties) immediately prior to the SLT Merger Effective Time shall be
canceled and extinguished without any conversion thereof and no payment shall be
made with respect thereto.




     (ii) The Percentage Interest (as such term is defined in the SLT LP
Agreement) in SLT held by Trust or the Surviving Trust in its capacity as general
partner of SLT shall not be amended or modified in any respect by virtue of the
SLT Merger.



          (c) Partnership Interests in SLT Merger Sub. Each limited partnership unit of SLT
Merger Sub outstanding immediately prior to the SLT Merger Effective Time shall be converted into
and exchanged for that number of RP Units of the Surviving Partnership equal to the number of SLT
Units outstanding immediately prior to the SLT Merger Effective Time that are converted into cash
in the SLT Merger. The general partnership interest of REIT Merger Sub in SLT Merger Sub
outstanding immediately prior to the SLT Merger Effective Time shall be canceled and extinguished
without any conversion thereof and no payment shall be made with respect thereto.




          (d) Appraisal or Dissenters Rights. No holder of SLT Units is entitled under
applicable Law or the SLT LP Agreement to appraisal, dissenters or other similar rights as a result
of the SLT Merger.




7









 








     Section 1.8 Appraisal or Dissenters Rights. Except for Sun (as sole holder of Class A
Shares), which shall waive any appraisal, dissenters or similar rights to which it is entitled with
respect to such Class A Shares pursuant to its approval of the REIT Merger promptly after the
execution of this Agreement, no holder of
Trust Shares is entitled under applicable Law or the Trust Declaration of Trust to appraisal,
dissenters or similar rights as a result of the REIT Merger.



     Section 1.9 Exchange of Certificates; Pre-Closing Dividends; Fractional Shares.



          (a) Exchange Agent. Prior to the REIT Merger Effective Time, Horizon OP shall appoint
American Stock Transfer & Trust Company, or another bank or trust company mutually agreed upon by
Horizon OP and Sun, to act as exchange agent (the “Exchange Agent”) for the exchange of the
REIT Merger Consideration and the Sun Common Share Amount, as applicable, upon surrender of
certificates (the “Certificates”) representing issued and outstanding Class A EPS or units
(when paired or unpaired) consisting of Class B Shares and shares of Sun Common Stock (each such
unit, a “Paired Share”)).




          (b) Provision of REIT Merger Consideration.





     (i) Horizon OP shall deposit, or cause to be deposited, with the Exchange
Agent, for the benefit of the holders of Trust Shares on or before the REIT Merger
Effective Time, the REIT Merger Consideration (other than the Class A EPS Sun Cash
Amount and all REIT Merger Consideration payable pursuant to Section
1.6(a)(i)) issuable in exchange for such issued and outstanding Trust Shares
pursuant to Section 1.6(a), and, after the REIT Merger Effective Time from
time to time as needed, any cash required to make payments (1) of any dividends or
other distributions payable in respect of Horizon Common Stock pursuant to
Section 1.9(d) and (2) in lieu of any fractional shares of Horizon Common
Stock pursuant to Section 1.9(g).




     (ii) Sun shall deposit, or cause to be deposited, with the Exchange Agent,
for the benefit of the holders of Class A EPS on or before the REIT Merger
Effective Time, the Class A EPS Sun Cash Amount included in the REIT Merger
Consideration issuable in exchange for the issued and outstanding shares of Class
A EPS pursuant to Section 1.6(a) and, after the REIT Merger Effective Time
from time to time as needed, any cash required to make payments of any dividends
or other distributions payable in respect of Sun Common Stock pursuant to
Section 1.9(d).




     (iii) The REIT Merger Consideration, together with any dividends or
distributions with respect thereto and any cash in lieu of fractional shares,
deposited with the Exchange Agent are collectively referred to herein as the
“Exchange Fund”. The Exchange Agent (or other depository acting for the
benefit of the Exchange Agent) shall invest any cash included in the Exchange Fund
as directed by Horizon OP, on a daily basis. Any interest or other income
resulting from such investments shall be paid to Horizon OP other than interest



8









 







and other income to the extent
resulting from the investment of the Class A EPS Sun Cash Amount, which
interest and other income shall be paid to Sun.



          (c) Exchange Procedure. Horizon OP and Sun shall use commercially reasonable efforts
to cause the Exchange Agent, no later than the fifth business day after the Closing Date, to mail
to each holder of record of a Certificate or Certificates which immediately prior to the REIT
Merger Effective Time represented outstanding Class A EPS or Paired Shares (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in a form and have such other provisions as Horizon OP and Sun may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange for the REIT Merger
Consideration and a certificate representing the Sun Common Share Amount, as applicable, together
with any dividends or distributions to which such holder is entitled pursuant to Section
1.9(d) and cash, if any, payable in lieu of fractional shares pursuant to Section
1.9(g). Upon surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other documents as may reasonably be required
by the Exchange Agent, (i) the holder of such Certificate shall be entitled to receive in exchange
therefor the REIT Merger Consideration into which Class A EPS or Class B Shares theretofore
represented by such Certificate shall have been converted pursuant to Section 1.6(a),
together with any dividends or other distributions to which such holder is entitled pursuant to
Section 1.9(d) and cash, if any, payable in lieu of fractional shares pursuant to
Section 1.9(g) and, in the case of Certificates for Paired Shares, a certificate
representing the number of shares of Sun Common Stock equal to the number of shares of Sun Common
Stock represented by such Certificate prior to the REIT Merger Effective Time (the “Sun Common
Share Amount”), (ii) Horizon OP and Sun shall use commercially reasonable efforts to cause the
Exchange Agent to mail (or make available for collection by hand if so elected by the surrendering
holder) such amount to such holder within five (5) business days after receipt thereof and (iii)
the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Class A EPS or Paired Shares which is not registered in the transfer records of Sun or
Trust, as applicable, payment of the REIT Merger Consideration or issuance of the Sun Common Share
Amount, as applicable, may be made to a Person other than the Person in whose name the Certificate
so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such payment or issuance either shall pay any
transfer or other Taxes required by reason of such payment or issuance being made to a Person other
than the registered holder of such Certificate or establish to the satisfaction of Sun or Horizon
OP, as applicable, that such Taxes have been paid or are not applicable. Until surrendered as
contemplated by this Section 1.9, each Certificate shall be deemed at any time after the
REIT Merger Effective Time to represent only the right to receive upon such surrender the REIT
Merger Consideration into which Class A EPS or Class B Shares heretofore represented by such
Certificate shall have been converted pursuant to Section 1.6(a), any dividends or other
distributions to which such holder is entitled pursuant to Section 1.9(d), any cash payable
in lieu of fractional shares pursuant to Section 1.9(g) and, if applicable, the Sun Common
Share Amount. No interest will be paid or will accrue on the REIT Merger Consideration upon the
s
urrender of any Certificate or on any cash payable pursuant to Section 1.9(d) or
Section 1.9(g). The Exchange Agent shall be entitled, in its sole and absolute discretion,
subject to Section 1.9(f), to deduct and withhold from the cash, Horizon Common Stock or
Sun Common Stock, or any combination thereof, that otherwise is payable or issuable




9









 




pursuant to this Agreement to any holder of one or more Certificates such amounts as are
required to be deducted and withheld with respect to the making of such payment under the Code or
under any provision of Tax Law; provided that, notwithstanding anything in this Section
1.9(c) to the contrary, no deduction or withholding shall be made under any provision of Tax
Law, including under Section 1445 of the Code, from any payments made to a Seller or any Subsidiary
thereof unless (i) in the case of any deduction or withholding other than under Section 1445 of the
Code, Horizon OP shall have furnished Sun, no later than fifteen (15) days prior to the applicable
payment date, with a written notice referring to this Section 1.9(c) and describing the
approximate amount of the deduction or withholding to be made (it being agreed that, in the event
of any such written notice and with respect to such deduction or withholding, (x) Sun and Horizon
OP shall promptly enter into discussions in good faith to determine if applicable circumstances
permit the lack of such deduction or withholding and (y) to the extent Horizon OP determines in
good faith that such deduction or withholding is required, and Sun determines in good faith that
such deduction or withholding is not required, there shall be no such deduction or withholding upon
an agreement by Sun in writing to indemnify Horizon OP against any such deduction, withholding,
interest, penalties and expenses that subsequently becomes borne, as a result of a challenge by the
applicable tax authority, by Horizon OP or its Affiliates) or (ii) in the case of any deduction or
withholding under Section 1445 of the Code, such Seller fails to furnish Horizon OP with an
affidavit as contemplated by Section 2.4(a)(vi) of this Agreement. Any amounts so deducted
or withheld by the Exchange Agent shall be treated for all purposes of this Agreement as having
been paid or issued to the holder of the Certificates in respect of which such deduction and
withholding was made by the Exchange Agent.




          (d) Distributions with Record Date after the REIT Merger Effective Time. Dividends or
other distributions with respect to Horizon Common Stock or Sun Common Stock with a record date
after the REIT Merger Effective Time shall be paid by Horizon or Sun, as applicable, to the
Exchange Agent for the benefit of any holder of any unsurrendered Certificate with respect to the
Horizon Common Stock or Sun Common Stock, as applicable, represented thereby and shall only be paid
to a holder of any unsurrendered Certificate once such holder surrenders the Certificate in
accordance with this Section 1.9. No cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 1.9(g), in each case until the surrender of
such Certificate in accordance with this Section 1.9. Subject to the effect of applicable
escheat laws, following surrender of any such Certificate, there shall be paid to the holder of
such Certificate, without interest, (i) at the time of such surrender, (x) the amount of any cash
in lieu of any fractional Horizon Common Stock to which such holder is entitled pursuant to
Section 1.9(g) and (y) the amount of dividends or other distributions with a record date
after the REIT Merger Effective Time theretofore paid with respect to such whole share of Horizon
Common Stock or Sun Common Stock and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the REIT Merger Effective Time but prior to such
surrender and with a payment date subsequent to such surrender payable with respect to such whole
share of Horizon Common Stock or Sun Common Stock.




          (e) No Further Ownership Rights in Trust Shares; Share Transfer Books. All REIT
Merger Consideration paid upon the surrender of Certificates in accordance with the terms of this
Section 1.9 (together with any dividends or other distributions paid pursuant to
Section 1.9(d)) shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Trust Shares theretofore represented by such Certificates; provided,
however, that Trust shall transfer




10









 




to its transfer agent cash sufficient to pay any dividends or make any other distributions
with a record date prior to the REIT Merger Effective Time which may have been declared or made by
Trust on such Trust Shares in accordance with the terms of this Agreement or prior to the date of
this Agreement and which remain unpaid at the REIT Merger Effective Time. At the REIT Merger
Effective Time, the share transfer books of Trust shall be closed and thereafter, there shall be no
further registration of transfers on the share transfer books of Trust of the Trust Shares which
were outstanding prior to the REIT Merger Effective Time, nor shall there be any further issuances
of Trust Shares or any Trust Share Rights. If, after the REIT Merger Effective Time, Certificates
are presented to Horizon OP or Sun for any reason, they shall be canceled and exchanged as provided
in this Section 1.9.




          (f) No Liability. None of Sun, Trust, Horizon OP or the Exchange Agent shall be
liable to any Person in respect of any REIT Merger Consideration, the Sun Common Share Amount, cash
payable in lieu of fractional shares pursuant to Section 1.9(g) or dividends or other
distributions delivered to a public official pursuant to any applicable abandoned property, escheat
or similar Law. Any portion of the Exchange Fund (other than dividends or distributions paid to
the Exchange Agent pursuant to Section 1.9(d), which the Exchange Agent shall retain in the
Exchange Fund, subject to applicable escheat and other similar Laws) delivered to the Exchange
Agent by Horizon OP pursuant to this Agreement that remains unclaimed for twelve (12) months after
the REIT Merger Effective Time shall be delivered by the Exchange Agent to Horizon OP, upon demand,
and any holders of Certificates who have not theretofore complied with Section 1.9(c) shall
thereafter, subject to the immediately preceding sentence, look only to Horizon OP for delivery of
the REIT Merger Consideration (other than the Class A EPS Sun Cash Amount) and any cash payable in
lieu of fractional shares of Horizon Common Stock pursuant to Section 1.9(g), subject to
applicable escheat and other similar Laws, but not the dividends or distributions paid to the
Exchange Agent pursuant to Section 1.9(d). Any portion of the Exchange Fund (other than
dividends or distributions paid to the Exchange Agent pursuant to Section 1.9(d), which the
Exchange Agent shall retain in the Exchange Fund, subject to applicable escheat and other similar
Laws) delivered to the Exchange Agent by Sun pursuant to this Agreement that remains unclaimed for
twelve (12) months after the REIT Merger Effective Time shall be delivered by the Exchange Agent to
Sun, upon demand, and any holders of Certificates who have not theretofore complied with
Section 1.9(c) shall thereafter, subject to the first sentence of this Section
1.9(f), look only to Sun, and Sun shall be solely responsible, for delivery of the REIT Merger
Consideration (other than the shares of Horizon Common Stock and the Class B Cash Consideration),
subject to applicable escheat and other similar Laws, but not the dividends or distributions paid
to the Exchange Agent pursuant to Section 1.9(d). At any time, Horizon OP shall be
entitled, in its reasonable discretion, to deduct and withhold, or cause the Exchange Agent to
deduct and withhold, from the REIT Merger Consideration such amounts as are required to be deducted
and withheld with respect to the payment of such REIT Merger Consideration under the Code or under
any provision of Tax Law; provided that, notwithstanding anything in this Section
1.9(f) to the contrary, no deduction or withholding shall be made under any provision of Tax
Law, including under Section 1445 of the Code, from any payments made to a Seller or any Subsidiary
thereof unless (i) in the case of any deduction or withholding other than under Section 1445 of the
Code, Horizon OP shall have furnished Sun, no later than fifteen (15) days prior to the applicable
payment date, with a written notice referring to this Section 1.9(f) and describing the
approximate amount of the deduction or withholding to be made (it being agreed that, in the event
of any such written notice and with




11









 




respect to such deduction or withholding, (x) Sun and Horizon OP shall promptly enter into
discussions in good faith to determine if applicable circumstances permit the lack of such
deduction or withholding and (y) to the extent Horizon OP determines in good faith that such
deduction or withholding is required, and Sun determines in good faith that such deduction or
withholding is not required, there shall be no such deduction or withholding upon an agreement by
Sun in writing to indemnify Horizon OP against any such deduction, withholding, interest,
penalties, and expenses that subsequently becomes borne, as a result of a challenge by the
applicable tax authority, by Horizon OP or its Affiliates) or (ii) in the case of any deduction or
withholding under Section 1445 of the Code, such Seller fails to furnish Horizon OP with an
affidavit as contemplated by Section 2.4(a)(vi) of this Agreement. Any amounts so deducted
or withheld by Horizon OP or the Exchange Agent shall be treated for all purposes of this Agreement
as having been paid or issued to the holder of the Certificates in respect of which such deduction
and withholding was made by the Exchange Agent.




          (g) No Fractional Shares.





     (i) No certificates or scrip representing fractional Horizon Common Stock or Sun Common
Stock or book-entry credit of the same, shall be issued upon the surrender for exchange of
Certificates or otherwise, and such fractional share interests will not entitle the owner
thereof to vote, to receive dividends or to any other rights of a stockholder of Horizon or
Sun, respectively.




     (ii) In lieu of the issuance of any fractional Horizon Common Stock, pursuant to this
Agreement, each holder of one or more Certificates shall be paid an amount in cash (without
interest), rounded to the nearest cent (with .5 of a cent rounded up), determined by
multiplying (A) the average closing price of one (1) share of Horizon Common Stock on the
New York Stock Exchange (the “NYSE”) on the twenty (20) consecutive trading days
immediately preceding the Closing Date by (B) the fraction of a share of Horizon Common
Stock which such holder would otherwise be entitled to receive under this Section
1.9.



          (h) Lost Certificates. If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Horizon OP or Sun, as applicable, or the Exchange Agent,
the posting by such Person of a bond in such reasonable amount as Horizon OP or Sun, as applicable,
or the Exchange Agent reasonably may direct as indemnity against any claim that may be made against
them with respect to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the REIT Merger Consideration to which the holders thereof are
entitled pursuant to Section 1.6(a), the Sun Common Share Amount, if any, to which holders
thereof are entitled pursuant to Section 1.9(c), if applicable, any cash payable pursuant
to Section 1.9(g) to which the holders thereof are entitled and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section 1.9(d).




          (i) Uncertificated Shares. In the case of any Class A EPS or Paired Shares that are
not represented by Certificates, the Exchange Agent shall issue at the REIT Merger Effective Time
the applicable REIT Merger Consideration, the Sun Common Share Amount, if




12









 




applicable, and any cash payable pursuant to Section 1.9(g), to the holders of such
Trust Shares without any action by such holders, and the parties hereto shall make appropriate
adjustments to this Section 1.9 to assure the equivalent treatment thereof.




          (j) SLT Merger Procedures. Sun and Horizon OP shall cooperate in good faith to
establish, prior to the Closing, appropriate procedures, consistent with this Section 1.9
to the extent applicable, with respect to the SLT Merger.




     Section 1.10 Certain Adjustments. If, between the date of this Agreement and the REIT
Merger Effective Time, the outstanding Horizon Common Stock, Sun Common Stock or Trust Shares shall
have been changed into a different number of shares, as applicable, or different class by reason of
any reclassification, recapitalization, stock split, split-up, combination or exchange of shares,
or a stock dividend or dividend payable in any other securities shall be declared with a record
date within such period, or any similar event shall have occurred, the Exchange Ratio, the Class A
Stock Consideration Per Share, the Class B Cash Amount (which shall be adjusted pursuant to this
sentence only in connection with an event relating to the Class B Shares), the Maximum Share Amount
and the Increased Share Amount (which Maximum Share Amount and Increased Share Amount shall be
adjusted pursuant to this sentence only in connection with an event relating to Horizon Common
Stock and not Sun Common Stock or Trust Shares) shall be appropriately adjusted to provide to the
holders of Horizon Common Stock, Trust Shares or SLT Units, as applicable, the same economic effect
as contemplated by this Agreement prior to such event.



     Section 1.11 Tax Treatment. The parties hereto (i) intend that for federal, and
applicable state and local, income tax purposes, the REIT Merger will be treated as a taxable
purchase by Horizon OP of all of Trust’s outstanding shares of beneficial interest and (ii) shall
prepare and file their applicable Tax Returns based on such treatment. The parties hereto intend
that for federal, and applicable state and local, income Tax purposes, the SLT Merger will be
treated as an acquisition by Horizon OP of SLT Units in exchange for the SLT Merger Consideration.
Each SLT Unitholder who participates in the SLT Merger shall be deemed, by such SLT Unitholder’s
act of receiving and accepting its share of the SLT Merger Consideration, to have agreed to the
characterization of the receipt of cash (including any cash deemed to be received pursuant to
Section 752 of the Code) as a taxable sale of all or a portion of its SLT Units, to the extent of
such cash received or deemed received, to Horizon OP.



ARTICLE 2.

OTHER CLOSING TRANSACTIONS




     Section 2.1 Other Closing Transactions. Upon the terms and subject to the conditions
set forth in this Agreement the following transactions (the “Other Closing Transactions”
and, together with the REIT Merger and the SLT Merger, the “Closing Transactions”) shall
occur at or immediately prior to the REIT Merger Effective Time (subject to Section
2.1(f)):



          (a) The Sun Parties and Sun Subsidiaries set forth on Schedule 2.1(a) (the “Global
Entity Sellers”) shall sell, convey, assign, transfer and deliver to Horizon OP or one or more
of the Horizon Subsidiaries designated by Horizon OP in writing, and Horizon OP or the applicable
Horizon Subsidiaries shall purchase, acquire and accept from such Global Entity Sellers, all right,
title and interest of such Global Entity




13









 




Sellers in and to the Stock Transfer Shares other than the
Local Stock Transfer Shares, free and clear of all Encumbrances (the “Global Stock Transfer
Shares”).




          (b) The Sun Parties and Sun Subsidiaries set forth on Schedule 2.1(b) (the “Global
Asset Sellers”) shall sell, convey, assign, transfer and deliver to Horizon OP or one or more
Horizon Subsidiaries designated by Horizon OP in writing, and Horizon OP or the applicable Horizon
Subsidiaries shall purchase, acquire and accept from such Global Asset Sellers, all right, title
and interest of such Global Asset Sellers in and to the Directly Acquired Assets, free and clear of
all Encumbrances other than Permitted Title Exceptions (the “Global Directly Acquired
Assets”).




          (c) The Sun Parties and Sun Subsidiaries set forth on Schedule 2.1(c) (the “Local
Entity Sellers”) shall sell, convey, assign, transfer and deliver to Horizon OP or one or more
of the Horizon Subsidiaries designated by Horizon OP in writing, and Horizon OP or the applicable
Horizon Subsidiaries shall purchase, acquire and accept from such Local Entity Sellers, pursuant to
the applicable Local Purchase Agreements, all right, title and interest of such Local Entity
Sellers in and to all of the Stock Transfer Shares of the Acquired Entities set forth on
Schedule 2.1(c), free and clear of all Encumbrances (the “Local Stock Transfer
Shares”).




          (d) The Sun Parties and Sun Subsidiaries set forth on Schedule 2.1(d) (the “Local
Asset Sellers”) shall sell, convey, assign, transfer and deliver to Horizon OP or one or more
Horizon Subsidiaries designated by Horizon OP in writing, and Horizon OP or the applicable Horizon
Subsidiaries shall purchase, acquire and accept from the Local Asset Sellers, pursuant to the
applicable Local Purchase Agreements, all right, title and interest of such Local Asset Sellers in
and to the Directly Acquired Assets, free and clear of all Encumbrances other than Permitted Title
Exceptions (the “Local Directly Acquired Assets”).




          (e) Horizon OP or one or more Horizon Subsidiaries designated by Horizon OP in writing shall
assume the Assumed Liabilities of the Asset Sellers pursuant to an instrument of assumption in all
material respects in the form of Exhibit D (the “Assumption Agreement”);
provided that, the assumption of Assumed Liabilities of Local Asset Sellers will be
pursuant to the applicable Local Purchase Agreements. It is expressly agreed to and understood by
the parties hereto that no Horizon Party or Horizon Subsidiary shall directly or indirectly assume
any Liability of Sun or any Subsidiary of Sun or
Trust (each, a “Sun Subsidiary”) as a result of the transactions contemplated by this
Agreement other than the Assumed Liabilities.




          (f) Notwithstanding anything contained herein to the contrary, Sun and Horizon OP agree to
cause such Acquired Hotels identified as the “1031 Hotels” on Schedule 10.1(d) as shall
have an aggregate Acquired Hotel Agreed Amount of at least $495,000,000 (but no more than is
necessary to achieve the minimum $495,000,000 amount) (such Acquired Hotels, the “Replacement
Hotels”) to be designated as replacement property to consummate a Tax-Deferred Exchange with
respect to property that Horizon OP will dispose of either prior to or within 180 days after the
Closing Date through the use of a qualified intermediary (the “Intermediary”) and/or
Exchange Accommodation Titleholder (“EAT”), pursuant to which Horizon OP shall assign all
of its right, title and interest (but not its liabilities or obligations) relating to the
Replacement Hotels under this Agreement and the Ancillary




14









 




Agreements to either an Intermediary or
the EAT (either the Intermediary or the EAT referred to herein as the “Assignee”);
provided that (i) the Replacement Hotels shall be transferred on the Closing Date
immediately prior to the REIT Merger Effective Time and (ii) the transfer of the Replacement Hotels
is made directly by (I) Sun and/or (II) any Subsidiary of Sun that is neither an Acquired Entity
nor a Subsidiary of an Acquired Entity. The Sun Parties agree to cooperate with the Horizon
Parties in structuring such transaction as a Tax-Deferred Exchange for the benefit of Horizon and
its Subsidiaries. Horizon OP shall reimburse the Sun Parties for all liabilities, out-of-pocket
costs and expenses (other than Consent Costs and increased liability for income Taxes) reasonably
incurred by the Sun Parties in connection with the structuring and implementation of such
transaction as a Tax-Deferred Exchange (to the extent such costs and expenses would not have been
incurred by the Sun Parties but for such structuring or implementation). Without limiting the
generality of the immediately preceding sentence, any real property transfer, sales, use, transfer,
value added, stock transfer and stamp taxes, stamp duties, and any transfer, recording,
registration and other fees, charges, premiums and any similar taxes (such amounts, “Subject
Taxes”), in each case incurred by the Sun Parties as a result of the structuring and
implementation of such transactions as a Tax-Deferred Exchange (to the extent such amounts would
not have been incurred by the Sun Parties but for such structuring or implementation) shall be
borne by Horizon OP and shall not be treated as Transfer Taxes for purposes of Section
8.3(b). To the extent required in connection with the Tax-Deferred Exchanges, the Sun Parties
agree to render all required performance under this Agreement with respect to the Replacement
Hotels to the Assignee to the extent reasonably and timely directed by Horizon OP and to accept
performance of all of Horizon OP’s obligations with respect to the Replacement Hotels by the
Assignee. To the extent required in connection with the Tax-Deferred Exchanges, the Sun Parties
agree that performance by the Assignee with respect to the Replacement Hotels will be treated as
performance by Horizon OP and Horizon OP agrees that the Sun Parties’ performance to the Assignee,
to the extent timely requested by Horizon OP, will be treated as performance to Horizon OP.
Horizon OP shall unconditionally guarantee the full and timely performance by the Assignee of each
and every one of the representations, warranties, indemnities, obligations and undertakings of the
Horizon Parties under this Agreement (and any amendments or modifications hereto) that relate to
the Replacement Hotels. As such guarantor, Horizon OP shall be treated as a primary obligor with
respect to those representations, warranties, indemnities, obligations and undertakings, and, in
the event of a breach, the Sun Parties may proceed directly against Horizon
OP on this guarantee without the need to join the Assignee. Notwithstanding the
identification of the “1031 Hotels” on Schedule 10.1(d), if effecting a Tax-Deferred
Exchange including any such 1031 Hotel, would (x) result in a material Tax liability being incurred
by Sun that would not be incurred by Sun if such 1031 Hotel was not a Replacement Hotel (but was
otherwise an Acquired Hotel) or (y) require a consent, approval or authorization that would not be
required if such 1031 Hotel was not a Replacement Hotel (but was otherwise an Acquired Hotel) and
such consent, approval or authorization would result in material Consent Costs or has not been
obtained after the date of the Horizon Stockholders Meeting, Sun shall be entitled to cause one or
more Acquired Hotels identified on such Schedule to not be treated as a Replacement Ho
tel upon
informing Horizon OP in writing that Sun would like to utilize one or more other Acquired Hotels
(other than those Acquired Hotels identified as “Non-1031 Hotels” on Schedule 10.1(d))
which (A) would not impair the availability of a Tax-Deferred Exchange from Horizon OP’s
perspective and (B) have Acquired Hotel Agreed Amount(s) that (1) aggregate the Acquired Hotel
Agreed Amount(s) of the hotel(s) which are no


15









 






longer to be treated as a Replacement Hotel or (2)
result in the aggregate of the Acquired Hotel Agreed Amount(s) for all Acquired Hotels that will be
included in a Tax-Deferred Exchange (taking into account, for the avoidance of doubt, such
adjustments to the Acquired Hotels so included as are the subject of this sentence) being equal to
or greater than $495,000,000 (Acquired Hotels satisfying clauses (A) and (B),
thereafter being treated as Replacement Hotels); provided that, notwithstanding any
provision in this Section 2.1(f) to the contrary, Horizon OP shall bear all Subject Taxes
incurred in connection with treating Acquired Hotels satisfying clauses (A) and (B)
as Replacement Hotels up to $2,000,000 (less the aggregate amount of Subject Taxes for which
Horizon is otherwise responsible for under this Section 2.1(f)) and Sun shall bear all
Subject Taxes incurred in connection with treating Acquired Hotels satisfying clauses (A)
and (B) as Replacement Hotels in excess thereof. For the avoidance of doubt,
notwithstanding anything in this Section 2.1(f) to the contrary, the Sun Parties hereby
make no representation or warranty, and undertake no other obligation, in each case with respect to
the Tax consequences of the transactions referenced in this Section 2.1(f) (including
whether the transactions qualify under Section 1031 of the Code) and shall not be responsible for
any loss or liability relating to any Tax liability to the Horizon Parties from such transactions.




     Section 2.2 Other Closing Transactions; Consideration.



          (a) The aggregate purchase price to be paid by Horizon OP and the Horizon Subsidiaries under
this Agreement for the Global Stock Transfer Shares and the Global Directly Acquired Assets (the
“Global Other Closing Transaction Purchase Price”) shall consist of (i) the cash amount
equal to (1) $1.063 billion, subject to adjustment pursuant to Sections 6.18 and
6.30 and Article 8 (the “Cash Amount”) minus (2) the sum of (A) the
aggregate cash portion of the Local Other Closing Transaction Purchase Price, (B) the Class A Cash
Consideration, (C) the Class B Cash Consideration and (D) the sum of (x) the aggregate amount of
cash (other than amounts payable by Sun) included in the SLT Merger Consideration and (y) the
number of SLT Units outstanding following the SLT Merger Effective Time multiplied by the Exchange
Ratio multiplied by the closing price per share of Horizon Common Stock, as reported on the NYSE
Composite Transactions reporting system (as published in the Wall Street Journal or, if not
published therein, in another authoritative source mutually selected by Sun and Horizon OP) on
the business day immediately preceding the Closing Date (the “SLT Cash Amount”) and (ii)
the Other Share Consideration (other than any portion of the Other Share Consideration included in
the Local Other Closing Transaction Purchase Price), if any.




          (b) The aggregate purchase price to be paid by Horizon OP and the Horizon Subsidiaries under
the Local Purchase Agreements for the Local Stock Transfer Shares and the Local Directly Acquired
Assets shall consist of the cash amounts and the Other Share Consideration, if any, provided
therefor in the Local Purchase Agreements (the “Local Other Closing Transaction Purchase
Price”).




          (c) The Horizon Parties shall be entitled, in their reasonable discretion, to deduct and
withhold from the consideration that is otherwise payable pursuant to this Article 2 and
the Local Purchase Agreements to any Seller such amounts as are required to be deducted and
withheld with respect to the making of such payments under the Code or under any provision of Tax
Law; provided that, no deduction or withholding shall be made under any provision of Tax
Law, including under Section 1445 of the Code, from any payments made to a Seller unless




16









 




(i) in the
case of any deduction or withholding other than under Section 1445 of the Code, Horizon OP shall
have furnished Sun, no later than fifteen (15) days prior to the applicable payment date, with a
written notice referring to this Section 2.2(c) and describing the approximate amount of
the deduction or withholding to be made (it being agreed that, in the event of any such written
notice and with respect to such deduction or withholding, (x) Sun and Horizon OP shall promptly
enter into discussions in good faith to determine if applicable circumstances permit the lack of
such deduction or withholding and (y) to the extent Horizon OP determines in good faith that such
deduction or withholding is required, and Sun determines in good faith that such deduction or
withholding is not required, there shall be no such deduction or withholding upon an agreement by
Sun in writing to indemnify Horizon OP against any such deduction, withholding, interest, penalties
and expenses that subsequently becomes borne, as a result of a challenge by the applicable tax
authority, by Horizon OP or its Affiliates) or (ii) in the case of any deduction or withholding
under Section 1445 of the Code, such Seller fails to furnish Horizon OP with an affidavit as
contemplated by Section 2.4(a)(vi) of this Agreement. Any amounts so deducted or withheld
by the Horizon Parties shall be treated for all purposes of this Agreement and the Local Purchase
Agreements as having been paid to the applicable Seller.




     Section 2.3
[Intentionally Omitted.]



     Section 2.4
Other Closing Transactions; Closing Deliveries.



          (a) Closing Deliveries by Sun. At the Closing, Sun shall deliver or cause to be
delivered to Horizon OP and the Horizon Subsidiaries, as applicable, the following:





     (i) certificates, where applicable, evidencing the Stock Transfer Shares and
the Class A Shares, duly endorsed in blank, or accompanied by stock powers duly
endorsed in blank, in proper form for transfer, including any required stamps
affixed thereto;




     (ii) the minute books, corporate seal, stock transfer books, stock ledger,
shareholders’ register and records (and analogous records for partnerships,
limited liability companies and other entities) for each Acquired Entity, if any;




     (iii) such duly executed (A) deeds, assignments of leases, bills of sale and
other good and sufficient instruments of conveyance and transfer as shall be
effective to vest title to the Directly Acquired Assets in Horizon OP or the
applicable Horizon Subsidiary as provided in this Agreement and (B) such other
instruments as may be reasonably requested by Horizon OP to transfer the Directly
Acquired Assets to Horizon OP or the applicable Horizon Subsidiary, or to evidence
such transfer on the public records;




     (iv) a receipt for the Cash Amount (as set forth in the Estimated Closing
Statement) less the sum of the Class B Cash Consideration and the SLT Cash Amount
and any certificates delivered by the Horizon Parties pursuant to Section
2.4(b)(ii);



17









 






     (v) resignation letters signed by each of the directors, trustees and
officers of each of the Acquired Entities as of the REIT Merger Effective Time;




     (vi) an affidavit from each Seller that is a “United States Person” within
the meaning of Section 7701(a)(30) of the Code stating, under penalty of perjury,
that the indicated number is the transferor’s United States taxpayer
identification number and the transferor is not a foreign person, pursuant to
Section 1445(b)(2) of the Code;




     (vii) the Ancillary Agreements, duly executed by Sun and the Sun Subsidiaries
(to the extent each is a party thereto), to the extent not delivered prior to the
Closing;




     (viii) all other certificates and other documents required to be delivered at
the Closing by Sun or any Sun Subsidiary pursuant to this Agreement; and




     (ix) any deliveries required pursuant to a Local Purchase Agreement.



          (b) Closing Deliveries by the Horizon Parties. At the Closing, the Horizon Parties or
one or more Horizon Subsidiaries, as applicable, shall deliver or cause to be delivered to Sun the
following (except, in each case, to the extent delivered to Sun or another Seller at or prior to
the Closing pursuant to a Local Purchase Agreement):





     (i) the Cash Amount (as set forth in the Estimated Closing Statement) less
the sum of the Class B Cash Consideration and the SLT Cash Amount, by
wire transfer of immediately available funds, to the accounts designated by
Sun in writing at least five (5) business days prior to the Closing Date;




     (ii) one or more stock certificates evidencing the Class A Stock
Consideration Per Share in respect of each Class A Share delivered pursuant to
Section 2.4(a)(i) and the Other Share Consideration, if any;




     (iii) the Local Other Closing Transaction Purchase Price, in the form and
manner set forth in the Local Purchase Agreements;




     (iv) such duly executed instruments as may be reasonably requested by Sun to
effect the assumption by Horizon OP or the applicable Horizon Subsidiary of the
Assumed Liabilities;




     (v) the Ancillary Agreements, duly executed by Horizon OP and the Horizon
Subsidiaries (to the extent each is a party thereto), to the extent not delivered
prior to the Closing;




     (vi) all other certificates and other documents required to be delivered at
the Closing by Horizon or any Horizon Subsidiary pursuant to this Agreement; and




     (vii) any deliveries required pursuant to a Local Purchase Agreement.



18









 





     Section 2.5 Purchase Price Allocations. The consideration payable pursuant to this
Agreement and the Local Purchase Agreements shall be allocated among the Acquired Entities and the
Acquired Assets in accordance with the allocation schedule set forth on Exhibit E (the
“Allocation Schedule”). Except with respect to the items set forth on Schedule 2.5
(which items shall not be adjusted pursuant to this Section 2.5), the parties to this
Agreement shall revise the Allocation Schedule to take into account any variation or adjustment in
the consideration payable pursuant to this Agreement and the Local Purchase Agreements, including
any variation in the value of the Horizon Common Stock issuable in the Closing Transactions from
the value of such stock on the date hereof, as well as estimated and final adjustments pursuant to
Article 8. Any such variation or adjustment shall be allocated proportionately among the
Acquired Entities and Acquired Assets acquired with such consideration (such that the proportion of
the aggregate consideration allocated to each Acquired Entity and Acquired Asset remains the same
after such variation or adjustment, except that (i) the consideration allocable, directly or
indirectly, to the stock of WD Parent shall be equal to the face amount of the debt obligations
held by WD Parent and (ii) the consideration allocable, directly or indirectly, to the debt
obligation of Sun and its Affiliates held by SLT shall be equal to the face amount of such debt
obligation held by SLT); provided, however, that any variation or adjustment
pursuant to Section 6.18, Section 6.30, Article 8 or any other provision of
this Agreement, the Indemnification Agreement or the Tax Sharing and Indemnification Agreement, as
applicable, that relates to any extent to a particular Acquired Entity or Acquired Asset shall be
applied to such Acquired Entity or Acquired Asset to such extent. Attached hereto as Exhibit
F are examples of how the parties to this Agreement agree revisions to Exhibit E should
be made if
there are variations in the value of the Horizon Common Stock issuable in the Closing
Transactions from the value of such stock on the date hereof. Revisions to the Allocation Schedule
shall be made in a manner consistent with the methodology used in the examples set forth in
Exhibit F. The parties hereto shall report the transactions contemplated by this Agreement
and the Local Purchase Agreements on any Tax Return consistent with the Allocation Schedule, giving
effect to any mutually agreed adjustments.



ARTICLE 3.

REPRESENTATIONS AND WARRANTIES OF

SUN AND TRUST




     Except as set forth in the letter, dated as of the date hereof, delivered by the Sun Parties
to the Horizon Parties prior to the execution of this Agreement (the “Sun Disclosure
Letter”), Sun and Trust hereby jointly and severally represent and warrant to the Horizon
Parties as follows:



     Section 3.1 Organization, Standing and Power.



          (a) Each of the Sellers and the Acquired Entities is duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation or organization, as
applicable.  Each of the Sellers (with respect to the Acquired Business) and the
Acquired Entities has all requisite corporate or other power and authority to own, operate, lease
and encumber its properties and carry on its business as now being conducted. The articles of
incorporation, as amended and supplemented, of Sun (the “Sun Charter”) and the comparable
Organizational Documents of each other Seller and the Acquired Entities are in effect and, to the
Knowledge of Sun, no dissolution, revocation or forfeiture proceeding regarding any Seller or




19









 




any
Acquired Entity has been commenced. Section 3.1(a)(1) of the Sun Disclosure Letter sets
forth each Acquired Entity and its jurisdiction of incorporation or organization. Section
3.1(a)(2) of the Sun Disclosure Letter sets forth a correct and complete list of all
jurisdictions in which the respective Sellers (with respect to the Acquired Business) and Acquired
Entities are duly qualified or licensed to do business as a foreign corporation or other limited
liability entity and are in good standing and, with respect to each such Seller and Acquired
Entity, such list includes all jurisdictions in which the nature of such Seller’s or Acquired
Entity’s business or the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so qualified or
licensed, individually and in the aggregate, would not reasonably be expected to (i) have, and has
not had, a Sun Material Adverse Effect or (ii) prevent or delay, and has not prevented or delayed,
in any material respect the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements or the Horizon Transactions or otherwise prevent Sun or any Sun Subsidiary
from performing its obligations under this Agreement or the Ancillary Agreements in any material
respect.




          (b) Sun has delivered or made available to Horizon OP complete and correct copies of the Sun
Charter, the bylaws of Sun (the “Sun Bylaws”), the Trust Declaration of Trust, the Trust
Bylaws and the comparable Organizational Documents
of the other Sellers and Acquired Entities, in each case, as amended, restated or supplemented
to the date of this Agreement. No Seller (with respect to the Acquired Business) or Acquired
Entity is in violation in any material respect of any provision of the Sun Charter, the Sun Bylaws,
the Trust Declaration of Trust, the Trust Bylaws or such other Organizational Documents. Except as
set forth in Section 3.1(b) of the Sun Disclosure Letter, complete and correct copies of
all minute books of the Acquired Entities have been previously delivered or made available to
Horizon OP.




     Section 3.2 Capital Structure.



          (a) To the extent any Acquired Entity is not directly or indirectly wholly owned, beneficially
and of record, by Sun or Trust, Section 3.2(a)(1) of the Sun Disclosure Letter sets forth
the identity and Interest of each of the other owners of such Interests in such Acquired Entity.
Section 3.2(a)(2) of the Sun Disclosure Letter sets forth (i) the percentage of outstanding
Interests in each Acquired Entity to be held by Sun and its Subsidiaries upon the completion of the
Sun Restructuring Steps and immediately prior to the Closing Transactions (the
“Post-Restructuring Time”) and (ii) each Acquired Entity for which not all of the
beneficial and record Interests (other than the Class B Shares, Options, Restricted Stock Unit
Awards, Class A EPS and Class B EPS) in such Acquired Entity will be owned by Sun or a wholly owned
Subsidiary of Sun at the Post-Restructuring Time and, with respect to each such Acquired Entity,
the identity and Interest (each, a “Minority Equity Interest”) of each Person that will
hold an Interest in such Acquired Entity at the Post-Restructuring Time.




          (b) The authorized shares of beneficial interest of Trust consist of 1,350,005,000 shares, par
value $0.01 per share, of which 5,000 are designated as Class A Shares, 1,000,000,000 are
designated as Class B Shares, 200,000,000 are designated as Excess Trust Shares (“Excess Trust
Shares”), 30,000,000 are designated as Class A EPS, 15,000,000 are designated as Class B
Exchangeable Preferred Shares (as such term is defined in the Trust Declaration of Trust)
(“Class B EPS”; the Class A Shares, Class B
Shares, Class A EPS, Class B




20









 




EPS,
Excess Trust
Shares and Excess Preferred Shares collectively referred to as “Trust Shares”), 55,000,000
are designated as Trust Preferred Shares (“Trust Preferred Shares”) and 50,000,000 are
designated as Excess Preferred Shares (“Excess Preferred Shares” and together with Excess
Trust Shares, “Excess Shares”). As of September 30, 2005, (i) 100 Class A Shares are
issued and outstanding; (ii) 219,272,686 Class B Shares are issued and outstanding; (iii) 562,222
Class A EPS are issued and outstanding; (iv) 24,627 Class B EPS are issued and outstanding; and (v)
no Trust Preferred Shares or Excess Shares are issued and outstanding. At the Post-Restructuring
Time, there will be no Class B EPS issued and outstanding. Since September 30, 2005, Trust has not
issued any Class B Shares other than in connection with (I) the issuance of Paired Shares upon the
exercise of Equity Awards pursuant to any of the Equity Plans, (II) the issuance of Paired Shares
upon the conversion of securities convertible or exchangeable for Paired Shares or (III) the
redemption of Class B EPS for cash.




          (c) Section 3.2(c) of the Sun Disclosure Letter provides a correct and, in all
material respects, complete description of all warrants or other rights to acquire Trust Shares
(other than exchange and conversion rights of holders of Class A EPS and Class B EPS under the
Trust Declaration of Trust), including, all stock options, stock appreciation rights, restricted
stock, phantom shares, dividend equivalents, deferred compensation accounts, performance awards,
restricted stock units, partnership units, stock units and other awards or equity-like rights or
arrangements, and all bonds, notes, debentures and other indebtedness which are at any time
convertible into, or exchangeable or exercisable for, Trust Shares (“Trust Share Rights”)
in each case which are outstanding on the date of this Agreement.




          (d) Except as set forth in Section 3.2(d) of the Sun Disclosure Letter, all of the
outstanding Interests in each Acquired Entity have been duly authorized and validly issued and (A)
in the case of stock Interests, are fully paid and (in applicable jurisdictions) nonassessable and
free of preemptive or similar rights, (B) in the case of partnership, limited liability company or
other Interests, are not subject to any Indebtedness, capital calls or other obligations
(contingent or otherwise) to contribute monies or property in respect thereof and (C) in all cases,
are owned free and clear of (i) Encumbrances and (ii) preemptive or other similar rights under Law,
any applicable Organizational Document and any Contract or instrument to which Sun or an Acquired
Entity is a party or by which it is bound.




          (e) Except as set forth in Section 3.2(e)(1) of the Sun Disclosure Letter, and except
for Class A EPS (which are exchangeable for Class B Shares in accordance with the Trust Declaration
of Trust) and Class B EPS (which are convertible into Class A EPS, at the option of Trust in
accordance with the Trust Declaration of Trust), as of the date of this Agreement there are not (i)
issued, reserved for issuance or outstanding any Interests of any Acquired Entity or (ii) any
Contracts to which any Acquired Entity is a party or by which such entity is bound, obligating any
Acquired Entity to issue, deliver, sell, transfer, redeem, repurchase or otherwise acquire, or
cause to be issued, delivered, sold, transferred, redeemed, repurchased or otherwise acquired
additional Interests of any Acquired Entity or obligating any Acquired Entity to issue, grant,
extend or enter into any such Contract. All Trust Shares subject to issuance in respect of Class A
EPS or Trust Share Rights, upon issuance prior to the REIT Merger Effective Time on the terms and
conditions specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable and free of preemptive rights. Set forth
in Section 3.2(e)(2) of the Sun Disclosure Letter is the “Exchange Ratio” (as such term is




21









 




defined in Section 6.15.5(d) of the Trust Declaration of Trust) as of the date of this Agreement
with respect to each share of Class A EPS.




          (f) Except as set forth in Section 3.2(f) of the Sun Disclosure Letter and except for
restrictions under applicable Law, there are no restrictions of any kind which prevent the payment
of dividends by any of the Acquired Entities and no Acquired Entity is subject to any obligation or
requirement to provide funds for or to make any investment (in the form of a loan or capital
contribution) to or in any Person. All dividends and distributions on Trust Shares that have been
declared prior to the date of this Agreement have been paid in full.




          (g) Except as set forth in Section 3.2(g) of the Sun Disclosure Letter, there are no
(i) registration rights agreements or other agreements between Sun and/or a Sun Subsidiary,
on the one hand, and one or more other parties, on the other hand, which set forth the rights
of any such other party or parties to cause the registration of any securities of any Acquired
Entity pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and (ii)
voting trust, proxy or other agreements or understandings to which Sun or any Sun Subsidiary is a
party or is bound with respect to the voting of any Interests in any Acquired Entity.




     Section 3.3 Other Capitalization Matters.



          (a) Except for (i) Interests in Acquired Entities and certain other entities as set forth in
Section 3.3(a) of the Sun Disclosure Letter and (ii) such other Interests that are permitted by the
Restructuring Plan to be transferred out of the Acquired Entities, as of the date of this
Agreement, no Acquired Entity owns directly any Interest in any Person other than (x) investments
in short-term investment securities and (y) Interests that can be assigned to a Retained Subsidiary
without the consent, approval, order or authorization of any Governmental Entity or other Person.




          (b) Except for Interests in Acquired Entities, at the Post-Restructuring Time no Acquired
Entity will own directly or indirectly any Interest in any Person (other than investments in
short-term investment securities).




          (c) Except as set forth in Section 3.3(c) of the Sun Disclosure Letter, the Acquired Entities
(directly and not through any Subsidiary or other Interest) do not own, operate or lease any (i)
hotel or (ii) other commercial property or business (in each case other than hotels) as of the date
of this Agreement, except (in the case of clause (ii)) for commercial properties or other
businesses that, individually and in the aggregate, do not have and would not reasonably be
expected to have, Liabilities in excess of $5,000,000.




          (d) Set forth in Section 3.3(d) of the Sun Disclosure Letter is the “Stated Value” and
the “Class B Liquidation Preference” (as such terms are defined in Sections 6.16.2 and 6.16.4(b),
respectively, of the Trust Declaration of Trust) as of the date of this Agreement with respect to
each share of Class B EPS.




     Section 3.4 Authority; Noncontravention; Consents.



          (a) Sun and each applicable Sun Subsidiary has all necessary corporate or other power and
authority to execute and deliver this Agreement (in the case of the Sun Parties)




22









 




and each Ancillary
Agreement to which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby to be consummated by Sun or such
Subsidiary. The execution and delivery by each Sun Party or other Sun Subsidiary of this Agreement
(in the case of the Sun Parties) and each Ancillary Agreement to which it is a party, the
performance of its obligations hereunder and thereunder, and the consummation by it of the
transactions contemplated hereby and thereby to be consummated by it have been duly and validly
authorized by all necessary action and no other proceedings on the
part of Sun or any such Sun Subsidiary and no votes by any holder of Interests in Sun or any
such Sun Subsidiary are necessary to authorize this Agreement or any Ancillary Agreement or to
consummate the transactions contemplated hereby and thereby, other than as provided in Section
3.24. This Agreement and each Ancillary Agreement has been duly authorized and validly
executed and delivered by Sun, as applicable, each Sun Subsidiary party thereto and, constitutes a
legal, valid and binding obligation of each such Sun Party or other Sun Subsidiary, enforceable
against such Sun Party or other Sun Subsidiary in accordance with its respective terms.




          (b) Except as set forth in Section 3.4(b) of the Sun Disclosure Letter, the execution
and delivery of this Agreement by the Sun Parties and the Ancillary Agreements by the applicable
Sun Subsidiaries do not, and the consummation of the transactions contemplated by, and the
performance of their respective obligations under, this Agreement and the Ancillary Agreements and
compliance by Sun and the Sun Subsidiaries with the provisions hereof and thereof, and the
consummation of the Horizon Transactions, will not conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a benefit under, or
result in the creation of any Encumbrance upon any of the Assets of Sun or any Sun Subsidiary
under, (i) the Sun Charter, Sun Bylaws, Trust Declaration of Trust or Trust Bylaws, or the other
Organizational Documents of any Sun Subsidiary, each as amended or supplemented, (ii) (A) (1) any
Permit required for the businesses, activities or operations of the Acquired Business or (2) any
Material Contract or Ground Lease or (B) any loan or credit agreement, note, bond, mortgage,
indenture, merger or other acquisition agreement, reciprocal easement agreement, lease or other
Contract, instrument, permit, concession, franchise or license applicable to Sun or any Sun
Subsidiary or their respective Assets or (iii) subject to the governmental filings and other
matters referred to in Section 3.4(c), any Laws applicable to Sun or any Sun Subsidiary or
their respective Assets, other than, in the case of clause (ii) or (iii), any such
conflicts, violations, defaults, rights, losses or Encumbrances that, individually and in the
aggregate, would not reasonably be expected to (x) result in, and has not resulted in, a Sun
Material Impairment (provided that this clause (x) shall not apply to clause
(ii)(B) above) or (y) prevent or materially impair the ability of Sun or any Sun Subsidiary to
perform its respective obligations hereunder or under the Ancillary Agreements or prevent or delay
in any material respect the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements or the Horizon Transactions.




          (c) No consent, approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Sun or any Sun Subsidiary in
connection with the execution and delivery of this Agreement and the Ancillary Agreements by the
Sun Parties or the consummation by Sun and the Sun Subsidiaries of the transactions contemplated by
this Agreement and the Ancillary Agreements, except for (i) the filing with the Securities and
Exchange Commission (the “SEC”) (x) the Proxy




23









 




Statement/Prospectus and (y) of such reports
and filings under the Securities Act and Section 13(a) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) as may be required in connection with this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and thereby, (ii) the filing and
acceptance for record of the REIT Articles of Merger by the Department and (iii) such other
consents, approvals, orders, authorizations, registrations, declarations and filings (A) as are set
forth in Section 3.4(c) of the Sun Disclosure Letter; (B) as may be required under (t) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (u) the
EC Merger Regulations or any other antitrust or competition Laws of other jurisdictions, (v) the
rules and regulations of the NYSE, (w) any applicable Laws governing the sale or service of liquor,
(x) Laws requiring transfer, recordation or gains tax filings, (y) Environmental Laws or (z) the
“blue sky” Laws of various states, to the extent applicable; or (C) which, if not obtained or made,
would not prevent or delay in any material respect the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements or the Horizon Transactions or otherwise
prevent Sun or any Sun Subsidiary from performing its respective obligations under this Agreement
or the Ancillary Agreements in any material respect or, individually or in the aggregate, result
in, or reasonably be expected to result in, a Sun Material Impairment.




     Section 3.5 SEC Documents; Financial Statements; Corporate Governance.



          (a) Trust has filed all reports, schedules, forms, statements, certifications and other
documents required to be filed with the SEC since December 31, 2002 (collectively, including all
exhibits thereto, the “Trust SEC Documents”). Except as set forth in Section
3.5(a) of the Sun Disclosure Letter, all of the Trust SEC Documents, as of their respective
filing dates and, as applicable, effective times, complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, and, in each case, the rules
and regulations promulgated thereunder applicable to such Trust SEC Documents as of the applicable
filing date or effective time. None of the Trust SEC Documents, at the time of filing or, as
applicable, of becoming effective, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading. Except as set
forth in Section 3.5(a) of the Sun Disclosure Letter, each of the consolidated financial
statements (including the related notes) of Trust included in the Trust SEC Documents filed prior
to the date hereof (the “Filed Trust SEC Documents”) (i) complied in all material respects
with applicable accounting requirements and the published rules and regulations of the SEC with
respect thereto, (ii) has been prepared in accordance with United States generally accepted
accounting principles (“GAAP”) (except, in the case of unaudited statements, to the extent
permitted by Form 10-Q under the Exchange Act) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and (iii) fairly presented in all
material respects in accordance with the applicable requirements of GAAP and the applicable rules
and regulations of the SEC, the consolidated financial position of Trust as of the dates thereof
and the consolidated results of operations and cash flows for the periods then ended. Except as
set forth in Section 3.5(a) of the Sun Disclosure Letter, Trust does not have any
Subsidiary (i) that is not consolidated for accounting purposes or (ii) that is required to file
any form, report or other document with the SEC. No Acquired Entity (other than Trust) is required
to file any form, report or other document with the SEC. As used in this Section 3.5(a)
and Section 4.6(a), the term “file”, and words of similar import, shall be broadly
construed to include any manner in




24









 




which a document or information is furnished, supplied or
otherwise made available to the SEC, in each case in accordance with SEC rules.




          (b) Each of the Unaudited Combined Interim Financial Statements and the Unaudited Stub Period
Financial Statements (i) when delivered will be prepared in all material respects in accordance
with (x) GAAP consistent with the accounting principles and practices applied in the preparation of
the financial statements included in Sun’s Annual Report on Form 10-K for the year ended December
31, 2004, as filed prior to the date of this Agreement (the “2004 10-K”), applied on a
consistent basis for the periods involved (except for changes required by GAAP as expressly
disclosed therein and except for the absence of footnotes to the extent permitted by Regulation S-X
of the Exchange Act (accompanied by a duly executed certificate of Sun, delivered in accordance
with Section 6.7(b), attached thereto), (y) Regulation S-X of the Exchange Act and (z) the
principles set forth in Section 3.5(b)(1) of the Sun Disclosure Letter (the
“Preparation Principles”), (ii) when delivered will fairly present in all material respects
the combined financial position, results of operations and cash flows, as of the dates and for the
periods presented therein, of the Acquired Business and (iii) except as set forth in Section
3.5(b)(2) of the Sun Disclosure Letter, when delivered will be prepared from, and in accordance
with, the books and records relating thereto, which books and records have been or (when delivered)
will have been, as applicable, regularly kept and maintained in all material respects in accordance
with normal and customary practices and were the basis for Sun’s and Trust’s financial statements
included in the applicable SEC Filings.




          (c) Each of the audited financial statements of the Acquired Business for the years ended
December 31, 2004, 2003 and 2002 (containing combined balance sheets of the Acquired Business as of
December 31, 2004 and 2003 and combined statements of operations and cash flows of the Acquired
Business for the years ended December 31, 2004, 2003 and 2002), together with all related notes and
schedules thereto, accompanied by the audit report of Ernst & Young LLP (“E&Y”) without
qualification or exception (the “Audited Combined Historical Financial Statements”) and, if
applicable, the 2005 Audited Financial Statements, when delivered, (i) will comply in all material
respects with (x) GAAP consistent with the accounting principles and practices applied in
preparation of the financial statements included in the 2004 10-K, applied on a consistent basis
for the periods involved, (y) Regulation S-X of the Exchange Act and (z) the Preparation
Principles, (ii) will fairly present in all material respects the combined financial position,
results of operations and cash flows, as of the dates and for the periods presented therein of the
Acquired Business and (iii) will have been prepared from, and in accordance with, the books and
records relating thereto, which books and records will have been regularly kept and maintained in
all material respects in accordance with normal and customary practices and were the basis for
Sun’s and Trust’s audited financial statements included in the applicable SEC Filings.




          (d) As of the date of this Agreement, other than the Indebtedness set forth in Section
3.17(a)(1)(ix) of the Sun Disclosure Letter, the Acquired Entities and (to the extent
constituting Assumed Liabilities) the Asset Sellers have no Indebtedness.




          (e) Trust has been and is in compliance in all material respects with the applicable
provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder
(the “Sarbanes-Oxley Act”). Section 3.5(e) of the Sun Disclosure Letter




25









 




sets
forth, as of the date hereof, the name of each
officer or director of any Acquired Entity that is currently indebted to an Acquired Entity,
as well as the amount and material terms of any such Indebtedness. There has been no default on,
or forgiveness or waiver of, in whole or in part, any Indebtedness required to be disclosed in
Section 3.5(e) of the Sun Disclosure Letter.




          (f) Each of Sun (as to the Acquired Business) and Trust has designed and maintains disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure
that material information relating to it and its consolidated Subsidiaries is made known to the
principal executive officer and the principal financial officer of it by others within those
entities. Each of Sun’s and Trust’s principal executive officer and principal financial officer
have made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act or Sections
302 and 906 of the Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC.




          (g) Each of Sun (as to the Acquired Business) and Trust has designed and maintains a system of
internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with GAAP
(within the meaning of such terms under the Sarbanes-Oxley Act). Each of Sun and Trust has
disclosed, based on its most recent evaluation to its respective auditors and the audit committee
of its Board of Directors or Trustees (as applicable) (A) any significant deficiencies and material
weaknesses in the design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect in any material respect Trust’s or Sun’s (as to the Acquired
Business) or, after the REIT Merger Effective Time, Horizon’s ability to record, process, summarize
and report financial information and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in its internal controls over financial
reporting. Each of Sun and Trust has delivered to Horizon any such disclosures (i) prior to the
date of this Agreement or (ii) with respect to evaluations after the date of this Agreement,
promptly following the disclosures to the applicable auditors and audit committee. For purposes of
this Section 3.5(g) and Section 4.6(d), the terms “significant deficiency” and
“material weakness” shall have the meanings assigned to them in the Public Company Accounting
Oversight Board Auditing Standard No. 2, as in effect on the date hereof.




          (h) As of the date of this Agreement, since the Sun Financial Statement Date and other than as
set forth in Section 3.5(h) of the Sun Disclosure Letter, with respect to the Acquired
Business, Sun’s Global Compliance Group has not received for investigation, or investigated, any
allegation or assertion of a violation or alleged violation of Sun’s Code of Conduct and Business
Ethics.




          (i) The draft combined statement of operations of the Acquired Hotels for the eight months
ended August 31, 2005 set forth in Section 3.5(i)(1) of the Sun Disclosure Letter (i)
fairly presents in all material respects the combined results of operations of the Acquired Hotels
for the period presented therein and (ii) except as set forth in Section 3.5(i)(2) of the
Sun Disclosure Letter, has been prepared from, and in accordance with, the books and records
relating thereto, which books and records have been or (when delivered) will have been, as
applicable, regularly kept and maintained in all material respects in accordance with normal and




26









 




customary practices and were (or will be) the basis for Sun’s and Trust’s financial statements
included in the applicable SEC Filings. The revenue and EBITDA of the Acquired Hotels for the
eight months ended August 31, 2005, in each case as reflected in or derivable from, as the case may
be, the Unaudited 2005 Interim Financial Statements (when delivered), shall not reflect any
variance that is in any material respect adverse to the Acquired Business, from such revenue and
EBITDA reflected in Section 3.5(i)(1) of the Sun Disclosure Letter.




          (j) The draft combined balance sheet and combined statement of operations of the Acquired
Hotels as of and for the year ended December 31, 2004 set forth in Section 3.5(j)(1) of the
Sun Disclosure Letter (i) fairly present in all material respects the combined financial position
and combined results of operations of the Acquired Hotels as of and for the period presented
therein and (ii) except as set forth in Section 3.5(j)(2) of the Sun Disclosure Letter,
have been prepared from, and in accordance with, the books and records relating thereto, which
books and records have been or (when delivered) will have been, as applicable, regularly kept and
maintained in all material respects in accordance with normal and customary practices and were (or
will be) the basis for Sun’s and Trust’s financial statements included in the applicable SEC
Filings. The financial statement line items of the Acquired Hotels as of and for the year ended
December 31, 2004, in each case as reflected in or derivable from, as the case may be, the Audited
Combined Historical Financial Statements (when delivered), shall not reflect any variance (other
than with respect to the line items set forth on Schedule 7.2(a)) that is in any material
respect adverse to the Acquired Business, from such financial statement line items reflected in
Section 3.5(j)(1) of the Sun Disclosure Letter.




     Section 3.6 Absence of Certain Changes or Events. Except as disclosed in Section
3.6(a) of the Sun Disclosure Letter, since December 31, 2004 (the “Sun Financial Statement
Date”), the Acquired Entities and, with respect to the Acquired Business, the Sellers have
conducted their business in the Ordinary Course. Except as disclosed in Section 3.6(b) of
the Sun Disclosure Letter, since the Sun Financial Statement Date there has not been (a) any
circumstance, event, occurrence, change or effect that, individually or in the aggregate, has had
or would reasonably be expected to have a Sun Material Adverse Effect, (b) on or prior to the date
of this Agreement, any split, combination or reclassification of Trust Shares or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu of or in
substitution for, or giving the right to acquire by exchange or exercise, shares of beneficial
interest of Trust or any issuance of any other Interest in, an Acquired Entity (other than
issuances of Equity Awards or Paired Shares) or (c) on or prior to the date of this Agreement, any
other action or omission by Sun or any Sun Subsidiary which, if occurring during the period from
the date of this Agreement through the Closing, would constitute a breach of any of the following
subsections of Section 5.1: (b), (f), (q), (s),
(t), (u)(i) and, with respect to any of the foregoing, (x).



     Section 3.7 Litigation. Except as disclosed in Section 3.7(a) of the Sun
Disclosure Letter, there is no suit, action, investigation or proceeding pending or, to the
Knowledge of Sun, threatened against or affecting Sun or any Sun Subsidiary directly relating to or
involving the Acquired Business, any Acquired Hotels or any Acquired Entity or any of their
respective Assets, or any of the directors,
officers, employees or agents thereof who may be subject to indemnification by Sun or any Sun
Subsidiary that, individually or in the aggregate, if determined or resolved adversely, would
reasonably be expected to (i) result in, or has resulted



27









 







in, a liability exceeding $500,000 (after
taking into consideration any insurance or third party proceeds which have been or would reasonably
be expected to be received in connection with such suit, action, investigation or proceeding) or
(ii) prevent or materially impair the ability of Sun or any Sun Subsidiary to perform any of its
respective obligations hereunder or under any Ancillary Agreement or prevent or delay in any
material respect the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements or the Horizon Transactions, nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against Sun or any Sun
Subsidiary or any of the Acquired Hotels that has had or would reasonably be expected to have any
effect set forth in clause (i) or (ii) above. Except as disclosed in Section
3.7(b) of the Sun Disclosure Letter, there is no suit, action, investigation or proceeding
pending or, to the Knowledge of Sun, threatened against or affecting Sun or any Sun Subsidiary
directly relating to or involving the Acquired Business, any Acquired Hotels or any Acquired Entity
or any of their respective Assets, or any of the directors, officers, employees or agents thereof
who may be subject to indemnification by Sun or any Sun Subsidiary that, individually or in the
aggregate, if determined or resolved adversely, would reasonably be expected to have, or has had, a
Sun Material Adverse Effect.



     Section 3.8 Properties.



          (a) Section 3.8(a) of the Sun Disclosure Letter sets forth (i) a complete and correct
list of the Acquired Properties, (ii) whether each Acquired Property is owned in fee simple or held
pursuant to a ground leasehold or other interest and (iii) the Sun Party or other Sun Subsidiary
that owns fee simple title to or a ground leasehold or other interest in each Acquired Property.
Except as set forth in Section 3.8(a) of the Sun Disclosure Letter, Sun or a Sun Subsidiary
owns fee simple title to or holds a valid leasehold interest in the Acquired Properties as of the
date of this Agreement, in each case free and clear of Encumbrances (except for Permitted Title
Exceptions). Except as set forth in Section 3.8(a) of the Sun Disclosure Letter, an Asset
Seller or an Acquired Entity will own fee simple title to or hold a valid leasehold interest in
each of the Acquired Properties immediately prior to the Closing, in each case free and clear of
Encumbrances (except for the Permitted Title Exceptions). For purposes of this Agreement,
“Permitted Title Exceptions” means: (i) Encumbrances for current real estate taxes and
assessments not yet due and payable; (ii) Encumbrances relating to Indebtedness included in the
Assumed Liabilities; (iii) Encumbrances, rights or obligations created by or resulting from the
acts or omission of any Horizon Party or any of its Affiliates and their respective lenders,
employees, officers, directors, agents, representatives, contractors, invitees or licensees or any
Person claiming by, through or under any of the foregoing; (iv) Encumbrances (A) created by any of
the documents to be executed in connection with this Agreement or any of the Ancillary Agreements
or (B) otherwise disclosed on Schedules or Exhibits to, or expressly permitted pursuant to, this
Agreement or the Ancillary Agreements; (v) all matters disclosed in the Existing Title Policies,
the Existing Surveys or any current title commitments or title reports (or, with respect to
Acquired Properties located outside of the United States and Canada, certificates, abstracts or
similar evidence of title) with respect
to the Acquired Properties delivered or made available to, or which have otherwise been
obtained directly by, Horizon OP prior to the date of this Agreement; (vi) all matters disclosed in
any zoning reports, surveys, written instruments or written agreements (whether recorded or
otherwise) delivered or made available to Horizon OP or which have otherwise been obtained directly
by Horizon OP prior to the date of this Agreement; (vii) any Encumbrance for which either title
insurance coverage, bonding or an




28









 




indemnification reasonably satisfactory to Horizon OP has been
obtained; (viii) any mechanic’s, workmen’s, repairmen’s, carrier’s, warehousemen’s or other like
liens (A) for amounts not yet due or (B) which are being contested in good faith and by appropriate
proceedings or are otherwise covered by clause (vii) above; (ix) liens created by or
resulting from any litigation or legal or administrative proceeding which is not otherwise a
violation of Section 3.7; (x) any other restrictions or title matters imposed or
promulgated by Law or any Governmental Entity with respect to real property (including zoning and
building Laws and regulations); (xi) without limiting the effect of Sections 3.8(d),
6.18 and 8.2(b), any claim, action or proceeding for condemnation or eminent domain
against any of the Acquired Properties; (xii) any Encumbrances which are not otherwise included in
the definition of Permitted Title Exceptions pursuant to any of the clauses of this definition, to
the extent such Encumbrances are incurred or created in the Ordinary Course and, individually and
in the aggregate, do not result in, and would not reasonably be expected to result in, a Sun
Material Impairment; and (xiii) any other easements, leases, rights-of-way, restrictions,
covenants, licenses or other Encumbrances, whether or not of record, or any encroachments or other
survey defects which would be disclosed by a current accurate survey or physical inspection of the
Acquired Property or otherwise, to the extent not otherwise included under clauses (i)
through (xii), but which, individually and in the aggregate (but without including any
other Encumbrances otherwise included as Permitted Title Exceptions pursuant to any other clauses
of this definition), do not result in, and would not reasonably be expected to result in, a Sun
Material Impairment. As used herein, “Existing Title Policy” means, with respect to each
Acquired Property, the existing policy of title insurance (if any) insuring the applicable Sun
Subsidiary’s fee simple title or leasehold estate, as the case may be, to such Acquired Property as
set forth in Section 3.8(a) of the Sun Disclosure Letter and which have been delivered or
made available to Horizon OP prior to the date of this Agreement (collectively, with respect to all
Acquired Properties, the “Existing Title Policies”). As used herein, “Existing
Survey” means, with respect to each Acquired Property, the existing survey (if any) covering
such Acquired Property as set forth in Section 3.8(a) of the Sun Disclosure Schedule and
which have been delivered or made available to Horizon OP prior to the date of this Agreement
(collectively, with respect to all Acquired Properties, the “Existing Surveys”).




          (b) To the Knowledge of Sun, neither Sun nor any Sun Subsidiary is in violation of any
material Permitted Title Exceptions, except for such violations which have been cured or which,
individually and in the aggregate, have not resulted in, and would not reasonably be expected to
result in, a Sun Material Impairment.




          (c) To the Knowledge of Sun, no material claim has been made against any Existing Title Policy
to the Acquired Properties.




          (d) Except as set forth in Section 3.8(d) of the Sun Disclosure Letter, neither Sun
nor any Sun Subsidiary has received any written notice to the effect that any condemnation event or
involuntary rezoning proceedings are pending or threatened with respect to any of the Acquired
Properties which, individually or in the aggregate, have resulted in, or would reasonably be
expected to result in, a Sun Material Impairment.




          (e) Set forth in Section 3.8(e)(1) of the Sun Disclosure Letter is a complete and
correct list of all ground leases relating to the Acquired Properties (the “Ground
Leases”). Except as set forth in Section 3.8(e)(2) of the Sun Disclosure Letter,
through the date hereof, Sun




29









 




has no Knowledge of delivery or receipt of any written notice of
termination under any Ground Lease that remains uncured. Except as, individually and in the
aggregate, has not resulted in and would not reasonably be expected to result in a Sun Material
Impairment, neither Sun nor any Sun Subsidiary has received a written notice that it is in
violation of or in default under (nor, to the Knowledge of Sun, does there exist any such violation
or default or any condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any Ground Lease that remains uncured. Each Ground
Lease is in full force and effect and is binding and enforceable against the Sellers or Acquired
Entities, as applicable, and, to the Knowledge of Sun, each other party thereto, except as,
individually and in the aggregate, has not resulted in and would not reasonably be expected to
result in a Sun Material Impairment. Sun has delivered or made available to Horizon OP correct and
complete copies of all Ground Leases, including all amendments, modifications, supplements,
renewals, extensions and guarantees related thereto, in effect as of the date hereof.




          (f) Neither Sun nor any Sun Subsidiary owns any real property adjacent to or adjoining the
Acquired Property associated with the Acquired Hotels identified as the “Sheraton Centre Toronto”
and “Sheraton Hamilton Hotel” on Schedule 10.1(d) of the Merger Agreement.




     Section 3.9 Environmental Matters.



          (a) “Environmental Law” means any and all Laws, permits, restrictions and licenses,
including any binding plans, other criteria, or guidelines promulgated pursuant to such Laws,
relating to noise control, the protection of human health, safety and natural resources, animal
health or welfare or the environment, including Laws relating to the use, manufacturing,
production, generation, installation, recycling, reuse, sale, storage, handling, transport,
treatment, release, threatened release or disposal of any Hazardous Materials (including the
Comprehensive Environmental Response, Compensation, and Liability Act, as amended, 42 U.S.C. ss
9601 et seq. (“CERCLA”)). “Environmental Reports” means those environmental
reports and assessments set forth in Section 3.9(a) of the Sun Disclosure Letter.
“Hazardous Materials” means substances, wastes, radiation or materials (whether solids,
liquids or gases) (i) which have been determined, pursuant to Environmental Law, to be hazardous,
toxic, infectious, explosive, radioactive, carcinogenic, or mutagenic, (ii) which are listed,
regulated or defined under any Environmental Law, and shall include “hazardous wastes,” “hazardous
substances,” “hazardous materials,” “pollutants,” “contaminants,” “toxic substances,” “radioactive
materials” or “solid wastes,” (iii) the presence
of which on property cause or, in their current form or condition, threaten to cause a
nuisance pursuant to applicable Law upon the property or to adjacent properties, (iv) which contain
without limitation polychlorinated biphenyls (PCBs), asbestos or asbestos-containing materials,
lead-based paints, urea-formaldehyde foam insulation, or petroleum or petroleum products (including
crude oil or any fraction thereof) or (v) which, in their current form or condition, pose a hazard
to human health, safety, natural resources, industrial hygiene, or the environment, or an
impediment to working conditions. “Release” shall have the meaning set forth in Section
101 of CERCLA, without regard to the exclusions set forth therein, unless the Environmental Law
applicable to the Acquired Property shall contain a definition or concept comparable to such term
but more broadly defined, in which case the definition or concept in such Environmental Law shall
apply and be included in the meaning of “Release” in respect to such Acquired Property.
“Structural Mold” means the presence of active mold growth within interior building
components (including drywall, insulation and ventilation




30









 




systems) that cannot be effectively
controlled through the application of routine periodic cleaning measures.




          (b) Except as disclosed in the Environmental Reports, or as set forth in Section
3.9(b) of the Sun Disclosure Letter,





     (i) neither Sun nor any Sun Subsidiary nor, to the Knowledge of Sun, any other Person
has caused or permitted the presence of any Hazardous Materials at, on or under any of the
Acquired Properties and, to the Knowledge of Sun, no Hazardous Materials are present at, on
or under any of the Acquired Properties, in each of the foregoing cases, in such quantities
or under such conditions that the presence of such Hazardous Materials (including the
presence of Structural Mold or asbestos in any buildings or improvements at the Acquired
Properties), individually or in the aggregate, has resulted in, or would reasonably be
expected to result in, a Sun Material Impairment;




     (ii) there have been no Releases of Hazardous Materials at, on, under or from the
Acquired Properties and, to the Knowledge of Sun, any Land underlying any Ground Lease,
during the period of ownership, operation or tenancy, and, to the Knowledge of Sun, no
Releases of Hazardous Materials have occurred or are presently occurring at, on, under or
from the Acquired Properties, which, individually or in the aggregate, have resulted in, or
would reasonably be expected to result in, a Sun Material Impairment, and neither Sun nor
any Sun Subsidiary nor, to the Knowledge of Sun, any other Person, has received any notice
of alleged, actual or potential responsibility for, or any inquiry or investigation
regarding, any such Releases or threatened Releases of Hazardous Materials, nor, to the
Knowledge of Sun, is there any information which might form the basis of any such notice or
any claim;




     (iii) the Acquired Entities and, with respect to the Acquired Business, the Sellers
have not failed to comply with any Environmental Law, and no Acquired Entity or, with
respect to the Acquired Business, Seller has received notice of any liability under the
Environmental Laws, except to the extent that any such failure to comply or any such
Liability, individually and in the aggregate, has not resulted in, and would not reasonably
be expected to result in, a Sun Material Impairment;




     (iv) neither Sun nor any Sun Subsidiary nor, to the Knowledge of Sun, any other Person,
has transported or arranged for the transport of Hazardous Materials from the Acquired
Properties which, to the Knowledge of Sun, is or would reasonably be expected to become the
subject of any environmental action;




     (v) the Acquired Entities and, with respect to the Acquired Business, the Sellers have
been duly issued, and currently have and will maintain through the Closing Date, all
permits, licenses, certificates and approvals required under any Environmental Law
(collectively, the “Environmental Permits”) necessary to operate their businesses as
currently operated except where the failure to obtain and maintain such Environmental
Permits, individually and in the aggregate, has not resulted in, and would not reasonably be
expected to result in, a Sun Material Impairment; and



31









 







     (vi) there is no suit, action, investigation or proceeding pending or, to the Knowledge
of Sun, threatened against or affecting Sun or any Sun Subsidiary directly relating to or
involving the Acquired Business, any Acquired Hotels or any Acquired Entity or any of their
respective Assets, or any of the directors, officers, employees or agents thereof who may be
subject to indemnification by Sun or any Sun Subsidiary relating to any Environmental Law
that, individually or in the aggregate, if determined or resolved adversely, would
reasonably be expected to (A) result in, or has resulted in, a liability exceeding $500,000
(after taking into consideration any insurance or third party proceeds which have been or
may be received in connection with such suit, action, investigation or proceeding) or (B)
otherwise have, or has had, a Sun Material Adverse Effect.



          (c) To the Knowledge of Sun, correct and, in all material respects, complete copies of all
material information, documents and reports, including environmental investigations and testing or
analysis, that are in the possession or custody of Sun or any Sun Subsidiary which relate to
compliance with Environmental Laws by any of them or to the past or current environmental condition
of the Acquired Properties (i) have been delivered or made available to Horizon OP and (ii) are set
forth in Section 3.9(a) of the Sun Disclosure Letter.




          (d) The representations and warranties contained in this Section 3.9 constitute the
sole and exclusive representations and warranties of Sun and Trust with respect to any
Environmental Laws, Hazardous Materials, Environmental Permits or litigation relating thereto.
Further, the parties hereto agree that for any matter or condition to be considered “disclosed” in
an Environmental Report for purposes of Section 3.9(b), the description of such matter or
condition in such Environmental Report must contain reasonable detail and/or explanation such that
the relevance and potential implications of such matter or condition in relation to Section
3.9(b) would be reasonably ascertainable to a sophisticated reviewer of environmental
assessment reports.




     Section 3.10 Affiliate Transactions; Intercompany Liabilities.



     Except as set forth in Section 3.10 of the Sun Disclosure Letter, there are no
understandings, arrangements or Contracts, including those providing for sales, purchases, leasing,
subleasing, licensing or sublicensing of goods, services, tangible or intangible property or joint
activities (including any Indebtedness), of the type described in Item 404 of Regulation S-K of the
Exchange Act between any of the Acquired Entities or (to the extent such Contracts constitute
Acquired Assets or Assumed Liabilities) the Asset Sellers, on the one hand, and Sun or any Retained
Subsidiary (other than any Asset Seller to the extent such Contracts constitute Acquired Assets or
Assumed Liabilities) or any of their respective current directors, officers or other Affiliates or
any other individuals who were named executive officers (as such term is used in Regulation S-K of
the Exchange Act) of Sun at any time since December 31, 2003 or any relative of any of the
foregoing (other than the Acquired Entities), on the other hand. Complete and correct copies of
all such understandings, arrangements and Contracts marked with an ‘*’ on Section 3.10 of
the Sun Disclosure Letter have previously been delivered or made available to Horizon OP. As used
in this Agreement, the term “Affiliate” shall have the same meaning as such term is defined
in Rule 405 promulgated under the Securities Act.




32










 







     Section 3.11 Employee Benefits. As used herein, the term “Employee Plan”
includes any pension, retirement, savings, disability, medical, dental, health, life, death
benefit, executive compensation, change of control benefit, savings, group insurance, profit
sharing, deferred compensation, equity compensation, bonus, incentive, vacation pay, tuition
reimbursement, severance pay, fringe benefit or other employee benefit plan, trust, Contract,
agreement, policy or commitment (including any employee benefit plan, as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder (“ERISA”), and any welfare plan as defined in Section 3(1) of ERISA,
whether or not covered by ERISA), whether any of the foregoing is funded, insured or self-funded,
written or oral. Section 3.11 of the Sun Disclosure Letter sets forth a correct and
complete list of all Employee Plans sponsored, maintained, contributed to or required to be
contributed to by Sun or any Sun Subsidiary for the benefit of employees of, or for employees
performing services primarily for, the Acquired Business (each, a “Sun Employee Plan”), as
well as each multiemployer plan (as such term or any similar term is defined in Section 3(37) of
ERISA or under applicable Law) that is a Sun Employee Plan (a “Multiemployer Plan”). Each
Sun Employee Plan has been established, registered, operated, invested, funded and administered in
compliance with its terms, all applicable employment agreements and applicable Law, except for such
instances of non-compliance which, individually and in the aggregate, would not reasonably be
expected to result in a Sun Material Impairment; provided, however, that, in the
case of any Multiemployer Plan, this representation is limited to matters within the Knowledge of
Sun. No Acquired Entity maintains or sponsors an Employee Plan. No Acquired Entity has been
assessed any current Liability under Title IV of ERISA, and the transactions contemplated by this
Agreement shall not trigger any Liability under Title IV of ERISA with respect to any Employee
Plan, other than a Multiemployer Plan. Sun and each Sun Subsidiary has made all contributions
required under applicable collective bargaining agreements and, in jurisdictions outside of the
United States, paid all interest and penalties claimed to each Multiemployer Plan, except for any
contribution which is not yet due and payable. To the Knowledge of Sun, the transactions
contemplated by this Agreement or the Ancillary Agreements or the Horizon Transactions will
not trigger or cause a withdrawal, whether complete or partial, from any Multiemployer Plan under
Section 4201, 4203 or 4205 of ERISA or under the terms of any Multiemployer Plan.



     Section 3.12 Employment and Labor Matters.



          (a) No Acquired Entity formed in the United States (or any subdivisioin thereof) or Canada (or
any subdivision thereof) directly employs any employees and all services performed for the Acquired
Entities and, with respect to the Acquired Business, the Asset Sellers, are performed by Sun or a
Sun Subsidiary other than an Acquired Entity (each, a “Sun Employer”) or independent contractors.



          (b) Except as set forth in Section 3.12(b) of the Sun Disclosure Letter, (i) there are
no suits, charges, grievances or attorney demand letters, pending or threatened, involving Sun or
any Sun Subsidiary and any employee of the Acquired Business, that, individually or in the
aggregate, if determined or resolved adversely to Sun or such Sun Subsidiary, has resulted in, or
would reasonably be expected to result in, a Sun Material Impairment, (ii) neither Sun nor any Sun
Subsidiary is a party to any collective bargaining agreement, labor union contract or legally
binding commitment to any labor union applicable to any employees of the Acquired Business, and, to
the Knowledge of Sun, there are no activities or



33









 




proceedings involving any labor union to organize
or represent any such employees, that, individually or in the aggregate, if successful, would
result in, or would reasonably be expected to result in, a Sun Material Impairment, (iii) there are
no unfair labor practice charges or other applications or proceedings before a labor relations
board or any similar authority currently pending or, to the Knowledge of Sun, threatened, involving
Sun or any Sun Subsidiary and any employee of the Acquired Business, that, individually or in the
aggregate, if determined or resolved adversely to Sun or any Sun Subsidiary, would result in, or
would reasonably be expected to result in, a Sun Material Impairment, (iv) neither Sun nor any Sun
Subsidiary is a party to, or otherwise bound by, any consent decree with, or citation or other
order by, any Governmental Entity relating to employment practices with respect to any employees of
the Acquired Business, except to the extent any such consent decree, citation or order,
individually and in the aggregate, has not resulted in and would not reasonably by expected to
result in a Sun Material Impairment and (v) each of Sun and the Sun Subsidiaries is in compliance
in all material respects with all applicable Laws, Contracts and employment policies relating to
employment practices, wages, hours and other terms and conditions of employment, employment
standards, human rights, occupational safety, workers’ compensation, language of work and plant
closing Laws with respect to employees of the Acquired Business, except in each case to the extent
that any noncompliance therewith, individually and in the aggregate, has not resulted in and would
not reasonably be expected to result in a Sun Material Impairment.




     Section 3.13 Intellectual Property. Except as set forth in Section 3.13 of
the Sun Disclosure Letter or as, individually and in the aggregate, have not had and would not
reasonably be expected to have a Sun Material Adverse Effect, (i) Sun and the Sun Subsidiaries own
or have a valid right to use all Sun
Intellectual Property that is used in the operation of the Acquired Business in the manner in
which it is currently used, (ii) no Acquired Entity or, with respect to the Acquired Business,
Seller has misappropriated or is infringing upon the Intellectual Property of others, (iii) Sun and
the Sun Subsidiaries have taken reasonable actions to protect and maintain the Sun Intellectual
Property that is used in the Acquired Business and (iv) there are no claims, suits or other actions
pending or, to the Knowledge of Sun, threatened that seek to limit or challenge the validity,
enforceability, ownership, or right to use, sell or license the Sun Intellectual Property owned by
Sun or any of its Affiliates, or the right to use or license any Sun Intellectual Property that Sun
or any of its Affiliates use or holds for use but does not own, that is used in the Acquired
Business, nor, to the Knowledge of Sun, is there any valid basis therefor.



     Section 3.14 Taxes.



          (a) Each of the Sun Parties, the Acquired Entities and each member of any affiliated,
consolidated, combined or unitary group of which any Sun Party or any Sun Subsidiary is (or, during
any taxable year either beginning on or after January 1, 1998 or for which the statute of
limitations has not expired, was) a member (each such entity, a “Sun Taxpayer”) (A) has
filed (or has had filed on its behalf) all material Tax Returns required to be filed by it (after
giving effect to any filing extension properly granted by a Governmental Entity having authority to
do so) and all such Tax Returns are accurate and complete in all material respects, (B) has paid
(or Sun or Trust has paid on its behalf) all material Taxes of it (whether or not shown on any Tax
Return) that are due and payable and (C) has complied in all material respects with all applicable
Laws relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to
Sections 1441, 1442, 1445, 1446, 3121, and 3402 of the Code



34









 







or any similar provision of Law) and
has, within the time period prescribed by Law, withheld and paid over to the proper Governmental
Entities all material amounts required to be so withheld and paid over under applicable Laws. The
most recent audited financial statements of Sun and Trust contained in the Filed Trust SEC
Documents, the Unaudited Combined Interim Financial Statements and the Unaudited Stub Period
Financial Statements reflect or (when delivered) will reflect, as applicable, an adequate reserve
(excluding any reserve for deferred Taxes established to reflect timing differences between book
and Tax income) for all material unpaid Taxes of the Sun Taxpayers for all taxable periods and
portions thereof through the date of such financial statements. From the Sun Financial Statement
Date through the date of this Agreement, no Sun Taxpayer has incurred any material liability for
Taxes other than in the Ordinary Course. From the date of this Agreement through Closing, no
Acquired Entity will have incurred any material liability for Taxes other than (i) in the Ordinary
Course or (ii) pursuant to the Baseline Restructuring Steps (as modified in accordance with
Exhibit A). Since January 1, 1995 or, if later, the acquisition by Trust of a direct or
indirect interest therein, none of Trust, W&S Denver Corp., W&S Lauderdale Corp. or W&S Seattle
Corp. (each such entity, a “REIT Entity”) has incurred any material liability for Taxes
under Sections 857(b), 860(c) or 4981 of the Code, including any Tax arising from a prohibited
transaction described in Section 857(b)(6) of the Code. No Acquired Entity is the subject of any
audit, examination, or other proceeding in respect of material Taxes, and to the Knowledge of Sun,
no audit, examination or other proceeding in respect of material Taxes involving any Acquired
Entity is being considered by
any Tax authority. No deficiencies for any material Taxes have been proposed, asserted or
assessed against any Acquired Entity, Sun (to the extent that any Acquired Entity could be held
liable for such Taxes) or any Sun Affiliate (to the extent that any Acquired Entity could be held
liable for such Taxes) that will not have prior to the Closing Date been fully paid (including any
applicable interest charges, penalties or other additions to Taxes), and no requests for waivers of
the time to assess any such Taxes are pending. No Acquired Entity has received written notice from
any Governmental Entity in a jurisdiction in which such entity does not file a Tax Return stating
that such entity is or may be subject to taxation by that jurisdiction. As of the completion of
the Closing, (i) no Acquired Entity (other than Trust) that is domestic and is treated as a
corporation for United States federal income tax purposes will have any C Corporation Earnings and
Profits and (ii) the aggregate amount of C Corporation Earnings and Profits of the Acquired
Entities that are foreign and are treated as corporations for United States federal income tax
purposes will not exceed $50,000,000 (taking into account only the earnings and profits of such
entities that have positive earnings and profits). As used in this Agreement: (i) “Taxes”
means (A) all taxes, charges, fees, levies and other assessments, including income, gross receipts,
excise, real or personal property, sales, withholding (including dividend withholding and
withholding required pursuant to Sections 1445 and 1446 of the Code), social security, occupation,
use, service, license, payroll, franchise, transfer and recording taxes, fees and charges,
including estimated taxes, imposed by the United States or any taxing authority (domestic or
foreign), whether computed on a separate, consolidated, unitary, combined or any other basis, and
any interest, fines, penalties or additional amounts attributable to, or imposed upon, or with
respect to any such taxes, charges, fees, levies or other assessments and (B) any liability for
amounts described in clause (A) of another Person under Treasury Regulation Section
1.1502-6 (or any similar provision of Law), as a result of transferee liability, by Law, by
Contract or otherwise and (ii) “Tax Return” means any report, return, document, declaration
or other information or filing required to be supplied to any taxing authority or jurisdiction
(foreign



35









 







or domestic) with respect to Taxes, including any schedule or attachment thereto and any
amendment thereof, any information returns, any documents with respect to or accompanying payments
of estimated Taxes, or with respect to or accompanying requests for the extension of time in which
to file any such report, return, document, declaration or other information. Notwithstanding
anything in this Section 3.14 to the contrary, any references to “Taxes” for purposes of
this Section 3.14(a) shall exclude any Taxes (within the meaning of clause (A) of
the definition of “Taxes”) of Sun or any Retained Subsidiary, other than Taxes for which
any Acquired Entity or Horizon Party could be held liable post-Closing or the non-payment of which
could result in the Acquired Assets being subject to a material Encumbrance.



          (b) Since January 1, 1995 or, if later, the acquisition by Trust of a direct or indirect
interest therein, Trust and each other REIT Entity (i) has elected to be subject to taxation as a
real estate investment trust (a “REIT”) within the meaning of Section 856 of the Code (and
any similar provision of state Tax Law) and has satisfied all requirements to qualify as a REIT for
all taxable years since and including 1995 or, if later, the acquisition by Trust of a direct or
indirect interest therein, (ii) has operated since and including January 1, 2005 to the date of
this representation, and intends to continue to operate through and including the Closing Date, in
such a manner as to qualify as a REIT and (iii) has received no written notice that a challenge to
its status as a REIT is pending or threatened. Each Acquired Entity that is a partnership, joint
venture or limited liability company has been treated since its
formation and continues to be treated for federal and state income tax purposes as a
partnership or as an entity that is disregarded for federal income tax purposes and not as a
corporation or an association taxable as a corporation. In addition, each Subsidiary of Trust or
any other REIT Entity that is a partnership, joint venture or limited liability company has not,
since the latest of January 1, 1995, its formation or the acquisition by Trust or such other REIT
Entity, as applicable, of a direct or indirect interest therein, owned any Assets (including
securities) that would cause Trust or such other REIT Entity to violate Section 856(c)(4) of the
Code. SLT is not a publicly traded partnership within the meaning of Section 7704(b) of the Code
that is taxable as a corporation pursuant to Section 7704(a) of the Code. For all taxable years
beginning on or after January 1, 1995 (in the case of Trust) or January 1, 1998 (in the case of
other REIT Entities) and ending on or before December 31, 2000, each Subsidiary of Trust or any
other REIT Entity which is a corporation (for federal income tax purposes) has been on the last day
of each calendar quarter during which Trust or such other REIT Entity has owned an interest in such
corporation representing more than 10% of the outstanding voting securities of such corporation, a
qualified REIT subsidiary under Section 856(i) of the Code or a REIT. For all taxable years
beginning on or after January 1, 2001, each Subsidiary of Trust or any other REIT Entity which is a
corporation (for federal income tax purposes) has been, on the last day of each calendar quarter
during which Trust or such other REIT Entity has owned an interest in such corporation representing
more than 10% of the value of the outstanding securities of such corporation or more than 10% of
the outstanding voting securities of such corporation, a qualified REIT subsidiary under Section
856(i) of the Code, a taxable REIT subsidiary of Trust or such REIT Entity under Section 856(l) of
the Code, a REIT, or a corporation which qualifies under the transitional rules set forth in
Section 546(b) of the Tax Relief Extension Act of 1999. Each Subsidiary of Trust that is a
“qualified REIT subsidiary” under Section 856(i) of the Code is set forth in Section
3.14(b) of the Sun Disclosure Letter. No Acquired Entity that is either a REIT Entity or a
Subsidiary of a REIT Entity will hold, as of the Closing, any Asset (x) the disposition of which
would be subject to rules similar to Section 1374 of the Code as a result of an election



36









 







under IRS
Notice 88-19, Temporary Treas. Reg. §1.337(c)-5T, Treas. Reg. §1.337(d)-5, Treas. Reg. §1.337(d)-6
or not making an election under Treas. Reg. §1.337(d)-7 or (y) which is subject to a consent filed
pursuant to Section 341(f) of the Code and the regulations thereunder.



          (c) To the Knowledge of Sun, as of the date hereof, each of the REIT Entities is a
“domestically-controlled” REIT within the meaning of Section 897(h) of the Code.



          (d) There are no Encumbrances for material Taxes (other than for current Taxes not yet due and
payable) on any Acquired Assets.



          (e) Section 3.14(e) of the Sun Disclosure Letter contains a list of each
tax-indemnity, tax-sharing or tax-allocation agreement that any Acquired Entity is a party to or
bound by (or, except for the Tax Sharing and Indemnification Agreement, will become a party to or
bound by). Section 3.14(e) of the Sun Disclosure Letter contains a list of all
Contribution Agreements that any Acquired Entity has entered into, is a party to, or is subject to.
As used herein, a “Contribution Agreement” means an agreement, oral or written, (A) that
has one of its purposes to permit a Person to take the position that such Person could defer
federal taxable income that otherwise might have been recognized upon a transfer of property or
contribution to any Acquired Entity that is treated as a partnership
for federal income tax purposes and that (i) prohibits or restricts in any manner the
disposition of any Assets of any Acquired Entity, (ii) requires that any Acquired Entity maintain,
put in place, or replace, indebtedness, whether or not secured by one or more Acquired Properties
or (iii) requires that any Acquired Entity offer to any Person at any time the opportunity to
guarantee or otherwise assume, directly or indirectly (including through a “deficit restoration
obligation,” guarantee (including a “bottom” guarantee), indemnification agreement or other similar
arrangement), the risk of loss for federal income Tax purposes for indebtedness or other
liabilities of any Acquired Entity, (B) that specifies or relates to a method of taking into
account book-tax disparities under Section 704(c) of the Code with respect to one or more Assets of
an Acquired Entity or (C) that requires a particular method for allocating one or more liabilities
of any Acquired Entity under Section 752 of the Code. As of the date hereof, no person has raised,
or to the Knowledge of Sun threatened to raise, a material claim against an Acquired Entity for any
breach of any Contribution Agreement. The transactions contemplated by this Agreement and the
Horizon Transactions will not result in a breach of any Contribution Agreement other than as set
forth in Section 3.14(e) of the Sun Disclosure Letter. The copies of the Contribution
Agreements provided to Horizon are complete and correct, and no such Contribution Agreement has
been amended or modified. Other than the Contribution Agreements identified in Section
3.14(e) of the Sun Disclosure Letter, there are no written or oral Contracts or similar
arrangements in effect which impose material obligations or restrictions on any Acquired Entity or
their affiliates with respect to the sale of properties or the maintenance of indebtedness or a
particular method for allocating one or more liabilities of any Acquired Entity under Section 752
of the Code or otherwise. For purposes of this Section 3.14(e), Contribution Agreements
shall exclude any agreements that otherwise meet the definition of such term, but that will expire
pursuant to their respective terms immediately upon the consummation of the transactions
contemplated by this Agreement other than any Contribution Agreement that will expire as a result
of a breach of such Contribution Agreement.



          (f) None of the Acquired Assets is property required to be treated as being owned by any other
person pursuant to the “safe harbor lease” provisions of former



37









 







Section 168(f)(8) of the Code.
None of the Acquired Assets directly or indirectly secures any debt the interest on which is
tax-exempt under Section 103(a) of the Code. None of the Acquired Assets is “tax-exempt use
property” within the meaning of Section 168(h) of the Code.



          (g) None of the Acquired Entities nor any predecessors of such entities by merger or
consolidation has within the past three years been a party to a transaction intended to qualify
under Section 355 of the Code or under so much of Section 356 of the Code as it relates to Section
355 of the Code.



          (h) Sun acquired SHC in a transaction constituting a reverse acquisition within the meaning of
Treasury Regulation Section 1.1502-75(d)(3), with the consolidated group of SHC being considered to
have continued for federal income tax purposes and with Sun and the members of its consolidated
group at the time of such acquisition being considered to have become members of the consolidated
group of SHC.



          (i) To the Knowledge of Sun, no gaming, wagering or other similar activities are conducted at
or in connection with any Acquired Hotel by any Person who is engaged in the
business of accepting wagers and who is legally authorized to engage in such business at or in
connection with such Acquired Hotel.



     Section 3.15 No Brokers. Except for Bear, Stearns & Co. Inc. (“Bear,
Stearns”) and Deutsche Bank AG, in each case whose fees are solely payable by Sun or any
Retained Subsidiary, no broker, investment banker, financial advisor or other Person is entitled to
any broker’s, finder’s, financial advisor’s or other similar fee or commission, or the
reimbursement of expenses, in connection with the transactions contemplated by this Agreement or
the Horizon Transactions based upon arrangements made by or on behalf of Sun or any Sun Subsidiary.



     Section 3.16 Compliance with Laws; Permits. Except as set forth in Section
3.16 of the Sun Disclosure Letter, since January 1, 2001, neither Sun nor any Sun Subsidiary
has violated or failed to comply with any Law (including Privacy Laws) applicable to the Acquired
Business, Acquired Hotels or Acquired Entities, except in each case to the extent that such
violation or failure, individually and in the aggregate, has not resulted in and would not
reasonably be expected to result in a Sun Material Impairment. Each of Sun, each Seller (with
respect to the Acquired Business), each Acquired Entity and each Sun Subsidiary that is a
management company of an Acquired Property owns and/or possesses all permits, licenses, variances,
authorizations, exemptions, orders, registrations and approvals of all Governmental Entities (the
“Permits”) which are required for the businesses, activities and operations of the Acquired
Business, except where the absence of such Permits, individually and in the aggregate, has not
resulted in, and would not reasonably be expected to result in, a Sun Material Impairment. Each of
Sun, each Seller (with respect to the Acquired Business), each Acquired Entity and each Sun
Subsidiary that is a management company of an Acquired Property has been in compliance in all
respects with the terms of its Permits, except for such instances of non-compliance which have been
cured or which, individually and in the aggregate, have not resulted in, and would not reasonably
be expected to result in, a Sun Material Impairment. All such Permits are in full force and effect
and neither Sun nor any Sun Subsidiary has received notice that any suspension, modification or
revocation of any of them is pending or, to the Knowledge of Sun, threatened nor, to the Knowledge
of Sun, do any grounds exist for any such action, except for such



38









 







suspensions, modifications or
revocations that, individually and in the aggregate, have not resulted in and would not reasonably
be expected to result in a Sun Material Impairment.



     Section 3.17 Contracts.



          (a) Except as set forth in Section 3.17(a)(1) of the Sun Disclosure Letter, neither
any Seller, nor any Acquired Entity (in each case, with respect to the Acquired Business) nor (in
the case of clause (xii) below) Sun or any Retained Subsidiary is a party to, and neither
any of such Persons nor their respective Assets are bound by, any Material Contracts as of the date
hereof. Notwithstanding the foregoing, neither Sun nor Trust shall bear any Liability to any
Horizon Party under Section 2(a)(i) of the Indemnification Agreement for the failure to list a
Material Contract in Section 3.17(a)(1) of the Sun Disclosure Letter or
(notwithstanding anything to the contrary in Section 3.17(b)) failure to provide or make
available to Horizon OP a correct and, in all material respects, complete copy of such undisclosed
Material Contract to the extent: (w) Sun did not have Knowledge of the existence of such Material
Contract as of the date of this Agreement, (x) such Material Contract relates exclusively to the
Acquired Hotels identified in Section 3.17(a)(2) of the Sun Disclosure Letter as “Secondary
Hotels” (the “Secondary Hotels”), (y) the impact of such Material Contract on the combined
financial position, results of operations and cash flows of the Acquired Business was fairly
presented in all material respects in the Audited Combined Historical Financial Statements and in
any projections with respect to the Acquired Business delivered or made available to Horizon OP
prior to the date of this Agreement and (z) such Material Contract contains no terms that, in the
event of a contingency that is reasonably likely to occur, would reasonably be expected to result,
individually or in the aggregate, in a material increase in the Liabilities, or a material decrease
in the benefits, under such Material Contract; or (2) in the case of Material Contracts which are
the subject in clauses (i), (ii), (vii) and (viii) below, any
Contract which is terminable by the applicable Acquired Entity or Directly Acquired Assets Owner
without any penalty, premium, termination payment or other Liabilities upon not more than ninety
(90) days notice. For purposes of this Agreement, “Material Contracts” means the following
Contracts:




     (i) Hotel management agreements, franchise agreements, golf course management
agreements, parking facility management agreements and health or spa facility
management agreements, in each case relating to any Acquired Hotel by any Person
other than an Acquired Entity;




     (ii) Contracts pursuant to which an Acquired Entity or, with respect to the
Acquired Business, a Seller manages or provides services with respect to any real
properties other than the Acquired Hotels involving annual payments of $150,000 or
more;




     (iii) license or other Contracts relating primarily to the Acquired Hotels
with respect to the names or marks under which the Acquired Hotels are operated;




     (iv) Contracts for any construction work (including any additions or
expansions) to be performed at any Acquired Hotel which are currently in effect
and under which any Acquired Entity or, with respect to the Acquired



39









 







Business, any
Seller currently has an obligation in excess of, with respect to the Acquired
Hotels identified in Section 3.17(a)(3) of the Sun Disclosure Letter as
“Primary Hotels” (the “Primary Hotels”), $250,000, and with respect to the
Secondary Hotels, $100,000, in each case in the aggregate;




     (v) Contracts providing for (A) the sale of, option to sell or right of first
refusal or offer with respect to any rights of Sun or any Sun Subsidiary in any
Acquired Property or, other than sales of inventory, consumables or FF&E in the
Ordinary Course of the Acquired Business, other material Asset of the
Acquired Business or (B) the purchase of (other than with respect to fixtures
and capital improvements), or option to purchase or right of first refusal or
offer for, any real estate by an Acquired Entity or, with respect to the Acquired
Business, a Seller involving (in the case of clause (B)) payments of
$250,000 or more;




     (vi) Contracts pursuant to which any Acquired Entity or, with respect to the
Acquired Business, any Seller has any material continuing contractual obligation
(A) for indemnification or otherwise under any agreements relating to the sale of
real estate, or any other business or material Assets, previously owned, whether
directly or indirectly, by an Acquired Entity or, with respect to the Acquired
Business, a Seller if such Contracts, to the Knowledge of Sun, are likely to
involve liability of $10,000,000 or more or (B) to pay additional purchase price
for any of the Acquired Properties;




     (vii) Material Sun Space Leases or leases for personal property relating to
any Acquired Property providing for annual rental payments of $100,000 or more;




     (viii) service or maintenance Contracts providing for annual payments by an
Acquired Entity or, with respect to the Acquired Business, a Seller of, with
respect to the Primary Hotels, $250,000 or more, and with respect to the Secondary
Hotels, $100,000, in each case in the aggregate;




     (ix) material loan or credit agreements, notes, bonds, mortgages, indentures
or any other Contracts (including capitalized leases involving annual payments in
excess of $50,000) pursuant to which any Indebtedness of any Acquired Entity or,
with respect to the Acquired Business, any Seller is outstanding or may be
incurred;




     (x) to the extent not disclosed pursuant to Section 3.17(a)(ix),
Contracts relating to interest rate caps, interest rate collars, interest rate
swaps, currency hedging transactions and other similar arrangements to which any
Acquired Entity or, with respect to the Acquired Business, any Seller is a party
or an obligor with respect thereto;




     (xi) partnership, limited liability company, joint venture or other similar
Contracts or arrangements with respect to the ownership or governance



40









 







of, or
otherwise with respect to the Interests representing ownership of, an Acquired
Entity;




     (xii) collective bargaining agreements or other material Contracts with any
labor union or other labor organization relating to wages, hours and other
conditions of employment in effect as of the date hereof, in each case with
respect to the Acquired Business (including any Contracts set forth or required to
be set forth in Section 3.12(b) of the Sun Disclosure Letter);




     (xiii) Contracts (other than this Agreement and the Ancillary Agreements)
that materially restrict the operations of the Acquired Business as currently
conducted or, at or after the Closing, would otherwise limit the freedom of
Horizon or any Horizon Subsidiary (including any Acquired Entity) to own or lease
any hotel or related facility in any geographic area;




     (xiv) Contracts set forth or required to be set forth in Section 3.10
or Section 3.14(e) of the Sun Disclosure Letter;




     (xv) Contracts to which any Acquired Entity or, with respect to the Acquired
Business, any Seller is a party to or bound by and which are required to be filed
as exhibits to the Filed Trust SEC Documents (other than Contracts required to be
disclosed solely pursuant to Item 601(b)(10)(ii)(A) or 601(b)(10)(iii) of
Regulation S-K of the Exchange Act) other than Contracts specified in clause
(ix) above;




     (xvi) all National/Regional Operating Agreements involving annual payments of
$2,000,000 relating to the Acquired Business; and




     (xvii) all Contracts providing for the sharing of mixed-use facilities,
including for the sharing of Taxes or maintenance or other costs and expenses
related to such facilities, which facilities are used in the operation of any
Acquired Hotel other than such Contracts required to be set forth in Section
3.10 of the Sun Disclosure Letter.



          (b) Except as set forth in Section 3.17(b) of the Sun Disclosure Letter and except as,
individually and in the aggregate, has not resulted in and would not reasonably be expected to
result in a Sun Material Impairment, neither Sun nor any Sun Subsidiary has received a written
notice that it is in violation of or in default under (nor to the Knowledge of Sun does there exist
any such violation or default or any condition which upon the passage of time or the giving of
notice or both would cause such a violation of or default under) any Material Contract. Each
Material Contract is in full force and effect, except to the extent it has expired in the Ordinary
Course in accordance with its terms after the date of this Agreement, and is binding and
enforceable against the Sellers or Acquired Entities, as applicable, and, to the Knowledge of Sun,
each other party thereto, except as, individually and in the aggregate, has not resulted in and
would not reasonably be expected to result in a Sun Material Impairment. Correct and, in all
material respects, complete copies of each Material Contract have been



41









 







delivered or made available
to Horizon OP (except to the extent a complete and correct copy of such Material Contract has been
filed as an exhibit to a Filed Trust SEC Document).



          (c) Sun has delivered or made available to Horizon OP a correct and complete copy of the Sun
Rights Agreement.



     Section 3.18 Guarantees; Letters of Credit.



          (a) Set forth in Section 3.18(a) of the Sun Disclosure Letter is a correct and
complete list of all Liabilities (other than Assumed Liabilities) of Sun or any Retained Subsidiary
under any guaranty, letter of credit, comfort letter, surety bond and/or other credit support
provided by any of Sun or any Retained Subsidiary in support of an obligation in excess of $100,000
or, with respect to such items of credit support that do not involve any financial obligation, a
value of $250,000 of any of the Acquired Entities or, with respect to the Acquired Business, any of
the Asset Sellers (the “Acquired Business Credit Support”).



          (b) Set forth in Section 3.18(b) of the Sun Disclosure Letter is a correct and
complete list of all Assumed Liabilities and Liabilities of Acquired Entities under any guaranty,
letter of credit, comfort letter, surety bond and/or other credit support provided by any Acquired
Entity or, with respect to the Acquired Business, any Asset Seller in support of an obligation in
excess of $100,000 or, with respect to such items of credit support that do not involve any
financial obligation, a value of $250,000 of Sun or (other than, with respect to the Acquired
Business, any of the Asset Sellers) any Retained Subsidiary (the “Sun Credit Support”).



          (c) Except as set forth in any subsection of Section 3.18(c) of the Sun Disclosure
Letter, the Assumed Liabilities do not include any Liability under any (i) guarantees in support of
an obligation in excess of $100,000 or, with respect to such items of support that do not involve
any financial obligation, a value of $250,000 of third Persons (other than Sun or any Retained
Subsidiary) or (ii) letters of credit or surety bonds of third Persons.



     Section 3.19 Assets.



          (a) Immediately after the Closing, Horizon OP, the Horizon Subsidiaries and the Acquired
Entities, collectively, (i) will have good title to or, in the case of leased, subleased, licensed
or sublicensed Assets, possess valid and subsisting leased, subleased, licensed, or sublicensed
interest in, or otherwise have the legal right to use, all of the Acquired Hotels, free and clear
of all Encumbrances other than Permitted Title Exceptions; provided that, the foregoing
shall not apply to real estate and Intellectual Property, which are covered in Sections 3.8
and 3.13, respectively and (ii) subject to Section 6.8, will have no legal or
beneficial right, title or interest in or to any Excluded Asset.



          (b) Other than as set forth in Section 3.19(b) of the Sun Disclosure Letter, the
Acquired Assets, together with all Assets and services to the extent the benefit of which will be
provided to Horizon OP or the Horizon Subsidiaries pursuant to this Agreement, the Ancillary
Agreements and the Local Purchase Agreements, constitute in all material respects all right, title
and interest of Sun and the Sun Subsidiaries in and to personal and real property Assets owned,
used or held for use by Sun and the Sun Subsidiaries immediately prior to the Closing that are



42









 







required for Horizon OP and the Horizon Subsidiaries to operate the Acquired Business in the manner
in which it is conducted immediately prior to Closing.



     Section 3.20 Insurance. Section 3.20(1) of the Sun Disclosure Letter contains a correct and complete list
as of the date of this Agreement of all material insurance policies (except title insurance) and
fidelity bonds owned or held by Sun or any Sun Subsidiary relating to the Acquired Business or the
Acquired Hotels and stating whether such policy is a claims-made or an occurrence-based policy.
There is no claim in excess of $100,000 by any Acquired Entity or, with respect to the Acquired
Business, Sun or any Retained Subsidiary pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such policies or bonds or
in respect of which such underwriters have reserved their rights. All premiums payable under all
such policies and bonds have been timely paid. Sun and the Sun Subsidiaries have complied in all
material respects with the terms and conditions of all such policies and bonds. Such policies of
insurance and bonds (or other policies and bonds providing substantially similar insurance
coverage) have been in effect since January 1, 2005 and/or have been renewed at expiration and
remain in full force and effect as of the date hereof. Such policies and bonds, in the aggregate,
cover all of the Acquired Hotels and are of the type and in the amounts customarily carried by
Persons conducting businesses similar to those of the Acquired Business. Except as set forth in
Section 3.20(2) of the Sun Disclosure Letter, such policies and bonds are sufficient for
compliance in all material respects with all requirements under any Contracts or Laws to which any
Acquired Entity or, with respect to the Acquired Business, any Seller is a party or otherwise
bound, or to which any of the Acquired Hotels is subject. To the Knowledge of Sun, there is no
threatened termination any such policies or bonds. Except as set forth in Section 3.20(3)
of the Sun Disclosure Letter, the Acquired Entities and the Directly Acquired Assets Owner, as
applicable, shall, if Horizon OP so elects, continue (after the Closing through the term of such
policies) to have coverage under such policies and bonds that are occurrence-based policies with
respect to events occurring prior to the Closing.



     Section 3.21 [Intentionally Omitted.]



     Section 3.22 Opinion of Financial Advisor. Sun and Trust have received the opinion of
Bear, Stearns, their financial advisor, which has not been withdrawn or otherwise modified, to the
effect that as of the date of this Agreement, based upon and subject to the matters set forth in
such opinion, the consideration to be received pursuant to this Agreement is fair, from a financial
point of view, to Sun and Trust.



     Section 3.23 State Takeover Statutes. Each of Sun and Trust has taken all action
necessary to exempt the transactions contemplated by this Agreement and the Ancillary Agreements
and the Horizon Transactions from the operation of any “fair price,” “moratorium,” “control share
acquisition” or any other anti-takeover statute or Law (a “Takeover Statute” ).



     Section 3.24 No Vote Required. Except for (i) approvals set forth in Section
3.24 of the Sun Disclosure Letter (the “SLT Unitholder Approvals”) and (ii) the
approval of Sun (as majority holder of RP Units), Trust (as the sole general partner of SLT) and
Starwood Hotels
& Resorts Holdings, Inc., an Arizona corporation (as sole holder of Class A Shares), which
shall be given promptly after the execution of this Agreement, no vote or approval of any of the
holders of capital stock, beneficial interests or other Interests of Sun or any Sun Subsidiary with
respect



43









 







to the adoption or approval of this Agreement or any Ancillary Agreement, or any
transaction contemplated hereby or thereby, shall be necessary or required.



ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF THE HORIZON PARTIES




     Except as set forth in the letter, dated as of the date hereof, delivered by the Horizon
Parties to the Sun Parties prior to the execution of this Agreement (the “Horizon Disclosure
Letter”), the Horizon Parties hereby jointly and severally represent and warrant to the Sun
Parties as follows:



     Section 4.1 Organization, Standing and Power.



          (a) Horizon is a corporation duly organized, validly existing and in good standing under the
laws of Maryland. Horizon has all requisite corporate power and authority to own, operate, lease
and encumber its properties and carry on its business as now being conducted. The articles of
incorporation of Horizon (the “Horizon Charter”) are in effect, and, to the Knowledge of
Horizon, no dissolution, revocation or forfeiture proceeding regarding Horizon has been commenced.
Horizon is duly qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually and in the aggregate, has not had
and would not reasonably be expected to (i) have a Horizon Material Adverse Effect or (ii) prevent
or delay in any material respect the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements or the Horizon Transactions or otherwise prevent Horizon from
performing its obligations under this Agreement or the Ancillary Agreements in any material
respect.



          (b) Horizon has made available to Sun complete and correct copies of the Horizon Charter and
the bylaws of Horizon (the “Horizon Bylaws”), in each case as amended, restated or
supplemented to the date of this Agreement. Horizon is not in violation in any material respect of
any provision of the Horizon Charter or the Horizon Bylaws.



     Section 4.2 Horizon Subsidiaries.



          (a) As of the date of this Agreement, Section 4.2(a) of the Horizon Disclosure Letter
sets forth (i) each Horizon Subsidiary, (ii) the Interest therein of Horizon and (iii) if not
directly or indirectly wholly owned by Horizon or Horizon OP, the identity and Interest of each of
the other owners of such Horizon Subsidiary (other than Horizon OP).



          (b) Except as set forth in Section 4.2(b) of the Horizon Disclosure Letter, all of the
outstanding Interests in each Horizon Subsidiary that is owned by Horizon or a Horizon Subsidiary
have been duly authorized and validly issued and (A) in the case of stock Interests, are fully paid
and (in applicable jurisdictions) nonassessable and free of preemptive or similar rights; (B) in
the case of partnership, limited liability company or other Interests, are not subject to any
Indebtedness, capital calls or other obligations (contingent or otherwise) to contribute monies in
respect thereof; and (C) in all cases, are owned free and clear of all Encumbrances. Each Horizon
Subsidiary is duly organized, validly existing and in good standing under the Laws



44









 







of its
jurisdiction of incorporation or organization, as applicable, and has all requisite corporate or
other power and authority to own, operate, lease and encumber its properties and carry on its
business as now being conducted. Each Horizon Subsidiary is duly qualified or licensed to do
business as a foreign corporation or other limited liability entity and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of its properties
makes such qualification or licensing necessary, other than in such jurisdictions where the failure
to be so qualified or licensed, individually and in the aggregate, has not had and would not
reasonably be expected to (i) have a Horizon Material Adverse Effect or (ii) prevent or delay in
any material respect the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements or the Horizon Transactions or otherwise prevent any Horizon Subsidiary from
performing its obligations under this Agreement or the Ancillary Agreements in any material
respect. Complete and correct copies of the Organizational Documents of Horizon OP and REIT Merger
Sub, in each case as amended, restated or supplemented to the date of this Agreement, have been
previously made available to Sun. The Organizational Documents of each Horizon Subsidiary that is
a Horizon Party are in effect and, to the Knowledge of Horizon, no dissolution, revocation or
forfeiture proceeding regarding any Horizon Party has been commenced. No amendment has been made
or modification or waiver granted to the Second Amended and Restated Agreement of Limited
Partnership of Horizon OP, dated as of December 30, 1998 (the “Horizon OP Agreement”),
since the amendment dated August 31, 2005, for the period ending June 30, 2005 (except to admit
substituted limited partners following transfers of Class A Units of Horizon OP (the “Horizon
OP Units”)).



     Section 4.3 Capital Structure.



          (a) The authorized shares of capital stock of Horizon consist of 750,000,000 shares of Horizon
Common Stock and 50,000,000 shares of preferred stock, par value $0.01 per share, of which, as of
the date of this Agreement, 650,000 are classified as Series A Junior Participating Preferred Stock
(the “Horizon Series A Preferred Stock”), 5,980,000 are classified as 10% Class C
Cumulative Redeemable Preferred Stock (the “Horizon Class C Preferred Stock”) and 8,000,000
are classified as 8 7/8% Class E Cumulative Redeemable Preferred Stock (the “Horizon Class E
Preferred Stock” and, together with the Horizon Series A Preferred Stock and the Horizon Class
C Preferred Stock, the “Horizon Preferred Stock”). As of November 9, 2005 (i)
353,816,070 shares of Horizon Common Stock were issued and outstanding; (ii) no shares of
Horizon Series A Preferred Stock were issued and outstanding; (iii)
5,980,000 shares of Horizon Class C Preferred Stock were issued and outstanding; (iv)
4,034,300 shares of Horizon Class E Preferred Stock were issued and outstanding; (v) 19,962,465
shares of Horizon Common Stock are reserved for issuance upon the redemption of Horizon OP Units;
(vi) 27,701,200 shares of Horizon Common Stock are reserved for issuance upon the exchange of the
3.25% Exchangeable Senior Debentures of Horizon OP (the “Horizon Exchangeable Debentures”);
(vii) 30,907,699 shares of Horizon Common Stock are reserved for issuance upon the conversion of
the 6.75% convertible preferred securities of Horizon Financial Trust, a Subsidiary of Horizon, and
the related conversion of the 6.75% convertible subordinated debentures of Horizon (the
“Horizon Convertible Preferred Securities”); (viii) 12,134,958 shares of Horizon Common
Stock are reserved for issuance under the Horizon and Horizon, L.P. Comprehensive Stock and Cash
Incentive Plan (the “Horizon Equity Plan”), under which stock options with respect to
1,959,842 shares of Horizon Common Stock (the “Horizon Stock Options”) have been granted
and are outstanding; (ix) 244,384 shares of Horizon Common Stock are reserved for issuance under
the



45









 







Horizon Non-Employee Directors Stock Compensation Plan; and (x) (exclusive of shares reserved
for issuance pursuant to clauses (v) through (ix) above) warrants or other rights
to acquire Horizon Common Stock, stock appreciation rights, phantom shares, dividend equivalents,
deferred compensation accounts, performance awards, restricted stock unit awards or equity-like
rights or arrangements and other awards with respect to 7,009,213 shares of Horizon Common Stock
are outstanding (the “Horizon Stock Rights”).



          (b) All outstanding shares of Horizon Common Stock are duly authorized, validly issued, fully
paid and nonassessable and free of preemptive or similar rights under Law, the Horizon Charter or
Horizon Bylaws and any Contract or instrument to which Horizon is a party or by which it is bound.



          (c) Other than (i) as set forth in Section 4.3(a) of this Agreement or Section
4.3(c) of the Horizon Disclosure Letter and (ii) Horizon OP Units (which may be redeemed for
shares of Horizon Common Stock), Horizon Stock Options, the Horizon Exchangeable Debentures, the
Horizon Convertible Preferred Securities and Horizon Stock Rights, as of November 9, 2005, there
are not (A) issued, reserved for issuance or outstanding any Interests of Horizon or any Horizon
Subsidiary or (B) any Contracts to which Horizon or any Horizon Subsidiary is a party or by which
such entity is bound, obligating Horizon or any Horizon Subsidiary to issue, deliver, sell,
transfer, redeem, repurchase or otherwise acquire, or cause to be issued, delivered, sold,
transferred, redeemed, repurchased or otherwise acquired additional Interests of Horizon or any
Horizon Subsidiary or obligating Horizon or any Horizon Subsidiary to issue, grant, extend or enter
into any such Contract. All shares of Horizon Common Stock subject to issuance in respect of
Horizon Stock Options, Horizon OP Units or Horizon Stock Rights, upon issuance prior to the REIT
Merger Effective Time on the terms and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights.



          (d) The Horizon Common Stock to be issued by Horizon pursuant to this Agreement have been duly
authorized for issuance, and upon issuance will be duly and validly issued, fully paid and
nonassessable.



     Section 4.4 Other Interests. Except for Interests in the Horizon Subsidiaries and
certain other entities as set forth in Section 4.4 of the Horizon Disclosure Letter (the
“Horizon Other Interests”), as of the date of this Agreement, neither Horizon nor any
Horizon Subsidiary owns directly or indirectly any Interest in any Person (other than investments
in short-term investment securities).



     Section 4.5 Authority; Noncontravention; Consents.



          (a) Each of the Horizon Parties has all necessary corporate or other power and authority to
execute and deliver this Agreement and each Ancillary Agreement to which it is a party, to perform
its obligations hereunder and thereunder and, subject to obtaining the Horizon Stockholder
Approval, to consummate the transactions contemplated hereby and thereby to be consummated by such
Horizon Party. The execution and delivery by each Horizon Party of this Agreement and each
Ancillary Agreement to which it is a party, the performance of its obligations hereunder and
thereunder, and the consummation by it of the transactions



46









 







contemplated hereby and thereby to be
consummated by it have been duly and validly authorized by all necessary action and no other
proceedings on the part of any Horizon Party and no votes by any holder of Interests in any Horizon
Party are necessary to authorize this Agreement or any Ancillary Agreement or to consummate the
transactions contemplated hereby and thereby, other than the Horizon Stockholder Approval. This
Agreement and each Ancillary Agreement has been duly authorized and validly executed and delivered
by each Horizon Party thereto and, subject to the Horizon Stockholder Approval, constitutes a
legal, valid and binding obligation of each such Horizon Party, enforceable against such Horizon
Party in accordance with its terms.



          (b) Except as set forth in Section 4.5(b) of the Horizon Disclosure Letter, the
execution and delivery of this Agreement and the Ancillary Agreements by the Horizon Parties do
not, and, subject to receipt of the Horizon Stockholder Approval and except as provided in
Section 4.12, the consummation of the transactions contemplated by, and performance of
their respective obligations under, this Agreement and the Ancillary Agreements and compliance by
Horizon and the Horizon Subsidiaries with the provisions hereof and thereof, and the consummation
of the Horizon Transactions, will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a benefit under, or result in the
creation of any Encumbrance upon any of the Assets of Horizon or any Horizon Subsidiary under, (i)
the Horizon Charter or the Horizon Bylaws or the other Organizational Documents of any Horizon
Subsidiary, each as amended or supplemented, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, merger or other acquisition agreement, reciprocal easement agreement, lease or
other Contract, instrument, permit, concession, franchise or license applicable to Horizon or any
Horizon Subsidiary, or their respective Assets or (iii) subject to the governmental filings and
other matters referred to in Section 4.5(c), any Laws applicable to Horizon or any Horizon
Subsidiary or their respective Assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights, losses or Encumbrances that,
individually and in the aggregate, have not had and would not reasonably be expected to (x) have a
Horizon
Material Adverse Effect or (y) prevent or materially impair the ability of Horizon or any
Horizon Subsidiary to perform its respective obligations hereunder or under the Ancillary
Agreements or prevent or delay in any material respect the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements or the Horizon Transactions.



          (c) No consent, approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Horizon or any Horizon Subsidiary
in connection with the execution and delivery of this Agreement and the Ancillary Agreements by the
Horizon Parties or the consummation by Horizon and the Horizon Subsidiaries of the transactions
contemplated by this Agreement and the Ancillary Agreements or the Horizon Transactions, except for
(i) the filing with the SEC of (x) the Proxy Statement/Prospectus and the Form S-4 and the
declaration of the effectiveness thereof by the SEC and (y) such reports and filings under the
Securities Act and under the Exchange Act as may be required in connection with this Agreement and
the Ancillary Agreements and the transactions contemplated hereby and thereby and the Horizon
Transactions, (ii) the filing and acceptance for record of the REIT Articles of Merger by the
Department and (iii) such other consents, approvals, orders, authorizations, registrations,
declarations and filings (A) as are set forth in Section 4.5(c) of the Horizon Disclosure
Letter; (B) as may be required under (t) the HSR Act, (u) the EC Merger Regulations or any other
antitrust or competition Laws of other



47









 







jurisdictions, (v) the rules and regulations of the NYSE,
(w) any applicable Laws governing the sale or service of liquor, (x) Laws requiring transfer,
recordation or gains tax filings, (y) Environmental Laws or (z) the “blue sky” Laws of various
states, to the extent applicable; or (C) which, if not obtained or made would not prevent or delay
in any material respect the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements or the Horizon Transactions or otherwise prevent Horizon or any Horizon
Subsidiary from performing its respective obligations under this Agreement or the Ancillary
Agreements in any material respect or, individually or in the aggregate, have, or reasonably be
expected to have, a Horizon Material Adverse Effect.



     Section 4.6 SEC Documents; Financial Statements; Corporate Governance.



          (a) Each of Horizon and Horizon OP has filed all reports, schedules, forms, statements,
certifications and other documents required to be filed with the SEC since December 31, 2002
(collectively, including all exhibits thereto, the “Horizon SEC Documents”). All of the
Horizon SEC Documents, as of their respective filing dates and, as applicable, effective times,
complied in all material respects with all applicable requirements of the Securities Act and the
Exchange Act and, in each case, the rules and regulations promulgated thereunder applicable to such
Horizon SEC Documents as of the applicable filing date or effective time. None of the Horizon SEC
Documents, at the time of filing or, as applicable, of becoming effective, contained any untrue
statement of a material fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading. Each of the consolidated financial statements (including the related
notes) of Horizon and the Horizon Subsidiaries included in the Horizon SEC Documents filed prior to
the date hereof (i) complied in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, (ii) has been prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q under
the Exchange Act) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and (iii) fairly presented in all material respects and in
accordance with the applicable requirements of GAAP and the applicable rules and regulations of the
SEC, the consolidated financial position of Horizon and the Horizon Subsidiaries, taken as a whole,
as of the dates thereof and the consolidated results of operations and cash flows for the periods
then ended.



          (b) Each of Horizon and Horizon OP has been and is in compliance in all material respects with
the applicable provisions of the Sarbanes-Oxley Act. No officer or director of Horizon is
currently indebted to Horizon or Horizon OP.



          (c) Each of Horizon and Horizon OP has designed and maintains disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that
material information relating to it and its consolidated Subsidiaries is made known to the
principal executive officer and the principal financial officer of it (or, in the case of Horizon
OP, the principal executive officer and the principal financial officer of Horizon, as its sole
general partner) by others within those entities. The principal executive officer and principal
financial officer of Horizon (including in their capacities as officers of the sole general partner
of Horizon OP) have made all certifications required by Rule 13a-14 or 15d-14 under the Exchange



48









 







Act or Sections 302 and 906 of the Sarbanes-Oxley Act and any related rules and regulations
promulgated by the SEC.



          (d) Horizon has designed and maintains a system of internal controls over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP (within the meaning of such terms under
the Sarbanes-Oxley Act). Horizon has disclosed, based on its most recent evaluation to its
respective auditors and the audit committee of Horizon’s Board of Directors (A) any significant
deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect in any material respect Horizon’s ability
to record, process, summarize and report financial information and (B) any fraud, whether or not
material, that involves management or other employees who have a significant role in its internal
controls over financial reporting. Horizon has delivered to Sun any such disclosures (i) prior to
the date of this Agreement or (ii) with respect to evaluations after the date of this Agreement,
promptly following the disclosures to the applicable auditors and audit committee.



     Section 4.7 Absence of Certain Changes or Events. Except as disclosed in Section
4.7 of the Horizon Disclosure Letter, since December 31, 2004 (the “Horizon Financial
Statement Date”), Horizon and Horizon OP have conducted their business in the Ordinary Course
and there has not been (a) any circumstance, event, occurrence, change or effect that, individually
or in the aggregate, has had or would reasonably be expected to have a Horizon Material Adverse
Effect or (b) on or prior to the date of this Agreement, any other action or omission by Horizon
or any Horizon Subsidiary which, if occurring during the period from the date of this
Agreement through the Closing, would constitute a breach of any of the following subsections of
Section 5.2: (b), (e) and, with respect to any of the foregoing,
(h).



     Section 4.8 Taxes.



          (a) Each of the Horizon Parties and each member of any affiliated, consolidated, combined or
unitary group of which any Horizon Party or any Horizon Subsidiary is or was a member (each such
entity, a “Horizon Taxpayer”) (A) has filed (or has had filed on its behalf) all material
Tax Returns required to be filed by it (after giving effect to any filing extension properly
granted by a Governmental Entity having authority to do so) and all such Tax Returns are accurate
and complete in all material respects; (B) has paid (or Horizon has paid on its behalf) all
material Taxes of it (whether or not shown on any Tax Return) that are due and payable; and (C) has
complied in all material respects with all applicable Laws relating to the payment and withholding
of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446, 3121, and
3402 of the Code or any similar provision of any other Law) and has, within the time period
prescribed by Law, withheld and paid over to the proper Governmental Entities all material amounts
required to be so withheld and paid over under applicable Laws. The most recent audited financial
statements of Horizon contained in the Horizon SEC Documents reflect an adequate reserve (excluding
any reserve for deferred Taxes established to reflect timing differences between book and Tax
income) for all material unpaid Taxes of the Horizon Taxpayers for all taxable periods and portions
thereof through the date of such financial statements. Since the Horizon Financial Statement Date,
no Horizon Taxpayer



49









 







has incurred any material liability for Taxes other than in the Ordinary
Course. Since January 1, 1999, Horizon has not incurred any material liability for Taxes under
Sections 857(b), 860(c) or 4981 of the Code, including any Tax arising from a prohibited
transaction described in Section 857(b)(6) of the Code. No Horizon Taxpayer is the subject of any
audit, examination, or other proceeding in respect of material Taxes, and to the Knowledge of
Horizon, no audit, examination or other proceeding in respect of material Taxes involving any
Horizon Taxpayer is being considered by any Tax authority. No deficiencies for any material Taxes
have been proposed, asserted or assessed against any Horizon Taxpayer that have not been resolved,
and no requests for waivers of the time to assess any such Taxes are pending. No Horizon Taxpayer
has received written notice from any Governmental Entity in a jurisdiction in which such entity
does not file a Tax Return stating that such entity is or may be subject to taxation by that
jurisdiction.



          (b) Since January 1, 1999, Horizon (i) has elected to be subject to taxation as a REIT within
the meaning of Section 856 of the Code (and any similar provision of state Tax Law) and has
satisfied all requirements to qualify as a REIT for all taxable years since and including 1999,
(ii) has operated since, and intends to continue to operate on or before the Closing Date, in such
a manner as to qualify as a REIT and (iii) has received no written notice that a challenge to its
status as a REIT is pending or threatened. Each Horizon Subsidiary that is a partnership, joint
venture or limited liability company has been treated since its formation and continues to be
treated for federal and state income tax purposes as a partnership or as an entity that is
disregarded for federal income tax purposes and not as a corporation or an association
taxable as a corporation. In addition, each Horizon Subsidiary that is a partnership, joint
venture or limited liability company has not since the latest of January 1, 1999, its formation or
the acquisition by Horizon of a direct or indirect interest therein, owned any Assets (including
securities) that would cause Horizon to violate Section 856(c)(4) of the Code, unless any such
Asset was disposed of prior to the last day of the calendar quarter in which it was acquired or
within the applicable cure period provided for in Section 856(c)(4) of the Code. Horizon OP is not
a publicly traded partnership within the meaning of Section 7704(b) of the Code that is taxable as
a corporation pursuant to Section 7704(a) of the Code. For all taxable years beginning on or after
January 1, 1999 and ending on or before December 31, 2000, each Horizon Subsidiary which is a
corporation (for federal income tax purposes) has been on the last day of each calendar quarter
during which Horizon has owned an interest in such corporation representing more than 10% of the
outstanding voting securities of such corporation, a qualified REIT subsidiary under Section 856(i)
of the Code. For all taxable years beginning on or after January 1, 2001, each Horizon Subsidiary
which is a corporation (for federal income tax purposes) has been, on the last day of each calendar
quarter during which Horizon has owned an interest in such corporation representing more than 10%
of the value of the outstanding securities of such corporation or more than 10% of the outstanding
voting securities of such corporation, a qualified REIT subsidiary under Section 856(i) of the
Code, a taxable REIT subsidiary of Horizon under Section 856(l) of the Code, a REIT, or a
corporation which qualifies under the transitional rules set forth in Section 546(b) of the Tax
Relief Extension Act of 1999. Each Horizon Subsidiary that is a “qualified REIT subsidiary” under
Section 856(i) of the Code is set forth in Section 4.8(b) of the Horizon Disclosure Letter.



          (c) To the Knowledge of Horizon, as of the date hereof, Horizon is a “domestically-controlled”
REIT within the meaning of Section 897(h) of the Code.



50









 





          (d) There are no Encumbrances for material Taxes (other than current Taxes not yet due and
payable) on the assets of any Horizon Taxpayer.



          (e) No Horizon Taxpayer, or any predecessors of such entity by merger or consolidation, has
within the past three (3) years been a party to a transaction intended to qualify under Section 355
of the Code or under so much of Section 356 of the Code as it relates to Section 355 of the Code.



     Section 4.9 No Brokers. Except for Goldman Sachs & Co. (“GS&Co.”), whose fees
are solely payable by Horizon or any Horizon Subsidiary, no broker, investment banker, financial
advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar
fee or commission, or the reimbursement of expenses, in connection with the transactions
contemplated by this Agreement or the Horizon Transactions based upon arrangements made by or on
behalf of Horizon or any Horizon Subsidiary.



     Section 4.10 Litigation. Except as disclosed in Section 4.10 of the Horizon
Disclosure Letter, there is no suit, action, investigation or proceeding pending or, to the
Knowledge of Horizon, threatened against
or affecting Horizon or any Horizon Subsidiary directly relating to or involving any of their
respective Assets, or any of the directors, officers, employees or agents thereof who may be
subject to indemnification by Horizon or any Horizon Subsidiary that, individually or in the
aggregate, if determined or resolved adversely, would reasonably be expected to (i) have, or has
had, a Horizon Material Adverse Effect or (ii) prevent or materially impair the ability of any
Horizon Party to perform any of its respective obligations hereunder or under any Ancillary
Agreement or prevent or delay in any material respect the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements or the Horizon Transactions, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Horizon or any Horizon Subsidiary that has had or would reasonably be expected
to have any such effect.



     Section 4.11 Opinion of Financial Advisor. Horizon has received the opinion of
GS&Co., its financial advisor, which has not been withdrawn or otherwise modified, to the effect
that as of the date of this Agreement, based upon and subject to the matters set forth in such
opinion, the Consideration (as such term is defined in such opinion) in the aggregate to be paid by
Horizon and certain of its Subsidiaries pursuant to this Agreement is fair from a financial point
of view to Horizon.



     Section 4.12 Horizon Stockholder Approval. The affirmative vote with respect to the
issuance of the shares of Horizon Common Stock in the Closing Transactions, of a majority of the
votes cast by holders of shares of Horizon Common Stock; provided that, the total vote cast
represents over 50% of the Horizon Common Stock issued, outstanding and entitled to vote, is the
only vote of the holders of any class or series of capital stock or equity interest of any Horizon
Party necessary or required to adopt or approve this Agreement and the Ancillary Agreements and the
transactions contemplated by this Agreement and the Ancillary Agreements and the Horizon
Transactions, except for the approval of (x) Horizon OP, as the sole member of REIT Merger Sub, and
(y) REIT Merger Sub, as the general partner of SLT Merger Sub. The approval by Horizon, which has
already been granted, is the only vote of any partner of Horizon



51









 







OP necessary or required to
approve this Agreement and the Ancillary Agreements and the transactions contemplated hereby and
thereby and the Horizon Transactions.



     Section 4.13 Ownership of REIT Merger Sub and SLT Merger Sub; No Prior Activities.



          (a) Each of REIT Merger Sub and SLT Merger Sub was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement and the Ancillary Agreements.



          (b) All of the outstanding membership interests of REIT Merger Sub are owned directly by
Horizon OP. All of the outstanding limited partnership interests of SLT Merger Sub are owned by
REIT Merger Sub, its general partner, and Horizon OP. There are no options, warrants or other
rights (including registration rights), agreements, arrangements or commitments to which either
REIT Merger Sub or SLT Merger Sub is a party of any character
relating to the issued or unissued membership interests of, or other equity interests in, REIT
Merger Sub or SLT Merger Sub, respectively, or obligating REIT Merger Sub or SLT Merger Sub,
respectively, to grant, issue or sell any membership interests of, or other equity interests in,
REIT Merger Sub or SLT Merger Sub, respectively, by sale, lease, license or otherwise. There are
no obligations, contingent or otherwise, of REIT Merger Sub or SLT Merger Sub, respectively, to
repurchase, redeem or otherwise acquire any membership interests of REIT Merger Sub or SLT Merger
Sub, respectively.



          (c) Except for agreements, obligations or Liabilities incurred in connection with its
organization and the transactions contemplated by this Agreement and the Ancillary Agreements, REIT
Merger Sub has not and will not have incurred, and SLT Merger Sub has not and will not have
incurred, directly or indirectly, through any Subsidiary or Affiliate, any obligations or
Liabilities or engaged in any business activities of any type or kind whatsoever or entered into
any agreements or arrangements with any Person.



     Section 4.14 Compliance with Laws; Permits. Except as set forth in Section
4.14 of the Horizon Disclosure Letter, neither Horizon nor, to the Knowledge of Horizon, any
Horizon Subsidiary has violated or failed to comply with any Law (including Privacy Laws)
applicable to their business, except in each case to the extent that such violation or failure,
individually and in the aggregate, has not had and would not reasonably be expected to have a
Horizon Material Adverse Effect. Horizon and the Horizon Subsidiaries own and/or possess all
Permits which are required for the businesses, activities and operations of their business, except
where the absence of such Permits, individually and in the aggregate, has not had and would not
reasonably be expected to have a Horizon Material Adverse Effect. Horizon and each Horizon
Subsidiary has been in compliance in all respects with the terms of its Permits, except for such
instances of non-compliance which have been cured or which, individually and in the aggregate, has
not had and would not reasonably be expected to have a Horizon Material Adverse Effect. All such
Permits are in full force and effect and neither Horizon nor any Horizon Subsidiary has received
notice that any suspension, modification or revocation of any of them is pending or, to the
Knowledge of Horizon, threatened nor, to the Knowledge of Horizon, do any grounds exist for any
such action, except for such suspensions, modifications or revocations that, individually and in
the



52









 







aggregate, have not had and would not reasonably be expected to have a Horizon Material Adverse
Effect.



     Section 4.15 Environmental Matters. Except as set forth in Section 4.15 of the
Horizon Disclosure Letter:



          (a) neither Horizon nor any Horizon Subsidiary nor, to the Knowledge of Horizon, any other
Person has caused or permitted the presence of any Hazardous Materials at, on or under any hotel
property of Horizon or any Horizon Subsidiary (each, a “Horizon Property”) and, to the
Knowledge of Horizon, no Hazardous Materials are present at, on or under any of the Horizon
Properties, in each of the foregoing cases, in such quantities or under such conditions that the
presence of such Hazardous Materials (including the presence of Structural Mold or asbestos in any
buildings or
improvements at the Horizon Properties), individually or in the aggregate, has had or would
reasonably be expected to have a Horizon Material Adverse Effect;



          (b) there have been no Releases of Hazardous Materials at, on, under or from any of the
Horizon Properties during the period of ownership or tenancy, and, to the Knowledge of Horizon, no
Releases of Hazardous Materials have occurred or are presently occurring at, on, under or from the
Horizon Properties, which, individually or in the aggregate, have had or would reasonably be
expected to have a Horizon Material Adverse Effect, and neither Horizon nor any Horizon Subsidiary
nor, to the Knowledge of Horizon, any other Person, has received any notice of alleged, actual or
potential responsibility for, or any inquiry or investigation regarding, any such Releases or
threatened Releases of Hazardous Materials, nor, to the Knowledge of Horizon, is there any
information which might form the basis of any such notice or any claim;



          (c) Horizon and the Horizon Subsidiaries have not failed to comply with any Environmental Law
and neither Horizon nor any Horizon Subsidiary has any liability under the Environmental Laws,
except to the extent that any such failure to comply or any such Liability, individually and in the
aggregate, has not had and would not reasonably be expected to have a Horizon Material Adverse
Effect;



          (d) Neither Horizon nor any Horizon Subsidiary nor, to the Knowledge of Horizon, any other
Person, has transported or arranged for the transport of Hazardous Materials from the Horizon
Properties which, to the Knowledge of Horizon, has or would reasonably be expected to have a
Horizon Material Adverse Effect;



          (e) Horizon and the Horizon Subsidiaries have been duly issued, and currently have and will
maintain through the Closing Date, all Environmental Permits necessary to operate their businesses
as currently operated except where the failure to obtain and maintain such Environmental Permits,
individually and in the aggregate, has not had and would not reasonably be expected to have a
Horizon Material Adverse Effect; and



          (f) there is no suit, action, investigation or proceeding pending or, to the Knowledge of
Horizon, threatened against or affecting Horizon or any Horizon Subsidiary directly relating to or
involving their respective businesses, any of their respective Assets or any of the directors,
officers, employees or agents thereof who may be subject to indemnification by



53









 







Horizon or any
Horizon Subsidiary relating to any Environmental Law that, individually or in the aggregate, if
determined or resolved adversely, would reasonably be expected to have, or has had, a Horizon
Material Adverse Effect.



          (g) The representations and warranties contained in this Section 4.15 constitute the sole and
exclusive representations and warranties of the Horizon Parties with respect to any Environmental
Laws, Hazardous Materials, Environmental Permits or litigation relating thereto.



          (h) Horizon has delivered to Sun a correct and, in all material respects, complete copy of all
environmental assessments commissioned by any Horizon Party with respect to any Acquired Property.



     Section 4.16 Contracts.



     As of the date hereof, except as set forth in the Horizon SEC Documents, neither Horizon nor
any Horizon Subsidiary is a party to or bound by any “material contracts” (as defined in Item
601(b)(10) of Regulation S-K of the Exchange Act, except for agreements required to be filed by
Item 601(b)(10)(iii) thereof) (each such “material contract” to which Horizon or any Horizon
Subsidiary is a party to or bound by, a “Horizon Material Contract”). Except as,
individually and in the aggregate, has not had or would not reasonably be expected to have a
Horizon Material Adverse Effect, neither Horizon nor any Horizon Subsidiary has received a written
notice that it is in violation of or in default under any Horizon Material Contract. Each Horizon
Material Contract is in full force and effect, except to the extent it has expired in accordance
with its terms, and is binding and enforceable against Horizon or such Horizon Subsidiary, as
applicable, except as, individually or in the aggregate, has not had or would not reasonably be
expected to have a Horizon Material Adverse Effect.



     Section 4.17 Insurance.



     Except as, individually and in the aggregate, has not had or would not reasonably be expected
to have a Horizon Material Adverse Effect, (i) Horizon and the Horizon Subsidiaries maintain
insurance policies that, in the aggregate, are of the type and in the amounts customarily carried
by Persons conducting businesses similar to the business conducted by Horizon and the Horizon
Subsidiaries and (ii) such policies are sufficient for compliance in all material respects with all
requirements under any Contracts or Laws to which Horizon or any of the Horizon Subsidiaries is a
party to or bound by, or to which any of the Horizon Properties is subject.



ARTICLE 5.

COVENANTS




     Section 5.1 Conduct of the Sun Parties Pending the Closing. During the period from
the date of this Agreement to the Closing (and with respect to each Deferred Asset, to the earlier
of (i) the applicable Post-Closing Deferral Deadline and (ii) the applicable closing date, if any,
under Section 6.18), except (A) with respect to subsections (a), (i),
(j), (k), (l), (m), (n), (t) and (with respect to
any of the foregoing subsections) (x) of this Section 5.1, as necessary to comply
with this Agreement and the Ancillary Agreements in accordance with the terms hereof or thereof or
(B) as consented to in writing by Horizon OP, which consent shall not be



54









 







unreasonably withheld,
conditioned or delayed (provided that in any event with respect to Section 5.1(r),
Horizon OP shall respond to each of Sun’s requests for its consent no later than ten (10) business
days following its receipt of such request), Sun and Trust shall, and shall cause each of the other
Sun Subsidiaries to:



          (a) use commercially reasonable efforts to preserve intact the business organizations and
goodwill of the Acquired Business as a whole and conduct the operations (including with respect to
maintenance and repairs) of each Acquired Hotel, and the business of each Acquired Entity, in the
Ordinary Course;



          (b) promptly notify Horizon OP of the occurrence of any loss, breakage or damage to an
Acquired Hotel in excess of $1,000,000 (irrespective of any insurance or third
party proceeds which have been or may be received in connection with such loss, breakage or
damage);



          (c) provide Horizon OP with (i) copies of all material notices and reports regarding the
Acquired Hotels (including financial reports, capital expenditure reports and any material notices
or reports received from any third party (or any Affiliate of Sun that is a hotel manager) with
respect to an Acquired Hotel), including reports required by Section 6.7, and (ii) as
reasonably requested by Horizon OP, copies of all reports with respect to all bookings for the use
and occupancy of the guest rooms and the meeting, restaurant and banquet facilities of each
Acquired Hotel; provided that, such reports may be redacted to exclude all information
identifying the particular Persons holding such bookings;



          (d) (i) deliver to Horizon OP, based on information available to Sun and its Affiliates, as
soon as reasonably practicable following receipt of such information, preliminary monthly operating
results for each of the Acquired Hotels and (ii) use commercially reasonable efforts to deliver to
Horizon OP, based on information available to Sun and its Affiliates, within twenty (20) days after
month end, reasonably detailed monthly operating reports (in a format substantially similar to
operating reports provided by Sun or its Affiliates for other hotels operated by them and, in any
event, in electronic format) that reflect the operational results of each Acquired Hotel and
include (1) a balance sheet including current month and prior year-end comparisons and differences
in reasonable detail, (2) an income and expense statement for such month and for the elapsed
portion of the current year through the end of such month, (3) a statement of net cash flow from
operations in reasonable detail for such month and such elapsed portion of the current year through
the end of such month and (4) a schedule of capital expenditures for all Routine Capital
Improvements, and any Building Capital Improvements and Renovations (each as defined in the form of
the Operating Agreement), if applicable, showing in reasonable detail, items budgeted, actual
expenditures to date and the amount of expenditures projected for completion;



          (e) (i) use commercially reasonable efforts to pursue the completion of capital expenditure
projects in accordance with the Sun Capital Budget and (ii) not undertake any capital expenditures
not in accordance with the Sun Capital Budget unless (in the case of clause (ii)) such
expenditures (A) are related to life safety, compliance with Laws or maintenance and repair in the
Ordinary Course, (B) are substantially completed prior to the Closing or (C) would be



55









 







permitted to
be undertaken without Horizon OP’s consent under the form of Operating Agreement or Sublease
Agreement, as applicable, after the Closing;



          (f) not change in any material manner any of its methods, principles or practices of
accounting in effect at the Sun Financial Statement Date, except as may be required by the SEC,
applicable Law or GAAP;



          (g) with respect to the Acquired Business or any Acquired Entity, duly and timely file all
material reports, Tax Returns and other documents required to be filed with Governmental Entities,
subject to extensions permitted by Law;



          (h) with respect to the Acquired Business, maintain in full force and effect insurance
coverage substantially similar to insurance coverage maintained on the date hereof
(unless such coverage is not maintained due to a material increase in premiums levels since
the date of this Agreement, in which case insurance coverage shall be maintained in full force and
effect to the extent it is maintained at similar hotels owned by Sun or by any Sun Subsidiary), and
pay all insurance premiums as and when they become due;



          (i) with respect to any Acquired Entity, not make or rescind any express or deemed material
election relative to Taxes that either (I) materially adversely affects such Acquired Entity’s Tax
liabilities in taxable years following Closing as a result of a reduction in the tax basis of an
asset or a change with respect to depreciation (it being understood that “Taxes” for purposes of
this Section 5.1(i) shall refer to Taxes within the meaning of clause (A) of the
definition of “Taxes”) or (II) could reasonably be expected to cause a significant risk that any
REIT Entity, or, after the Closing, SHC, Horizon or the Horizon Subject Foreign Curency REITs would
fail to qualify as a REIT under the Code. Subject to clause (II) of this Section
5.1(i), any Sun Party or a Subsidiary thereof shall be entitled, in Sun’s sole discretion, to
make (A) an election under Section 965 of the Code or (B) any election permitted under (x) the
consolidated return rules as currently set forth in Section 1502 of the Code or other Treasury
Regulations applicable to one or more members of a Consolidated Group, or (y) any other United
States state or local Tax Law comparable to those described in the foregoing clause (x) (it being
understood that, in the event that any election described in clause (A) or clause
(B) of this sentence is made and results in an effect described in clause (I) of this
Section 5.1(i), Sun shall indemnify Horizon against the increase (if any) in such Acquired
Entity’s Tax Liabilities that is described in such clause (I));



          (j) except with respect to Indebtedness (other than Specified Indebtedness) with respect to
which all Liabilities are fully discharged at or prior to the Closing or that does not constitute
an Assumed Liability at Closing, not, with respect to an Acquired Entity, (A) incur, or enter into
any commitment or contractual obligation (each a “Commitment”) to incur, Indebtedness
(secured or unsecured) other than Specified Indebtedness or (B) modify, amend or terminate, or
enter into any Commitment to modify, amend or terminate, any Indebtedness (secured or unsecured),
including indirectly through the acquisition of any Person;



          (k) not amend or modify or grant any waiver with respect to the Organizational Documents of
any Acquired Entity, except to the extent necessary to reflect transactions permitted by
Section 5.1(l) that can be made without a vote of limited partners;



56









 





          (l) not classify or re-classify any, grant or issue, combine, split, subdivide, redeem or
otherwise make any change in the number of issued and outstanding, shares of beneficial interest,
capital stock, membership interests, units of limited partnership interest, or other Interests
(other than (x) the issuance or repurchase of Paired Shares or securities convertible or
exchangeable for Paired Shares or (y) the redemption of Class B EPS for cash in accordance with
this Agreement and the Restructuring Plan) of any Acquired Entity other than the redemption or
cancellation of Interests in Acquired Entities pursuant to the Sun Restructuring Steps, upon the
terms and subject to the conditions of the Restructuring Plan;



          (m) not sell, lease, mortgage, subject to Encumbrance (other than Permitted Title Exceptions)
or otherwise dispose of any of the Acquired Entities or Acquired Assets, except for disposals of
inventories, consumables and FF&E, in each case in the Ordinary Course;



          (n) with respect to the Acquired Business or any equity holder claims arising out of or
relating to the transactions contemplated by this Agreement or the Horizon Transactions, not pay,
discharge, settle or satisfy any claims or Liabilities other than the payment, discharge,
settlement or satisfaction (A) in the Ordinary Course, (B) in full of claims or Liabilities which
involve an amount no greater than $150,000 (or $1,000,000 where such claims or Liabilities relate
to injury or damage to an Acquired Hotel and are covered by one or more property insurance
policies) with respect to an individual claim or Liability, or one or more related claims or
Liabilities, and do not impose any material Liability other than the payment of money, (C) with
respect to equity holder claims, if, after such payment, discharge, settlement or satisfaction,
such equity holder does not hold any Interest in an Acquired Entity or (D) in accordance with their
terms disclosed pursuant to Section 3.17(a)(1) of the Sun Disclosure Letter, of liabilities
reflected or reserved against in, the most recent quarterly consolidated financial statements (or
the notes thereto) furnished to Horizon OP prior to the date of this Agreement;



          (o) with respect to an Acquired Entity or an Acquired Hotel, not guarantee the Indebtedness of
another Person, enter into any “keep well” or other agreement to maintain any financial statement
condition of another Person or enter into any arrangement having the economic effect of any of the
foregoing unless such guarantee or other arrangement terminates (with no surviving Liability) at or
prior to the Closing;



          (p) not enter into any Commitment between any Acquired Entity or, with respect to the Acquired
Business, any Seller, on the one hand, and any officer or director of Sun or a Retained Subsidiary,
on the other hand, unless such Commitment relates solely to a change in the compensation or
benefits payable to an officer or director employed in connection with the Acquired Business
located outside of the United States not otherwise prohibited by any other subsection of this
Section 5.1;



          (q) except in the Ordinary Course, as required by any agreement set forth in Section
3.12(b) of the Sun Disclosure Letter or as would be permitted without Horizon OP’s consent
under the form of Operating Agreement or Sublease Agreement, as applicable, after the Closing, not
materially increase any aggregate compensation and benefits payable to employees of a Sun Employer
with



57









 







respect to the Acquired Business, adopt or become liable for any Employee Plan that would
materially increase the Liability of any Acquired Entity or, with respect to the Acquired Business,
any Asset Seller, enter into, or renegotiate, any collective bargaining agreement with
respect to
employees of a Sun Employer, or incur any withdrawal liability under any Multiemployer Plan which
could result in a Liability to Horizon, any Horizon Subsidiary, any Acquired Entity or otherwise
with respect to the Acquired Business;



          (r) not materially amend or terminate (except for terminations pursuant to Section
6.5) or waive compliance with the terms of or breaches under, any Ground Lease or Material
Contract (other than a National/Regional Operating Agreement, except to the extent Horizon OP or
any Horizon Subsidiary would have a consent right with respect thereto under the
form of Operating Agreement or Sublease Agreement, as applicable) unless, except in the case
of any Ground Lease, such amendment or waiver would not reasonably be expected to result in a
material increase in any Assumed Liability or otherwise adversely affect the Acquired Business or
any Acquired Entity in any material respect in each case after the Closing, or enter into a new
Contract or other arrangement (other than a National/Regional Operating Agreement, except to the
extent Horizon OP or any Horizon Subsidiary would have a consent right with respect thereto under
the form of Operating Agreement or Sublease Agreement, as applicable) that would constitute a
Ground Lease or Material Contract unless, except in the case of any Ground Lease, such new Contract
is terminable by the applicable Acquired Entity or Directly Acquired Assets Owner without any
penalty, premium, termination payment or other Liabilities upon not more than ninety (90) days
notice; provided that, with respect to Material Contracts (and not Ground Leases), this
clause (r) shall not restrict any action that would be permitted without Horizon OP’s
consent under the form of Operating Agreement or Sublease Agreement, as applicable, after the
Closing;



          (s) with respect to any Acquired Entity, not settle or compromise any material Tax Liability
to the extent such settlement or compromise would reasonably be expected to materially reduce the
tax basis of Horizon or any Horizon Subsidiary in an Acquired Asset without notifying and obtaining
input from Horizon;



          (t) not take any action, or omit to take any action which has been reasonably requested in
writing by Horizon, in each case which could reasonably be expected to cause a significant risk
that any REIT Entity, or after the Closing, SHC, Horizon or any Horizon Foreign Currency REIT would
fail to qualify as a REIT under the Code; provided that, in its sole discretion, Sun may
choose to inform Horizon OP in writing of an action which Sun proposes to take, to inquire as to
whether Horizon OP considers such action to comply with this Section 5.1(t), to which
Horizon OP shall promptly respond in writing (it being understood that (x) any response by Horizon
OP regarding non-compliance, or any decision by Sun to not inform Horizon OP in writing pursuant to
this Section 5.1(t), shall have no effect on whether or not Sun shall be treated as having
actually complied with this Section 5.1(t) and (y) Horizon OP agrees to not assert,
following any Horizon OP response confirming compliance, that the particular action of which it was
so informed results in a breach of this Section 5.1(t), except if the information provided
by Sun to Horizon OP with respect to the applicable action was not accurate and complete in all
material respects);



          (u) not (i) approve any Operating Plan (as such term is defined in the form of the Operating
Agreement) for calendar year 2006 or (ii) hire any general manager of an Acquired Hotel without
affording to the Horizon Parties the review, consultation and consent rights which



58









 







Horizon OP or
the applicable Acquired Entity or other Horizon Subsidiary would have under the form of Operating
Agreement or Sublease Agreement, as applicable, after the Closing;



          (v) except as is necessary to comply with the Baseline Restructuring Steps and any Plan
Modifications, not (A) acquire or agree to acquire (by merger, consolidation, acquisition of stock
or assets or otherwise) any corporation, partnership or other business organization or any division
thereof or any equity interest therein or asset thereof or enter into any other business
combination or (B) sell or otherwise dispose of any material portion of its business, including
pursuant to a Paired Share Proposal, if (in the case of clauses (A) or (B))
such acquisition, combination, sale or other disposition is reasonably likely to prevent or
delay, in any material respect, the consummation of the transactions contemplated by this Agreement
or the Horizon Transactions;



          (w) provide Horizon OP with written notice describing in reasonable detail any allegation of
any violation of Sun’s Code of Conduct and Business Ethics with respect to the Acquired Business
that Sun’s Global Compliance Group receives for investigation after the date of this Agreement; and



          (x) not enter into any Contract or other agreement, commitment or arrangement to do any of the
foregoing prohibited actions.



     Section 5.2 Conduct of the Horizon Parties’ Business Pending the Closing. During the
period from the date of this Agreement to the Closing (and, with respect to the restrictions in
clause (g) of this Section 5.2 on issuances of equity interests in Horizon or
Horizon OP, to the sixtieth (60th) day after the Closing Date), except (x) with respect
to subsections (a), (d), (e), (g) and, with respect to any of the
foregoing subsections, (h) of this Section 5.2, as necessary to comply with this
Agreement and the Ancillary Agreements in accordance with the terms hereof or thereof, to
facilitate the consummation of the Horizon Transactions or (y) as consented to in writing by Sun,
which consent shall not be unreasonably withheld, conditioned or delayed, Horizon and Horizon OP
shall, and shall cause each of the other Horizon Subsidiaries to:



          (a) use commercially reasonable efforts to preserve intact its business organizations and
goodwill as a whole, except in connection with the sale or disposition of any of its Assets or
Subsidiaries in a manner that is not otherwise prohibited by any other subsection of this
Section 5.2;



          (b) not change in any material manner any of its methods, principles or practices of
accounting in effect at the Horizon Financial Statement Date, except as may be required by the SEC,
applicable Law or GAAP;



          (c) duly and timely file all material reports, Tax Returns and other documents required to be
filed with Governmental Entities, subject to extensions permitted by Law, provided such extensions
do not adversely affect Horizon’s status as a REIT under the Code;



          (d) not amend the Horizon Charter, the Horizon Bylaws or the Horizon OP Agreement, except to
the extent necessary to (i) authorize or designate additional shares or classes of capital stock or
other equity interests or (ii) reflect the admission of additional limited



59









 







partners and other
amendments in connection therewith that can be made by Horizon without a vote of limited partners;



          (e) not (A) acquire or agree to acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership or other business organization or any division
thereof or any equity interest therein or asset thereof or enter into any other business
combination or (B) sell or otherwise dispose of any material portion of its business if (in the
case of clause (A) or (B)) such acquisition, combination, sale or other disposition
is reasonably likely
to prevent or delay, in any material respect, the consummation of the transactions
contemplated by this Agreement or the Horizon Transactions;



          (f) not enter into any reorganization of Horizon or Horizon OP;



          (g) except in connection with the use of Horizon Common Stock to pay the exercise price or tax
withholding in connection with equity-based employee benefit plans by the participants therein, not
(i) authorize, declare, set aside or pay any dividend or make any other distribution or payment
with respect to any Horizon Common Stock or Horizon OP Units or (ii) directly or indirectly
combine, split, subdivide, exchange, redeem, purchase or otherwise acquire or issue any, or
otherwise make any change in the number or issued and outstanding shares of capital stock,
membership interests or units of partnership interest or any option, warrant or right to acquire,
or security convertible into, shares of capital stock, membership interests, or units of
partnership interest of Horizon or Horizon OP, except for (A) redemptions of Horizon Common Stock
required under Section 8.2 of the Horizon Charter in order to preserve the status of Horizon as a
REIT under the Code, (B) declarations or payments of a dividend or other distribution (or an
increase in such dividend or distribution) by Horizon or Horizon OP (1) reasonably believed by
Horizon to be necessary to maintain REIT status, avoid the incurrence of any taxes under Section
857 of the Code, avoid the imposition of any excise taxes under Section 4981 of the Code, or avoid
the need to make one or more extraordinary or disproportionately larger dividends or distributions
to meet any of the three preceding objectives (or to any corresponding distributions or increases
in distributions paid by Horizon OP), (2) except for any special or extraordinary dividend, any
quarterly dividends contemplated by Horizon’s dividend policy as described in its Report on Form
10-Q for the quarterly period ended June 17, 2005, or (3) with respect to Horizon Preferred Stock,
at their respective stated dividend or distribution rates, (C) redemptions of Horizon OP Units,
whether or not outstanding on the date of this Agreement, under the Horizon OP Agreement in which
shares of Horizon Common Stock are utilized, (D) redemptions, exchanges or conversions of Interests
in Horizon or any Horizon Subsidiary in accordance with the terms of those Interests that are in
effect as of the date of this Agreement (or, in the case of Interests issued after the date of this
Agreement, as of such later date), (E) issuances of Horizon Common Stock or rights to acquire
Horizon Common Stock (1) to employees, officers or directors pursuant to benefit or compensation
plans, (2) pursuant to Contracts or Interests described in Section 4.3 or in Section
4.3(c) of the Horizon Disclosure Letter or (3) to any Person in consideration for the sale by
such Person or its Affiliates of any assets to Horizon or any Horizon Subsidiary; provided
that, in the case of clause (3), such Horizon Common Stock will be subject to a lock-up for
at least sixty (60) days after the Closing Date, (F) issuances of Horizon OP Units subject to a
lock-up for at least sixty (60) days after the Closing Date and (G) issuances of shares of Horizon
Preferred Stock or other



60









 







preferred securities that are not convertible into Horizon Common Stock
prior to the sixtieth (60th) day after the Closing Date; and



          (h) not enter into any Contract or other agreement, commitment or arrangement to do any of the
foregoing prohibited actions.



     Section 5.3 No Solicitation.



          (a) On and after the date hereof, each of the Sun Parties agrees that:




     (i) neither Sun nor any Sun Subsidiary shall invite, initiate, solicit or
encourage, directly or indirectly, any inquiries, or the making or submission of
any proposal or offer (including any proposal or offer to its equity holders) with
respect to any transaction or series of transactions that would reasonably be
expected to result, directly or indirectly, in any (i) merger, consolidation,
business combination, reorganization, recapitalization, liquidation, dissolution
or similar transaction involving any Acquired Entity, (ii) sale, acquisition,
tender offer, exchange offer (or the filing of a registration statement under the
Securities Act in connection with such an exchange offer), offering, spin-off,
share exchange or other transaction or series of related transactions that, if
consummated, would result in the issuance of securities representing, or the sale,
exchange or transfer of, 10% or more of the outstanding voting equity securities
or other Interests (measured by voting power or economic interest) of any Acquired
Entity or (iii) except as set forth in Section 5.3(a) of the Sun
Disclosure Letter, sale, lease, exchange, mortgage, license, pledge, transfer or
other disposition (“Transfer”) of any of the Acquired Assets in one or a
series of related transactions, other than the transactions contemplated by this
Agreement and the Ancillary Agreements and the Horizon Transactions (any such
inquiry, proposal or offer being hereinafter referred to as an “Acquisition
Proposal”); provided that, any inquiry, proposal or offer that relates
to a merger, consolidation, share exchange, or other similar business combination
that relates solely to Excluded Assets and Retained Subsidiaries shall not
constitute an Acquisition Proposal, or engage in any discussions or negotiations
with or provide any confidential or non-public information or data to, or afford
access to properties, books or records to, any Person relating to, or that may
reasonably be expected to lead to, an Acquisition Proposal, or enter into any
letter of intent, agreement in principle or agreement relating to an Acquisition
Proposal, or the abandonment, termination or other failure to consummate the
transactions contemplated by this Agreement or the Horizon Transactions, or
propose publicly to agree to do any of the foregoing, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal; provided,
however, that if, at any time after the date hereof and prior to February
12, 2006, Sun or any Sun Subsidiary receives an unsolicited bona fide written
Acquisition Proposal from any Person, which is determined in good faith by the
Board of Trustees of Trust or the Board of Directors of Sun, as applicable, to be,
or to be reasonably likely to result in, a Superior Proposal, Sun and the Sun
Subsidiaries may (i) furnish information with respect to the Acquired Entities,



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Acquired Assets and the Acquired Business to the Person making such Acquisition
Proposal (and its representatives) pursuant to a customary confidentiality
agreement not materially less restrictive of such person than the Confidentiality
Agreement (all such information furnished to such Person pursuant to clause
(i) of the proviso to the preceding sentence shall, in substance, be provided
to Horizon by Sun and the Sun Subsidiaries promptly after it is provided to such
Person, to the extent it has not been
previously provided or made available to Horizon) and (ii) participate in
discussions or negotiations with the Person making such Acquisition Proposal (and
its representatives) regarding such Acquisition Proposal.




     (ii) each Sun Party shall promptly inform each officer, director, trustee,
employee, agent, investment banker, financial advisor, attorney, accountant,
broker, consultant or other agent or representative of Sun and each Sun Subsidiary
(each, a “Sun Representative”), as appropriate, of its obligations not to
engage in any of the activities described in Section 5.3(a)(i);




     (iii) if any activities, discussions or negotiations with any Person are
currently existing or ongoing with respect to any of the foregoing (including any
Acquisition Proposal), Sun and the Sun Subsidiaries shall, and shall cause each
Sun Representative, as applicable, to (A) immediately cease and cause to be
terminated any such activities, discussions or negotiations and (B) promptly
request each Person, if any, that has received confidential information of the
Acquired Business (or any portion thereof) under a confidentiality agreement
within the thirty (30) days prior to the date hereof in connection with its
consideration of any Acquisition Proposal to return or destroy all confidential
information heretofore furnished to such Person by or on behalf of Sun and the Sun
Subsidiaries (and Sun shall not, and shall cause its Subsidiaries not to,
terminate, amend, modify or grant any waiver with respect to any such
confidentiality agreement with respect to confidential information of the Acquired
Business (or any portion thereof)); and




     (iv) it shall notify Horizon OP as promptly as practicable (but in any event
within twenty-four (24) hours), orally and in writing, if Sun, any Sun Subsidiary
or any Sun Representative (1) receives an Acquisition Proposal or any amendment or
change in any previously received Acquisition Proposal or any request for
confidential or nonpublic information or data relating to, or for access to any
properties, books or records of, the Acquired Business (or any portion thereof) by
any Person that has made, or to Sun’s Knowledge may be considering making, an
Acquisition Proposal and (2) engages in any discussions or negotiations with, or
provides confidential information to, such Person with respect to an Acquisition
Proposal, and include in such notice the identity of such Person. Sun shall keep
Horizon OP reasonably informed as to the material terms of any such Acquisition
Proposal, indication, request or expression and, if in writing, shall promptly
deliver to Horizon OP copies of any Acquisition Proposal or material amendment or
change to such Acquisition Proposal.



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          (b) Nothing contained in this Section 5.3 shall prohibit Sun or any Sun Subsidiary
from complying with Rules 14d-9 or 14e-2 promulgated under the Exchange Act with respect to an
Acquisition Proposal.



     Section 5.4 Control of Other Party’s Business. Nothing contained in this Agreement shall give Horizon OP, directly or indirectly, the
right to control or direct the operations of Sun or any Sun Subsidiary in violation of applicable
Law prior to the REIT Merger Effective Time or any of the Other Closing Transaction Effective
Times, as applicable. Nothing contained in this Agreement shall give Sun or Trust, directly or
indirectly, the right to control or direct the operations of Horizon or any Horizon Subsidiary in
violation of applicable Law.



ARTICLE 6.

ADDITIONAL COVENANTS




     Section 6.1 Proxy Statement/Prospectus; Registration Statement; Horizon Stockholders
Meeting.



          (a) As promptly as practicable after execution of this Agreement, Horizon shall, and the Sun
Parties shall cooperate in all respects with Horizon’s efforts to, prepare and file with the SEC
one or more registration statements on Form S-4 (such registration statement(s), together with any
amendments or supplements thereto, the “Form S-4”), in connection with the registration
under the Securities Act of the Horizon Common Stock be issued in the Closing Transactions which
shall include one or more proxy statements/prospectuses, forms of proxies or information statements
(such proxy statement(s)/prospectus(es) or information statement(s), together with any amendments
or supplements thereto, the “Proxy Statement/Prospectus”) relating to the Horizon
Stockholders Meeting and the required votes of the stockholders of Horizon with respect to the
issuance of Horizon Common Stock in the Closing Transactions. Horizon shall cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules and regulations
promulgated thereunder. Each of the Sun Parties shall furnish all information about itself and its
business and operations and all financial information to the Horizon Parties as may reasonably be
requested in connection with the preparation of the Proxy Statement/Prospectus and the Form S-4.
Each of the Horizon Parties shall use its commercially reasonable efforts, and the Sun Parties
shall cooperate with the Horizon Parties, to have the Form S-4 declared effective by the SEC as
promptly as practicable (including clearing the Proxy Statement/Prospectus with the SEC) and kept
effective as long as is necessary to complete the REIT Merger and the issuance of Horizon Common
Stock pursuant to the other Closing Transactions. Each of Horizon, Sun and Trust agrees to
promptly notify the others if and to the extent that any information provided by it for use in the
Proxy Statement/Prospectus and the Form S-4 shall have become false or misleading in any material
respect, and each of Horizon, Sun and Trust further agrees to cooperate with the others to take all
steps necessary to amend or supplement the Proxy Statement/Prospectus and the Form S-4 and to cause
the Proxy Statement/Prospectus and the Form S-4, as amended or supplemented, to be filed with the
SEC and to be disseminated to its stockholders or shareholders, as applicable, in each case as and
to the extent required by applicable securities Laws. Each of Horizon, Sun and Trust represents
and warrants that the information provided by it for inclusion in the Proxy Statement/Prospectus
and the Form S-4 and



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each amendment or supplement thereto at the time of mailing thereof (in the
case of the Proxy Statement/Prospectus), at the time it becomes
effective (in the case of the Form S-4) and at the time of the Horizon Stockholders Meeting,
will not include an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Horizon will advise and deliver copies (if any) to Sun
promptly after it receives notice of any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form S-4 or comments thereon and responses thereto or requests by the
SEC for additional information, in each case to the extent such requests relate to the Sun Parties.
Horizon shall not file with the SEC any amendment to the Form S-4 without allowing Sun the
opportunity to review and comment on any such amendment. Horizon shall promptly notify Sun, if
applicable, of (i) the time when the Form S-4 has become effective, (ii) the filing of any
supplement or amendment thereto, (iii) the issuance of any stop order and (iv) the suspension of
the qualification and registration of the Horizon Common Stock issuable in connection with the
Closing Transactions. Sun also shall use commercially reasonable efforts (including by provision
of customary representations and certifications) to cause Sidley Austin Brown & Wood LLP or other
counsel reasonably satisfactory to Horizon to have delivered an opinion, which opinion shall be
filed as an exhibit to the Form S-4, as to federal income tax matters as are required to be
addressed in the Form S-4. Horizon shall use commercially reasonable efforts (including by
provision of customary representations and certifications) to cause Hogan & Hartson L.L.P. or other
counsel reasonably satisfactory to Sun to have delivered an opinion, which opinion shall be filed
with the SEC as an exhibit to the Form S-4, as to federal income tax matters as are required to be
addressed in the Form S-4. Such opinions shall contain customary exceptions, assumptions and
qualifications and be based upon customary representations. Each of Horizon, Sun and Trust shall
mail the Proxy Statement/Prospectus to its stockholders or shareholders, as applicable, as promptly
as practicable after the Form S-4 shall have become effective.



          (b) Horizon shall, as soon as practicable following the date of this Agreement, duly call,
give notice of, convene and hold a meeting of its stockholders (the “Horizon Stockholders
Meeting”) for the purpose of obtaining from its stockholders approval of the issuance of shares
of Horizon Common Stock in the Closing Transactions (the “Horizon Stockholder Approval”).
Horizon shall, through its Board of Directors, recommend to its stockholders that they approve the
issuance of shares of Horizon Common Stock in the Closing Transactions (and include its
recommendations in the Proxy Statement/Prospectus), and not withdraw, modify, amend or qualify its
recommendation in any manner adverse to Sun (a “Change in Recommendation”);
provided that, the foregoing shall not prohibit accurate and complete public disclosure
(and such disclosure shall not be deemed to be a Change in Recommendation) by Horizon of factual
information regarding the business, Assets, financial condition or results of operations of
Horizon, Trust or the Acquired Business (so long as the Board of Directors of Horizon does not
expressly withdraw, modify, amend or qualify in any manner adverse to Sun the recommendation of the
Board of Directors of Horizon) in the Proxy Statement/Prospectus or the Form S-4, in each case, to
the extent that Horizon determines in good faith, on the basis of advice of outside legal counsel,
that such factual information is required to be disclosed under applicable Law in order to comply
with Rule 14a-9 of the Exchange Act or Section 11 or 12 of the Securities Act. Subject to the
foregoing, Horizon shall include its recommendation set forth above in the Proxy
Statement/Prospectus, and submit a proposal to approve the issuance of shares of Horizon
Common Stock in the Closing



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Transactions to its stockholders at the Horizon Stockholders
Meeting for the purpose of obtaining the Horizon Stockholder Approval; provided that, such
proposal shall not be required to be submitted to the stockholders of Horizon at the Horizon
Stockholders Meeting if this Agreement has been terminated pursuant to Section 9.1.



          (c) If on the date for the Horizon Stockholders Meeting, Horizon has not received duly
executed proxies for a sufficient number of votes to obtain the Horizon Stockholder Approval, then
Horizon may, in its sole discretion, adjourn the Horizon Stockholders Meeting until one or more
later dates.



     Section 6.2 Access to Information; Confidentiality; Monthly Meetings.



          (a)




     (i) Subject to the requirements of applicable Law, each of the Sun Parties
shall, and shall cause each of the Acquired Entities and Asset Sellers to, afford
to Horizon OP and to the directors, officers, employees, agents, investment
bankers, brokers, consultants, accountants, attorneys, financial advisors and
other agents or representatives of Horizon or any Horizon Subsidiary (the
“Horizon Representatives”) reasonable access during normal business hours
prior to the Closing (and with respect to each Deferred Asset, prior to the
earlier of (A) the applicable Post-Closing Deferral Deadline and (B) the
applicable closing date, if any, under Section 6.18(f)) to all properties,
offices, other facilities, books, Contracts, commitments, personnel (including
hotel managers) and records and other information relating to the Acquired
Business as Horizon OP may reasonably request. No investigation conducted
pursuant to this Section 6.2(a)(i) shall affect or be deemed to modify or
limit any representation or warranty made in this Agreement.




     (ii) Horizon OP shall hold any nonpublic information in confidence in
accordance with the letter agreement dated January 3, 2005, between Sun and
Horizon (the “Confidentiality Agreement”), which shall remain in full
force and effect pursuant to the terms thereof, notwithstanding the execution and
delivery of this Agreement, the termination hereof or the Closing. Horizon OP
shall cause its Subsidiaries and the Horizon Representatives to comply with the
Confidentiality Agreement.




     (iii) Horizon OP shall give written notice to Sun within five (5) business
days after Horizon obtains Knowledge of any event, circumstance or condition that
would reasonably be expected to give rise to any indemnification claim by the
Horizon Parties with respect to any breach of representation or warranty of Sun or
Trust under Article 3; provided, however, that Horizon OP
shall have no liability to the Sun Parties with respect to any failure of Horizon
OP to give
such notice except to the extent the Sun Parties are actually prejudiced as a
result of such failure.



          (b)



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     (i) Subject to the requirements of applicable Law and Contracts, each of the
Horizon Parties shall, and shall cause each of its Subsidiaries to, afford to Sun
and the Sun Representatives reasonable access during normal business hours prior
to the Closing to all properties, offices, other facilities, books, Contracts,
commitments, personnel and records and other information relating to Horizon or
Horizon OP as Sun may reasonably request to the extent reasonably necessary solely
to investigate whether (x) a Horizon Material Adverse Effect has occurred or (y) a
representation, warranty, covenant or agreement made by any of the Horizon Parties
in this Agreement has become inaccurate or untrue or has not been performed or
complied with, as applicable. No investigation conducted pursuant to this
Section 6.2(b)(i) shall affect or be deemed to modify or limit any
representation or warranty made in this Agreement.




     (ii) Sun shall hold any nonpublic information in confidence in accordance
with the Confidentiality Agreement. Sun shall cause its Subsidiaries, and the Sun
Representatives, to comply with the Confidentiality Agreement.




     (iii) Sun shall give written notice to Horizon OP within five (5) business
days after Sun obtains Knowledge of any event, circumstance or condition that
would reasonably be expected to give rise to any indemnification claim by the Sun
Parties with respect to any breach of representation or warranty of Horizon or
Horizon OP under Article 4; provided, however, that Sun
shall have no liability to the Horizon Parties with respect to any failure of Sun
to give such notice except to the extent the Horizon Parties are actually
prejudiced as a result of such failure.



          (c) To the extent, if any, that the Tax Sharing and Indemnification Agreement does not permit
Horizon OP or the Horizon Representatives (or Sun or the Sun Representatives) to receive access to
Tax items or matters (including books, records and other information relating to Taxes), the Tax
Sharing and Indemnification Agreement shall control notwithstanding anything in this Article
6 to the contrary.



          (d) Horizon OP and Sun shall form a transitional working group, comprised of the persons set
forth on Schedule 6.2(d), which shall meet monthly prior to the Closing to discuss
transitional matters relating to the Acquired Hotels. The Sun Parties shall provide Horizon OP the
opportunity to attend monthly meetings with existing hotel managers to discuss operations of the
Acquired Hotels. Each meeting will be held at a time and location mutually agreeable to Sun and
Horizon OP. As part of such meetings, subject to Section 5.4 and the requirements of
applicable Law, Horizon OP shall be permitted to inquire as to, and management of the Acquired
Business and Sun shall undertake commercially reasonable efforts to respond with respect to, all
material matters relating to the Acquired Business, including: approval of, or variations
from, budgets, forecasts and material transactions relating to the Acquired Business which have
been entered into or have been proposed to be entered into and the financial and operating results,
conditions, plans and prospects of the Acquired Hotels.



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     Section 6.3 Support of Transaction; Notification.



          (a) Subject to the terms and conditions herein provided, each of the parties hereto shall:
(i) use commercially reasonable efforts and cooperate with one another in (A) determining which
filings are required to be made prior to the Closing with, and which consents, approvals, waivers,
permits or authorizations are required to be obtained prior to the Closing from, Governmental
Entities and any third parties in connection with the execution and delivery of this Agreement and
the Ancillary Agreements, and the consummation of the transactions contemplated hereby and thereby
and the Horizon Transactions, including any filing required under the HSR Act, the EC Merger
Regulations, any applicable antitrust or competition Laws or foreign investment review, and (B)
timely making all such filings and timely seeking all such consents, approvals, waivers, permits
and authorizations; (ii) use reasonable best efforts to obtain in writing any consents, approvals,
waivers, permits and authorizations required from Governmental Entities and any third parties to
effectuate the transactions contemplated by this Agreement and the Ancillary Agreements and the
Horizon Transactions, such consents, approvals, waivers, permits and authorizations to be in form
reasonably satisfactory to each of the parties hereto; and (iii) without limiting the foregoing,
use commercially reasonable efforts to take, or cause to be taken, all other action and to do, or
cause to be done, all other things necessary, proper or appropriate to consummate and make
effective the transactions contemplated by this Agreement and the Ancillary Agreements and the
Horizon Transactions, including (w) the satisfaction of the conditions precedent to the obligations
of the other party hereto, (x) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement, the Ancillary Agreements or the performance
of the obligations hereunder and thereunder or the transactions contemplated hereby or thereby or
the Horizon Transactions, (y) the cooperation with the other parties to effect the filings and
other actions set forth on Schedule 6.3(a)(i) and (z) the execution and delivery of such
other documents, instruments and conveyances, and the taking of such other actions, as the other
party hereto may reasonably require in order to carry out the intent of this Agreement and the
Ancillary Agreements. Notwithstanding the foregoing, Horizon and the Horizon Subsidiaries shall be
responsible for applying for and obtaining any and all Permits of the type set forth on
Schedule 6.3(a)(ii) required for the ownership and operation of the Acquired Hotels that
are needed in connection with the execution and delivery of this Agreement and the Ancillary
Agreements, and the consummation of the transactions contemplated hereby and thereby and the
Horizon Transactions. Sun and the Sun Subsidiaries shall reasonably cooperate with Horizon, the
Horizon Subsidiaries and their Representatives in connection with obtaining such Permits required
for the ownership and operation of the Acquired Hotels.



          (b) Each of Sun and Trust shall use commercially reasonable efforts to obtain from E&Y access
for the Horizon Parties and the Horizon Representatives to work papers relating to audits of Sun
and Trust performed by E&Y to the extent they relate directly to the
Acquired Business, including, to the extent they relate directly to the Acquired Business, any
work papers used in the preparation or review of the Audited Combined Historical Financial
Statements or the other financial statements of the Acquired Business contemplated by this
Agreement, and the continued cooperation of E&Y with regard to the preparation of financial
statements for, or with respect to the Acquired Business; provided, however, that
the foregoing shall be subject to professional standards and E&Y’s firm policy, which may include
the



67









 







requirement that prior to receiving access to any materials prepared by E&Y Horizon and its
Representatives sign an indemnification letter in a form customarily accepted by E&Y.



          (c) Each of Sun and Trust shall give prompt notice to Horizon OP, and Horizon OP shall give
prompt notice to Sun and Trust, (i) if any representation or warranty made by it contained in this
Agreement that is qualified as to materiality becomes untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becomes untrue or inaccurate in any
material respect or (ii) of any event, circumstance or condition which would reasonably be expected
to result in the failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties hereto or the conditions to the obligations of
the parties under this Agreement.



     Section 6.4 Further Assurances; Books and Records.



          (a) Subject to the terms and conditions of this Agreement, from and after the Closing, each of
Horizon OP and Sun shall take all appropriate actions and execute and deliver to the other such
further assurances, documents, instruments or conveyances of any kind as may be necessary, proper
or advisable under applicable Laws or otherwise to consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements and the Horizon Transactions. Without
limiting the generality of the foregoing, subject to the terms and conditions of this Agreement (i)
to the extent any of the Books and Records or other Acquired Assets are in the possession, custody
or control of one or more of the Sellers or their Affiliates after the Closing Date, the Sun
Parties shall promptly deliver or cause to be delivered to Horizon OP or the applicable Horizon
Subsidiary all such Books and Records (which, if maintained by Sun or its Affiliates in an
electronic format, Sun or such Affiliates shall deliver to Horizon OP or the applicable Horizon
Subsidiary in an electronic format reasonably requested by Horizon OP or such Subsidiary) and other
Acquired Assets, (ii) to the extent any Excluded Assets are in the possession, custody or control
of one or more of the Horizon Parties or their Affiliates after the Closing Date, the Horizon
Parties shall, at Sun’s sole expense, use reasonable best efforts to promptly deliver or cause to
be delivered to Sun or the applicable Retained Subsidiary such Excluded Assets and (iii) each Sun
Party shall, and shall cause the other Retained Subsidiaries to, promptly deliver to Horizon OP any
mail (physical, electronic or otherwise), facsimile or other correspondence or communication
received by such Sun Party or Retained Subsidiary following the Closing Date with respect to the
Acquired Business. For the purposes of this Agreement, “Books and Records” means all books
of account, documents, records, lists, ledgers, general, financial, legal, regulatory, Tax,
accounting, files, correspondence, manuals, data, papers, reports, drawings and other operating or
ownership
information of any kind (whether in hard copy or computer or other format, including any
offline or archived data) to the extent relating to the Acquired Assets, the Acquired Entities or
the Acquired Business. Notwithstanding the foregoing provisions of this Section 6.4(a),
each party hereto may refuse to deliver any books or records if it believes in good faith (after
consultation with outside counsel), that doing so is reasonably likely to cause an attorney-client
or work product privilege which such party would be entitled to assert to be undermined with
respect to such books or records and such undermining of privilege could in such party’s good faith
judgment (after consultation with outside counsel) adversely affect in any material respect such
party’s position in any pending, or



68









 







what such party believes in good faith (after consultation with
outside counsel) is reasonably likely to be, future litigation (other than amongst the parties
hereto); provided that, the parties hereto shall cooperate in seeking to find a way to
allow disclosure of such books or records to the extent doing so would not (in the good faith
belief of the party attempting to disclose such books or records (after consultation with outside
counsel)) reasonably be likely to cause such privilege to be undermined with respect to such books
or records; provided, further, that the disclosing party shall (i) notify the other
party that such disclosures are reasonably likely to cause such privilege to be undermined and (ii)
communicate to the other party in reasonable detail (A) the facts giving rise to such notification
and (B) the subject matter of such books or records. Notwithstanding anything in this Section
6.4, Section 2.4(a)(ii) or Section 3.1(b) to the contrary, Sun and the Sun
Subsidiaries shall not be required to provide Books and Records (or any other information) relating
to Tax matters to the extent the Tax Sharing and Indemnification Agreement expressly provides such
information is not to be disclosed.



          (b) After the Closing, upon reasonable written request, the Sun Parties shall furnish or cause
to be furnished to Horizon OP and the Horizon Representatives reasonable access, during normal
business hours, to such information and assistance relating to the Acquired Business, Acquired
Hotels or the Acquired Entities as is reasonably necessary for financial reporting and accounting
matters, the preparation and filing of any Tax Returns, reports or forms or the defense of any Tax
audit, claim or assessment. After the Closing, upon reasonable written request, the Horizon
Parties shall furnish or cause to be furnished to Sun and the Sun Representatives reasonable
access, during normal business hours, to such information and assistance relating to the Retained
Sun Business, Sun or the Sun Subsidiaries as is reasonably necessary for financial reporting and
accounting matters, the preparation and filing of any Tax Returns, reports or forms or the defense
of any Tax audit, claim or assessment. The requesting party will reimburse out-of-pocket expenses
reasonably incurred by the furnishing party pursuant to this Section 6.4(b).



          (c) After the Closing, (i) if Sun or any of its Affiliates receives any payment of cash or
other property that is an Acquired Asset or is otherwise properly due and owing to Horizon OP or
any of its Affiliates under this Agreement, Sun shall promptly remit, or cause to be remitted, such
cash or other property to Horizon OP and (ii) if Horizon OP or any of its Affiliates receives any
payment of cash or other property that is an Excluded Asset or is otherwise properly due and owing
to Sun or any of its Affiliates under this Agreement, Horizon OP shall promptly remit, or cause to
be remitted, such cash or other property to Sun.



     Section 6.5 Intercompany Accounts. Except for this Agreement, the Ancillary Agreements and the agreements set forth on
Schedule 6.5, all Contracts providing for sales, purchases, leasing, subleasing, licensing
or sublicensing of goods, services, tangible or intangible property or joint activities (including
any receivables, payables, loans, notes, advances or other Indebtedness) between any of the
Acquired Entities or (to the extent such Contracts would, but for the termination pursuant to this
Section 6.5, constitute Acquired Assets or Assumed Liabilities) the Asset Sellers, on the
one hand, and Sun or any Retained Subsidiary (other than any Asset Seller to the extent such
Contracts would, but for the termination pursuant to this Section 6.5, constitute Acquired
Assets or Assumed Liabilities), on the other hand, shall be terminated and of no further force and
effect after the Closing and all Liabilities thereunder shall be settled, offset or discharged with
no further Liabilities on the part of any party thereto.



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Without limiting the foregoing, such
settlements, offsets, discharges and terminations shall be effected as to certain accounts and
agreements in the manner and at such times as set forth on Schedule 6.5.



     Section 6.6 Guarantees; Letters of Credit.



          (a) The Horizon Parties and the Sun Parties shall use commercially reasonable efforts to
obtain from the respective counterparty, in form and substance reasonably satisfactory to the Sun
Parties, on or before the Closing, valid and binding written complete and unconditional releases of
Sun or the applicable Retained Subsidiary from any Liability (other than any Retained Liability),
whether arising before, on or after the Closing Date, under any Acquired Business Credit Support in
effect as of the Closing, including by providing substitute guarantees with terms that are at least
as favorable to the counterparty as the terms of the applicable Acquired Business Credit Support
and by furnishing letters of credit, instituting escrow arrangements, posting surety or performance
bonds or making other arrangements as the counterparty may reasonably request. If any item of
Acquired Business Credit Support has not been released as of the Closing Date, then the Horizon
Parties and the Sun Parties shall use commercially reasonable efforts after the Closing to cause
each such unreleased item of Acquired Business Credit Support to be released promptly and prior to
such release the Horizon Parties shall indemnify and hold harmless the Sun Parties from any
Liability, except to the extent any Purchaser Indemnified Party (as such term is defined in the
Indemnification Agreement) would be entitled to indemnification with respect thereto pursuant to
the Indemnification Agreement, incurred by the Sun Parties under such Acquired Business Credit
Support. Notwithstanding anything to the contrary herein, the Horizon Parties and Sun Parties
acknowledge and agree that at no time after the Closing Date, shall Horizon OP or any of its
Affiliates renew or extend the term of, increase any of the Seller Indemnified Parties’ (as such
term is defined in the Indemnification Agreement) obligations under, or transfer to another third
party, any item of, subject to or under, any Acquired Business Credit Support.



          (b) The Sun Parties shall use commercially reasonable efforts to obtain from the respective
counterparty, in form and substance reasonably satisfactory to the Horizon Parties, on or before
the Closing, valid and binding written complete and unconditional releases of the applicable
Acquired Entity or, with respect to the Acquired Business, Asset Seller, from any Liability,
whether arising before, on or after the Closing Date, under any Sun Credit Support in
effect as of the Closing, including by providing substitute guarantees with terms that are at
least as favorable to the counterparty as the terms of the applicable Sun Credit Support and by
furnishing letters of credit, instituting escrow arrangements, posting surety or performance bonds
or making other arrangements as the counterparty may reasonably request. If any item of Sun Credit
Support has not been released as of the Closing Date, then the Horizon Parties and the Sun Parties
shall use commercially reasonable efforts after the Closing to cause each such unreleased item of
Sun Credit Support to be released promptly and prior to such release the Sun Parties shall
indemnify and hold harmless the Horizon Parties from any Liability incurred by any Purchaser
Indemnified Party under such Sun Credit Support. Notwithstanding anything to the contrary herein,
the Horizon Parties and Sun Parties acknowledge and agree that at no time after the Closing Date,
shall Sun or any of its Affiliates renew or extend the term of, increase any of the Purchaser
Indemnified Parties’ obligations under, or transfer to another third party, any item of, subject to
or under, any Sun Credit Support.



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     Section 6.7 Delivery of Financial Statements.



          (a) Sun shall deliver on or before November 21, 2005 to Horizon OP, (i) an unaudited
comparative combined balance sheet of the Acquired Business at August 31, 2005 and unaudited
comparative combined statements of operations and cash flows of the Acquired Business for the
eight-month period ending on August 31, 2005 (including for the comparable eight-month period for
the prior year), together with all related notes and schedules thereto (the “Unaudited 2005
Interim Financial Statements”) and (ii) the Audited Combined Historical Financial Statements.



          (b) With respect to each of the Unaudited Combined Interim Financial Statements and the
Unaudited Stub Period Financial Statements required under Section 6.7(a) or Section
6.7(e) and Section 6.7(c), respectively, to be delivered by Sun, Sun shall (i) use
reasonable best efforts to cause E&Y to perform a SAS 100 review with respect thereto and to orally
confirm to Horizon OP that (A) such review was conducted in accordance with the standards of the
American Institute of Certified Public Accountants (the “AICPA”) and (B) the certificate
delivered by Sun pursuant to clause (ii) below is accurate in all material respects and
(ii) deliver to Horizon OP, upon completion of the review contemplated by clause (i) above,
a certificate, duly executed by the controller of Sun solely in his capacity as an officer of Sun,
(A) stating, if true and correct, that E&Y has informed him that it has completed a SAS 100 review
with respect thereto in accordance with the standards of the AICPA and (B) setting forth a
description of all material modifications, if any, to such financial statements that E&Y informed
him should be made thereto for such financial statements to conform with GAAP. Horizon OP shall
reimburse the Sun Parties for any reasonable, out-of-pocket expenses incurred by them and, to the
extent not paid by Sun or a Retained Subsidiary, pay to E&Y directly its fees and expenses in
respect of (x) E&Y’s conducting of such SAS 100 review and (y) E&Y’s audit of the Audited Combined
Historical Financial Statements and the 2005 Audited Financial Statements.



          (c) Unless the Closing Date is December 31, 2005, Sun shall use reasonable best efforts to
deliver on or before the date that is thirty (30) days after the Closing Date (and
shall in any event deliver on or before the date that is forty-four (44) days after the
Closing Date) to Horizon OP, an unaudited combined balance sheet of the Acquired Business at the
Closing Date and unaudited combined statements of operations and cash flows of the Acquired
Business for the period beginning on September 1, 2005 (or, if the Closing Date is after December
31, 2005, January 1, 2006) and ending on the Closing Date and the year-to-date period then ending,
together with all related notes and schedules thereto (the “Unaudited Stub Period Financial
Statements”).



          (d) If the Closing Date is on or after December 31, 2005, Sun shall use reasonable best
efforts to deliver on or before February 28, 2006 (and shall in any event deliver on or before
March 14, 2006) to Horizon OP (whether or not the Closing occurs prior to, on or after March 14,
2006), an audited combined balance sheet of the Acquired Business at December 31, 2005 and audited
combined statements of operations and cash flows of the Acquired Business for the year ending
December 31, 2005 (the “2005 Audited Financial Statements”), together with a report without
qualification or exception of E&Y with respect thereto.




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          (e) If the Closing Date is on or after (i) February 28, 2006, Sun shall use reasonable best
efforts to deliver on or before March 30, 2006 (and shall in any event deliver on or before April
14, 2006) to Horizon OP, an unaudited comparative combined balance sheet of the Acquired Business
at February 28, 2006 and unaudited comparative combined statements of operations and cash flows of
the Acquired Business for the two-month period ending on February 28, 2006 (including for the
comparable period for the prior year), together with all related notes and schedules thereto (the
“Unaudited First Quarter 2006 Interim Financial Statements”) and (ii) May 31, 2006, Sun
shall use reasonable best efforts to deliver on or before June 30, 2006 (and shall in any event
deliver on or before July 15, 2006) to Horizon OP an unaudited comparative combined balance sheet
of the Acquired Business at May 31, 2006 and unaudited comparative combined statements of
operations and cash flows of the Acquired Business for the three-month period ending on May 31,
2006 (including for the comparable period for the prior year), together with all related notes and
schedules thereto (the “Unaudited Second Quarter 2006 Interim Financial Statements” and,
together with the Unaudited First Quarter 2006 Interim Financial Statements (the “Unaudited
2006 Interim Financial Statements” and, together with the Unaudited 2005 Interim Financial
Statements, the “Unaudited Combined Interim Financial Statements”).




     Section 6.8 Non-Assignment.



          (a) Notwithstanding anything else in this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign, license, sublicense, lease, sublease, convey or transfer at
Closing any Acquired Asset, including any Acquired Entity, Permit, Contract or any claim or right
or any benefit arising thereunder or resulting therefrom, as to which consent or approval to
assignment, license, sublicense, lease, sublease, conveyance or
transfer thereof or amendment thereof (including consents and approvals of Governmental
Entities) is required but has not been obtained as of the Closing Date unless and until such
consent, approval or amendment is no longer required or has been obtained. Each of the parties
hereto shall use, and cause each of their respective Subsidiaries to use, reasonable best efforts
to obtain any such consent, approval or amendment, including after the Closing Date. Upon
obtaining any such consent, approval or amendment after the Closing, such consent, approval or
amendment to be in a form reasonably satisfactory to Horizon OP, the Horizon Parties and Sun shall
cause any applicable Acquired Asset to be transferred to Horizon OP or one or more Horizon
Subsidiaries (as designated by Horizon OP and permitted by such consent, approval or amendment) on
the terms that would have applied to such transfer had it occurred in the transactions as
contemplated by this Agreement or the Horizon Transactions.




          (b) Subject to Section 6.21, in the event and to the extent that the parties hereto
are unable to obtain any such required consent, approval or amendment to transfer, license,
sublicense, lease, sublease, convey or assign any Acquired Asset to Horizon OP or one or more
Horizon Subsidiaries (as designated by Horizon OP), the parties hereto shall cooperate to agree to
a mutually agreeable arrangement under which Horizon OP or one or more Horizon Subsidiaries (as
designated by Horizon OP) shall obtain the economic claims, rights and benefits under the Acquired
Asset, in the manner set forth below, with respect to which such consent, approval or amendment has
not been obtained in accordance with this Agreement. Notwithstanding any failure of the parties
hereto to agree to such a mutually agreeable arrangement, Sun shall, and shall cause the Retained
Subsidiaries to (i) continue to hold, and to




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the extent required by the terms applicable to such
Asset, operate the Asset, in the case of real or personal property, and to be bound thereby in the
case of Contracts, (ii) cooperate in any reasonable and lawful arrangement proposed by Horizon OP
to provide to Horizon OP or the designated Horizon Subsidiaries the benefits arising under any such
Acquired Asset which were to arise out of its transfer pursuant to this Agreement, the structure of
which is such that such Acquired Asset shall qualify as a real estate asset within the meaning of
Section 856(c)(5)(B) of the Code (a “Qualifying Asset”) and the income derived therefrom
shall qualify as income described in Sections 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code
(“Qualifying Income”) (such transfer a “Qualified Transfer”), including accepting
such reasonable and lawful direction as Horizon OP shall request of Sun and (iii) enforce at
Horizon OP’s request, or allow Horizon OP and the Horizon Subsidiaries to enforce (in which case,
solely for such purpose, Sun shall constitute and appoint Horizon OP or the subject Horizon
Subsidiaries as its true and lawful attorney-in-fact), any rights of Sun and the Retained
Subsidiaries as to such Acquired Asset against the issuer thereof or the other party or parties
thereto (including the right to elect to terminate such of the foregoing in accordance with the
terms thereof upon the request of Horizon OP). Sun shall, and shall cause the Retained
Subsidiaries to, without further consideration therefor, and without right of set-off (except for
actually incurred costs and expenses to the extent Horizon OP is responsible therefor under this
Section 6.8), pay and remit to Horizon OP promptly all monies, rights and other
considerations received in respect of such Qualifying Asset, net of any costs and expenses incurred
by Sun and the Retained Subsidiaries in connection with such Qualifying Asset to the extent such
costs and expenses would have been borne by Horizon OP if such Qualifying Asset had been properly
transferred to Horizon OP pursuant to Article 2 at the Closing. For the avoidance of
doubt, unless an arrangement under
this Section 6.8(b) shall in its entirety constitute a Qualified Transfer, no such
arrangement shall be established or be deemed to have been given effect in whole or in part.




          (c) To the extent that Horizon OP or the Horizon Subsidiaries are provided the benefits of any
Acquired Asset pursuant to Section 6.8(b), Horizon OP or such Horizon Subsidiary shall,
subject to Section 6.8(h), (i) be responsible for the Assumed Liabilities, if any, arising
under or related to such Acquired Asset, (ii) perform for the benefit of the counterparty or
counterparties thereto, the obligations of Sun or the Retained Subsidiary, as the case may be,
thereunder or in connection therewith, but only to the extent (x) that such performance by Horizon
OP or the Horizon Subsidiaries would not result in any default thereunder or in connection
therewith and (y) such performance pertains to the Acquired Business and the benefits provided to
Horizon OP or the Horizon Subsidiaries in the Qualified Transfer; provided,
however, that if Horizon OP or the Horizon Subsidiaries shall fail to perform to the extent
required herein and such failure continues for ten (10) business days following notice thereof to
Horizon OP, Sun and the Retained Subsidiaries shall thereafter cease to be obligated under this
Section 6.8 to maintain the Qualified Transfer which is the subject of such failure to
perform unless and until such situation is remedied and (iii) reimburse Sun for, and hold it
harmless from, all Liabilities (not already used to set-off monies, rights or other consideration
paid to Horizon OP or a Horizon Subsidiary pursuant to Section 6.8(b)) incurred or asserted
as a result of any actions (or omissions to act) of Sun or any Retained Subsidiary taken at the
direction of, and in all material respects in the manner prescribed by, Horizon OP or any of its
Subsidiaries pursuant to Section 6.8(b), in each case in clause (i), (ii)
or (iii) only to the extent such Liabilities would have been borne by Horizon OP if such
Acquired Asset had been properly transferred to Horizon OP pursuant to Article 2 at the
Closing.




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          (d) If any consent, approval or amendment is required to assign, license, sublicense, lease,
sublease, convey or transfer any Excluded Asset from any Acquired Entity to Sun or any Retained
Subsidiary, Sun shall use, and cause each of the Sun Subsidiaries to use, reasonable best efforts
to obtain any such consent, approval or amendment, including after the Closing Date. The Horizon
Parties, at Sun’s expense, shall cooperate with Sun and the Sun Subsidiaries in obtaining any such
consent, approval or amendment. Upon obtaining any such consent, approval or amendment after the
Closing, the Horizon Parties and Sun shall cause any applicable Excluded Asset to be transferred to
Sun, or a Retained Subsidiary designated by Sun in writing, without further consideration therefor.




          (e) Subject to Section 6.21, in the event and to the extent that Sun is unable to
obtain any such required consent, approval or amendment required in order for an Acquired Entity to
transfer, license, sublicense, lease, sublease, convey or assign any Excluded Asset to Sun or one
or more of the Retained Subsidiaries, the parties hereto shall cooperate to agree to a mutually
agreeable arrangement under which Sun or one or more Sun Subsidiaries shall obtain the economic
claims, rights and benefits under the Excluded Asset, in the manner set forth below, with respect
to which such consent, approval or amendment has not been obtained in accordance with this
Agreement. Notwithstanding any failure of the parties hereto to agree to such a mutually agreeable
arrangement, but subject to Section 7.2(e)(i), Horizon OP shall, and shall cause the
Acquired Entities, from and after the Closing, to (i) continue to hold and to be bound thereby, in
the case of Contracts, (ii) cooperate in any reasonable and lawful arrangement proposed by Sun to
provide to Sun or the Sun Subsidiaries the benefits arising under any such
Excluded Asset, including accepting such reasonable and lawful direction as Sun shall request
of Horizon OP and (iii) enforce at Sun’s request, or allow Sun and its Affiliates to enforce, any
rights of the applicable Acquired Entity under any such Excluded Asset against the issuer thereof
or the other party or parties thereto (including the right to elect to terminate such of the
foregoing in accordance with the terms thereof upon the request of Sun). Any incremental Taxes
payable with respect to an Excluded Asset by any taxable REIT subsidiary to which such Excluded
Asset has been transferred, including all Taxes payable on any payments received under this
Section 6.8(e) and all Taxes payable on the distribution or transfer of, if any, such
Excluded Asset out of such taxable REIT subsidiary and the expenses of the transfer of such
Excluded Asset to such taxable REIT subsidiary shall be borne by Sun. The reasonable costs and
expenses (including reasonable professional fees and expenses) incurred by Horizon OP or the
Horizon Subsidiaries (including the Acquired Entities) at Sun’s request, or incurred by Sun or the
Retained Subsidiaries, in each case with respect to any of the actions contemplated under
clause (iii) above, shall be borne solely by Sun. Horizon OP shall, and shall cause the
Acquired Entities to, without further consideration therefor, remit to Sun promptly all monies,
rights and other considerations received in respect of such Excluded Asset, net of any costs and
expenses incurred by Horizon or any Horizon Subsidiaries in connection with such Excluded Asset.
The parties hereto agree for tax purposes to report the actual transfer of such Assets to Sun or
one or more of the Retained Subsidiaries on the Closing Date.




          (f) In the case of an Asset described in Section 6.8(e), Sun shall, and shall cause
its Retained Subsidiaries to, perform for the benefit of the issuer thereof, or the other party or
parties thereto, the obligations of Horizon OP or its relevant Affiliate, as the case may be,
thereunder or in connection therewith.




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          (g) In the event that Sun cannot convey, transfer, assign or deliver, directly or indirectly,
as contemplated by this Agreement, any Excluded Asset at Closing by reason of the failure or
inability to obtain a required consent, approval or amendment, and, at any time thereafter, Horizon
OP, in its good faith judgment, after consultation with its outside tax counsel, determines that
the Excluded Asset or the income generated by such Excluded Asset would reasonably be expected to
cause a significant risk that Trust, W&S Seattle Corp., W&S Denver Corp., Horizon, SHC or any
Horizon Foreign Currency REIT would fail to qualify as a REIT under the Code, then Horizon OP and
the Horizon Subsidiaries (including the Acquired Entities) shall no longer have any obligation with
respect to such Excluded Asset, except pursuant to this Section 6.8(g). Without limiting
the foregoing, if, in the good faith judgment of Horizon OP, after consultation with its outside
tax counsel, the holding of such Excluded Asset by the applicable Horizon Subsidiary would not
reasonably be expected to cause a significant risk that Trust, W&S Seattle Corp., W&S Denver Corp.,
Horizon, SHC or any Horizon Foreign Currency REIT would fail to qualify as a REIT under the Code,
in such event, Horizon OP shall give prompt notice to Sun thereof and continue to allow Sun to use
its reasonable best efforts to obtain such required consent, approval or amendment in accordance
with Section 6.8(d) until the date that is ten (10) business days after such notice is
delivered to Sun. In the event Sun fails to obtain such required consent, approval or amendment
prior to such date, Horizon OP shall thereafter cause the applicable Horizon Subsidiary to, at
Sun’s election, (i) use commercially reasonably efforts to transfer such Excluded Asset to Sun, or
a Retained Subsidiary designated by Sun in writing, without further consideration therefor (unless,
in the good faith judgment of Horizon OP, after consultation with its outside tax counsel, the
transfer of such Excluded Asset
would reasonably be expected to cause a significant risk that Trust, W&S Seattle Corp., W&S
Denver Corp., Horizon, SHC or any Horizon Foreign Currency REIT would fail to qualify as a REIT
under the Code, in which case this clause (i) may not be elected by Sun), (ii) in the event
that, in the good faith judgment of Horizon OP, the transfer of such Excluded Asset by the Acquired
Entity that holds such Excluded Asset to a taxable REIT subsidiary of Horizon, and the holding of
such Excluded Asset by such taxable REIT subsidiary, would not reasonably be expected to cause a
significant risk that Trust, W&S Seattle Corp., W&S Denver Corp., Horizon, SHC or any Horizon
Foreign Currency REIT would fail to qualify as a REIT under the Code, use commercially reasonable
efforts to cause such Excluded Asset to be transferred to such taxable REIT subsidiary, or (iii)
use commercially reasonable efforts (A) to sell such Excluded Asset to one or more third parties in
one or more arms-length transactions and (B) taking into account all potential Losses to Horizon OP
described in clause (i), to maximize the net proceeds of any such sale. In the event Sun
elects clause (i) of the immediately preceding sentence, Sun shall indemnify the Purchaser
Indemnified Parties for any Losses arising out of Third Party Claims (as such term is defined in
the Indemnification Agreement) with respect to the transfer of such Excluded Asset to Sun. Horizon
OP shall cause the applicable Horizon Subsidiaries to remit to Sun the net proceeds of any such
sale, after setting off all costs, expenses and other Losses (as such term is defined in the
Indemnification Agreement) of Horizon OP and the applicable Horizon Subsidiaries in connection with
such transactions. Upon receipt
by Sun of such payment in full, neither Sun nor Horizon OP nor any
Horizon Subsidiary shall have any further obligation under this Section 6.8(g) with respect
to such Excluded Asset.




          (h) Notwithstanding anything to the contrary in this Agreement, Sun shall indemnify the
Purchaser Indemnified Parties for any Losses arising out of (i) any gross negligence or willful
misconduct by Sun or a Retained Subsidiary in connection with this Section




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6.8, and any
arrangements pursuant thereto, (ii) any claim by a third party that there had occurred any default
or breach (or alleged default or breach) by Sun or Horizon OP or any of their respective
Subsidiaries to the extent it arises by reason of the fact that (in accordance with Section
6.8) (A) in the case of an Acquired Asset, Horizon OP or one of its Subsidiaries, rather than
Sun or one of its Subsidiaries, is, or has been, performing Sun’s or its Subsidiary’s obligations
under, or obtaining Sun’s or its Subsidiaries’ benefits under, an Acquired Asset that has not been
assigned, licensed, sublicensed, leased, subleased, conveyed or transferred to Horizon OP or one of
its Subsidiaries, but excluding from the foregoing any default or breach (or alleged default or
breach) to the extent related to any defect in the performance by Horizon OP or its Subsidiary
itself or (B) in the case of an Excluded Asset, Sun or one of its Subsidiaries, rather than Horizon
or one of its Subsidiaries, is performing Horizon OP’s or its Subsidiary’s obligations under, or
obtaining Horizon OP’s or its Subsidiaries’ benefits under, an Excluded Asset that has not been
assigned, licensed, sublicensed, leased, subleased, conveyed or transferred, as applicable, to Sun
or one of its Subsidiaries or (iii) except to the extent arising out of any gross negligence or
willful misconduct by Horizon OP or its Affiliates, and subject (in the case of an Acquired Asset)
to Section 6.8(c), any arrangements or actions contemplated by this Section 6.8.




          (i) Nothing in this Section 6.8 shall (i) be deemed to constitute an agreement to
exclude from the transactions contemplated by this Agreement and the Local Purchase Agreements or
the Horizon Transactions any Acquired Asset, or any claim, right or benefit arising hereunder or
thereunder, (ii) be deemed to constitute an agreement to include in the
transactions contemplated by this Agreement and the Local Purchase Agreements or the Horizon
Transactions any Excluded Asset, or any claim, right or benefit arising hereunder or thereunder,
(iii) qualify the obligations of the parties hereto to consummate the transactions contemplated by
this Agreement and the Ancillary Agreements or the Horizon Transactions or (iv) obligate the
parties hereto to consummate the Closing Transactions unless the conditions to their respective
obligations set forth in Article 7 have been satisfied or waived.




          (j) Nothing in this Section 6.8 shall permit or require any act, omission or
arrangement which, in the reasonable determination of Horizon, could adversely affect the REIT
status of Horizon or, after the Closing, W&S Seattle Corp., W&S Denver Corp., SHC or any Horizon
Foreign Currency REIT.




     Section 6.9 Public Announcements. The parties hereto shall use commercially
reasonable efforts to develop, and shall cooperate with respect to, a joint communications plan
with respect to this Agreement and the Ancillary Agreements and the transactions contemplated
hereby and thereby. Without limiting the foregoing, (i) the initial press release to be issued
with respect to the transactions contemplated by this Agreement and the Ancillary Agreements will
be in the form agreed to by the parties hereto prior to the execution of this Agreement and (ii)
the Horizon Parties, on the one hand, and the Sun Parties, on the other hand, will consult with Sun
and Horizon OP, respectively, before issuing, and provide Sun and Horizon OP, respectively,
reasonable opportunity to review and comment upon, any press release or other material written
public statement, including any press release or other written public statement which addresses in
any manner the transactions contemplated by this Agreement and the Ancillary Agreements, and shall
not issue any such press release or make any such written public statement prior to such



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consultation, except as may be required by applicable Law, court process or by obligations pursuant
to any listing agreement with any national securities exchange.



     Section 6.10 Listing. Horizon shall use reasonable best efforts to cause the Horizon
Common Stock to be issued in the Closing Transactions to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the REIT Merger Effective Time.



     Section 6.11 Reserved.



     Section 6.12 Comfort Letters.



          (a) If requested by Sun, Horizon shall use commercially reasonable efforts to cause to be
delivered to Sun and Trust comfort letters of KPMG LLP (“KPMG”), Horizon’s independent
public accountants, dated approximately the date on which the Form S-4 shall become effective and
as of the Closing Date, and addressed to Sun and Trust, in form reasonably satisfactory to Sun and
Trust and customary in scope and substance for letters
delivered by independent public accountants in connection with transactions such as those
contemplated by this Agreement.




          (b) If requested by Horizon, Sun shall use commercially reasonable efforts to cause to be
delivered to Horizon comfort letters of E&Y, Sun’s and Trust’s independent public accountants,
dated approximately the date on which the Form S-4 shall become effective and as of the Closing
Date, and addressed to Horizon, in form reasonably satisfactory to Horizon and customary in scope
and substance for letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.




     Section 6.13 Cooperation with Financing. The Sun Parties shall, and shall cause their
Subsidiaries to, reasonably cooperate with the Horizon Parties and their Representatives, and shall
use commercially reasonable efforts to cause their respective Representatives, including the
independent accounting firm(s) retained by the Sun Parties, to cooperate with the Horizon Parties
and their Representatives, in connection with efforts to obtain high yield bond financing and any
other debt and equity financings and related arrangements (“Financings”) undertaken by the
Horizon Parties or their Subsidiaries, in connection with the Closing Transactions, including in
connection with the review of written offering materials used to complete such Financings and
materials for rating agency presentations, to the extent information contained therein relates to
the Sun Parties, including to any Assets, Liabilities, or operations of the Acquired Entities.
Without limiting the foregoing, the Sun Parties shall: (i) use commercially reasonable efforts to
provide the Horizon Parties and their Representatives with historical, comparative and pro forma
financial information and data, projections, and other information and data reasonably requested in
connection with such Financings; (ii) cause appropriate Representatives of the Sun Parties to (x)
be available to answer questions in due diligence sessions customarily involved in Financing
efforts and (y) assist in reviewing offering materials and other documents prepared by the Horizon
Parties and their Representatives as may be reasonably requested in connection with such
Financings; provided that, the foregoing activities would not unreasonably interfere with
the performance of such Sun Representatives’ duties in connection with the Acquired Business or the
Retained Sun Business; and (iii) use commercially reasonable efforts (including by delivering
customary representation letters and certificates) to obtain accountants’ comfort letters



77









 







and
consents as reasonably requested by Horizon OP; provided that, in the case of any of
clauses (i)-(iii) above, Horizon OP shall reimburse Sun for any out-of-pocket expenses
incurred by the Sun Parties and their Subsidiaries in connection with their compliance with this
Section 6.13. The obligations of the Sun Parties under this Section 6.13 shall be
subject to the Horizon Parties first entering into the Financing Indemnification Agreement.



     Section 6.14 Auditor’s Consent and Cooperation.



          (a) The Sun Parties shall use commercially reasonable efforts to cause E&Y to deliver to
Horizon a duly executed letter in which E&Y: (i) acknowledges that it understands that Horizon and
one or more of its Subsidiaries intend to include the Audited Combined Historical Financial
Statements, certain Unaudited Combined Interim Financial Statements and,
if applicable, the 2005 Audited Financial Statements in statements and reports required
pursuant to the Securities Act and the Exchange Act to be filed by Horizon and Horizon OP and their
respective successors from time to time with the SEC (“SEC Filings”); (ii) subject to E&Y’s
usual procedures and professional standards and after being given reasonable opportunity to review
such SEC Filings and documents incorporated by reference therein at Horizon’s sole cost and
expense, agrees that it shall consent to the references in such SEC Filings to E&Y as experts and
the inclusion of any of its audit reports on the Audited Combined Historical Financial Statements
and, if applicable, the 2005 Audited Financial Statements in any SEC Filing, until such financial
statements and consents are no longer required to be included in such SEC Filing by the Securities
Act or the Exchange Act; and (iii) acknowledges that Horizon will be providing the Audited Combined
Historical Financial Statements, certain Unaudited Combined Interim Financial Statements and, if
applicable, the 2005 Audited Financial Statements to potential lenders for the transactions
contemplated hereby and will be including such financial statements in the offering materials used
in connection with a private or exempt offering under the Securities Act. The Sun Parties shall
use commercially reasonable efforts to cause E&Y, including by providing customary representation
letters and other customary documents and instruments, subject to E&Y’s usual procedures and
professional standards and E&Y being given reasonable opportunity to review such SEC Filings or
offering documents and documents incorporated by reference therein at Horizon’s sole cost and
expense, (A) to consent to the inclusion of any of its audit reports on the Audited Combined
Historical Financial Statements and, if applicable, the 2005 Audited Financial Statements in any
SEC Filing (and to the references therein to E&Y as experts) and (B) to issue customary comfort
letters (concerning matters which are the subject of the Audited Combined Historical Financial
Statements, the Unaudited Combined Interim Financial Statements or, if applicable, the 2005 Audited
Financial Statements) that may be required in connection with any offering of debt or equity
securities by Horizon or any of its Subsidiaries or their respective successors.




          (b) If E&Y fails, for any reason whatsoever, to consent to the inclusion of any such audit
reports on the Audited Combined Historical Financial Statements or, if applicable, the 2005 Audited
Financial Statements in any SEC Filing (and to the references therein to E&Y as experts) or to
provide such comfort letters, Sun shall, and shall cause each of its Subsidiaries to, (i) provide
Horizon’s independent accountants reasonable access to its books and records and personnel
reasonably required in order to audit the Audited Combined Historical Financial Statements and, if
applicable, 2005 Audited Financial Statements and to conduct a SAS 100 review of the Unaudited
Combined Interim Financial Statements so that Horizon may




78









 




expeditiously cause any or all of such
financial statements to be reaudited, again reviewed or to be so confirmed by “comfort” letters as
the case may be, (ii) use commercially reasonable efforts to cause E&Y to cooperate with the
auditors engaged by Horizon to conduct such audit or review and (iii) provide customary
representation letters and other customary documents and instruments; provided,
however, that the foregoing shall be subject to Horizon’s auditors agreeing not to disclose
to Horizon any of the Sun information made available to such auditors that is not directly related
to the Acquired Business or the Acquired Assets. Sun acknowledges that if E&Y fails to consent to
the inclusion of any such audit reports in any SEC Filing (and to the references therein to E&Y as
experts) or to provide such comfort letters, and Horizon or any of its successors is denied in any
manner whatsoever the access provided for in this Section 6.14, Horizon and its successors
(if any) will suffer irreparable injury and damage. Therefore, Sun agrees that, if Horizon or its
successors is denied access provided for in this Section 6.14 in any
manner whatsoever, Horizon and its Affiliates and their respective successors (if any) will be
entitled, without posting of bond, to, in addition to all other remedies available to it,
injunctive relief and specific performance to prevent the breach of and to secure the enforcement
of this Section 6.14.




          (c) Horizon OP shall reimburse Sun for any reasonable out-of-pocket expenses incurred by the
Sun Parties and their Subsidiaries in connection with their compliance with this Section
6.14.




     Section 6.15 Ground Lease Estoppel Certificates. Sun shall use commercially
reasonable efforts to cooperate with Horizon OP in Horizon OP’s efforts to obtain from the
applicable landlord under each Ground Lease a ground lease estoppel certificate relating to each
such Ground Lease, in a form reasonably acceptable to Horizon OP.



     Section 6.16 Ancillary Agreements. At or prior to the Closing, each Sun Party and
Horizon Party shall, and shall cause their applicable Affiliates to, as the case may be, execute
and deliver to the other parties thereto each of the following, to the extent contemplated thereby
to be a party: (i) a registration rights agreement, in all material respects in the form of
Exhibit G (the “Registration Rights Agreement”); (ii) a right of first offer
agreement in all material respects in the form of Exhibit H (the “Right of First Offer
Agreement”); (iii) an indemnification agreement in all material respects in the form of
Exhibit I (the “Indemnification Agreement”); (iv) (a) a separate sublease agreement
for each applicable Acquired Hotel in all material respects consistent with the terms set forth on
Exhibit J (the “Sublease Agreement”) and (b) a separate lease agreement for each
applicable Acquired Hotel in all material respects consistent with the terms set forth in
Exhibit K (the “Lease Agreement”); (v) a Master Reserve Fund agreement in all
material respects in the form of Exhibit L (the “Master Reserve Fund Agreement”);
(vi) a separate operating agreement for each applicable Acquired Hotel in all material respects in
the form of Exhibit M, subject to the deviation schedule attached hereto as Schedule
6.16(vi) (the “Operating Agreement”); (vii) a separate license agreement for each
applicable Acquired Hotel in all material respects in the form of Exhibit N, subject to the
deviation schedule attached hereto as Schedule 6.16(vii) (the “License Agreement”);
(viii) a working capital concentration account agreement in all material respects in the form of
Exhibit O (the “Working Capital Concentration Account Agreement”); (ix) a
compensating balance agreement in all material respects in the form of Exhibit P (the
“Compensating Balance Agreement”); (x) a termination upon sale agreement in all material
respects in the form of Exhibit Q (the “Termination Upon Sale



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Agreement”); (xi) a
tax sharing and indemnification agreement in all material respects in the form of Exhibit R
(the “Tax Sharing and Indemnification Agreement”); (xii) a financing
cooperation and indemnification agreement in all material respects in the form of Exhibit
S (the “Financing Indemnification Agreement”); (xiii) a corporate-level amendment to
the Operating Agreements and the License Agreements in all material respects in the form of
Exhibit T (the “Corporate-Level Agreement”); (xiv) a growth plan agreement in all
material respects in the form of Exhibit U (the “Growth Plan Agreement”); and (xv)
the Local Purchase Agreements. The Registration Rights Agreement, the Right of First Offer
Agreement, the Indemnification Agreement, the Sublease Agreements, the Lease Agreements, the Master
Reserve Fund Agreement, the Operating Agreements, the License Agreements, the Working Capital
Concentration Account Agreement, the Compensating Balance Agreement, the Termination Upon Sale
Agreement, the Tax Sharing and Indemnification Agreement, the Financing Indemnification Agreement,
the Corporate Level Agreement, the Growth Plan Agreement, the Assumption Agreement and the Local
Purchase Agreements collectively, are referred to in this Agreement as the “Ancillary
Agreements”.



     Section 6.17 [Intentionally Omitted].



     Section 6.18 Deferral Triggers; Deferred Assets.



          (a) With respect to any Acquired Hotel or Acquired Entity, a “Deferral Trigger” shall
be deemed to have occurred if any of the following circumstances, events, occurrences, changes or
effects has occurred and is continuing at or prior to the Closing:





     (i) after the date of the the Horizon Stockholders Meeting, any consent, approval or
authorization of any Governmental Entity or other third party required to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements or the Horizon
Transactions and set forth on Schedule 6.18(a)(i) has not been obtained;




     (ii) in the case of an Acquired Hotel, any portion thereof has been damaged by fire or
other casualty event and the cost of repair or restoration with respect to any one or more
such casualties (without taking into consideration any insurance or third party proceeds
which have been or may be received in connection with such casualties), individually or in
the aggregate, exceed, or would reasonably be expected to exceed, (x) in the case of an
Acquired Hotel, 25% of the applicable Acquired Hotel Agreed Amount or (y) in the case of an
Acquired Entity, 25% of the aggregate Acquired Hotel Agreed Amounts of the Acquired Hotels
held by such Acquired Entity;




     (iii) in the case of an Acquired Hotel, any condemnation events are commenced against
any portion thereof and the economic impact (without taking into consideration any
condemnation award or other proceeds) of any such condemnation events, individually or in
the aggregate, exceed, or would reasonably be expected to
exceed, (x) in the case of an Acquired Hotel, 25% of the applicable Acquired Hotel
Agreed Amount or (y) in the case of an Acquired Entity, 25% of the aggregate Acquired Hotel
Agreed Amounts of the Acquired Hotels held by such Acquired Entity;



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     (iv) (A) (1) after the date of the Horizon Stockholders Meeting, any consent, approval
or authorization of any Governmental Entity or other third party required in connection with
the transactions contemplated by this Agreement or the Horizon Transactions has not been
obtained or (2) the condition set forth in Section 7.2(a) would not be satisfied
with respect to breaches, inaccuracies or failures to be true of representations or
warranties set forth in Section 3.1(a) (Organization, Standing and Power),
3.2 (Capital Structure), 3.4 (Authority; Noncontravention; Consents),
3.6 (Absence of Changes), 3.7 (Litigation), 3.8 (Properties) (but
only subsections (a), (b) and (e) thereof), 3.9
(Environmental Matters), 3.16 (Compliance with Laws; Permits), 3.17
(Contracts) (but only with respect to clauses (v), (vi) and (xii) of
Section 3.17(a) and Section 3.17(b) as it relates to those clauses) or
3.19 (Assets) (in each case, disregarding all qualifications and exceptions
contained in Section 7.2(a), itself, relating to materiality, Sun Material Adverse
Effect, Sun Material Impairment or specified numerical threshold and continuing to disregard
the qualifications and exceptions set forth in Article 3 that are disregarded by
Section 7.2(a)) and (B) the economic impact (without taking into account any
indemnification, insurance or third party proceeds) of any state of facts, change,
development, effect, condition or occurrence set forth in Section 6.18(a)(iv)(A),
individually or in the aggregate, exceeds, or would reasonably be expected to exceed, (x) in
the case of an Acquired Hotel, 25% of the applicable Acquired Hotel Agreed Amount or (y) in
the case of an Acquired Entity, 25% of the aggregate Acquired Hotel Agreed Amounts of the
Acquired Hotels held by such Acquired Entity; provided, however, that no
state of facts, change, development, effect, condition or occurrence associated with any
breach, inaccuracy or failure to be true of any representation or warranty set forth in
Section 3.4 (other than clause (a)), 3.6, 3.7, 3.8
(other than clauses (a), (b) or (e)), 3.9, 3.16,
3.17 or 3.19 (except to the extent also associated with any breach,
inaccuracy or failure to be true of any representation or warranty set forth in Section
3.1(a), 3.2, 3.4(a) or Section 3.8(a), (b) or
(e)) shall be taken into account in determining such economic impact if the economic
impact relating thereto, together with the economic impact relating to any other matters
arising out of the same, or any related, facts, events or circumstances, is less than
$500,000 (or, with respect to breaches, inaccuracies or failures to be true of Section
3.19, $100,000), but, if such economic impact is $500,000 (or, as applicable $100,000)
or more, then the entire economic impact shall be taken into account;




     (v) after the date of Horizon Stockholders Meeting, any Restructuring Parameter (within
the meaning of Exhibit A) would not be satisfied in any material respect if such
Acquired Hotel or Acquired Entity is included in, but would be satisfied if such Acquired
Hotel or Acquired Entity were excluded from, the transactions contemplated by this
Agreement;




     (vi) after the date of the Horizon Stockholders Meeting, Sun shall not have received a
favorable ruling regarding the Tax treatment as set forth on Schedule 6.18(a)(vi) with respect to any one or more Acquired Hotels or Acquired
Entities set forth on such Schedule;




     (vii) (A) after the date of the Horizon Stockholders Meeting, any Required Antitrust
Approvals have not been obtained (or any required waiting periods in



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connection with the
Required Antitrust Approvals have not expired or been terminated), (B) a temporary
restraining order, preliminary or permanent injunction or other order has been issued by any
court of competent jurisdiction which is then in effect making illegal or otherwise
preventing, in material part, the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements or the Horizon Transactions or (C) there has been any
action taken, or any Law enacted, entered, enforced or deemed applicable to the transactions
contemplated by this Agreement and the Ancillary Agreements or the Horizon Transactions, by
any Governmental Entity of competent jurisdiction that makes, in material part, the
consummation of the transactions contemplated by this Agreement and the Ancillary Agreements
or the Horizon Transactions illegal or prevents their consummation;




     (viii) on or after the date of the Horizon Stockholders Meeting, Horizon OP determines
in good faith that (A) the sum of (1) in the case of any Acquired Hotel in Italy and Spain
(or any applicable Acquired Entity), Horizon’s and the Horizon Subsidiaries’ share of any
Transaction Costs included in clause (iii) of Section 8.3(b) in connection
with the Sublease Agreements arising from the works council review and (2) the
indemnification Liabilities payable by Horizon or any Horizon Subsidiary under Section
2.04(iii) of the Compensating Balance Agreement, if any, applicable to such Acquired Hotel
or Acquired Entity would reasonably be expected to exceed (B) 10% of the EBITDA that would
(but for the costs and Liabilities described in clause (A) above) otherwise be
received by Horizon and the Horizon Subsidiaries with respect to such Acquired Hotel or
Acquired Entity during the twelve months immediately following Closing; or




     (ix) on the date on which the conditions set forth in Sections 7.1 and
7.2 (other than (x) those conditions that, by their terms, are to be satisfied on
the Closing Date and (y) Section 7.2 with respect to the Restructuring Parameters
that are contemplated by the Restructuring Plan to be satisfied, or the Sun Restructuring
Steps or the Closing Restructuring Steps that are required to be completed by the
Restructuring Plan, on or promptly before the Closing Date) have been satisfied or waived,
if any Horizon Deferral Trigger exists with respect to one or more of the Acquired Hotels
identified as the “Westin Europa & Regina”, the “Westin Palace Madrid” and the “Westin
Palace Milan” on Schedule 10.1(d) (collectively, the “Primary International
Hotels”) or one or more Acquired Entities in which a Primary International Hotel is
held, then a Horizon Deferral Trigger shall be deemed to exist with respect to all Acquired
Hotels located outside the United States, Canada and Poland (the “Deferred International
Hotels”) and each of the Acquired Entities in which one or more Deferred International
Hotels is held. Notwithstanding anything to the contrary contained in this Agreement, the
Horizon Deferral Trigger under this Section 6.18(a)(ix) shall be deemed to exist
with respect to each Deferred International Hotel at any time,
and from time to time, thereafter that any other Horizon Deferral Trigger (under any
other provision of Section 6.18(a)) exists with respect to one or more Primary
International Hotels.



     Nothwithstanding anything to the contrary in this Section 6.18, if a Deferral Trigger
shall be deemed to have occurred with respect either of the Acquired Hotels identified as the



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“Sheraton Royal Denarau Resort” or “Sheraton Fiji Resort” on Schedule 10.1(d), a Deferral
Trigger shall be deemed to have occurred with respect to both such Acquired Hotels.



          (b) Without limiting the Sun Parties’ or the Horizon Parties’ obligations under this
Agreement, including under Section 6.3, upon receiving any Knowledge or other notice of the
existence of any Deferral Trigger, (i) Sun or Horizon OP, as applicable, shall promptly give notice
to Horizon OP or Sun, as applicable, of the existence of such Deferral Trigger and (ii) the Sun
Parties, or the Sun Parties and the Horizon Parties, in the case of a Deferral Trigger referred to
in Section 6.18(a)(i), Section 6.18(a)(iv)(A)(1) or Section 6.18(a)(vii),
shall use reasonable best efforts to cause such Deferral Trigger to be cured prior to the Closing
Date; provided that, the Sun Parties shall not be required to use reasonable best efforts
to cure any Deferral Trigger arising from a casualty event or condemnation event.




          (c) From time to time prior to the Closing, (A) in the event that one or more of the Deferral
Triggers described in clause (i), (ii), (iii), (iv), (v),
(vii), (viii) or (ix) of Section 6.18(a) (the “Horizon Deferral
Triggers”) has occurred with respect to any one or more Acquired Hotels or Acquired Entities,
Horizon OP may elect, in its sole discretion, and (B) in the event that one or more of the Deferral
Triggers described in clause (i), (vi) or (vii) of Section 6.18(a)
(the “Sun Deferral Triggers”) has occurred with respect to any one or more Acquired Hotels
or Acquired Entities, Sun may elect, in its sole discretion, to exclude (subject to Section
6.18(f)) any one or more of such Acquired Hotels or Acquired Entities, as applicable, from the
transactions contemplated by this Agreement and the Ancillary Agreements; provided that,
(I) any such election must be made by written notice from a Sun Party to Horizon OP, or from a
Horizon Party to Sun, as applicable, (II) such notice must identify the Acquired Hotels and
Acquired Entities to be excluded and (III) subject to Section 6.18(d), the exclusion of
the Acquired Hotels and Acquired Entities identified in any such notice will be effective on the
earlier of (1) the Closing Date and (2) the later of (x) the date that is twenty (20) business days
after such notice is delivered to Sun or Horizon OP, as applicable, and (y) the date set forth in
such notice as the effective date of such exclusion; provided, further, that no
Acquired Hotel or Acquired Entity will be excluded pursuant to any such notice if all of the
Horizon Deferral Triggers, in the case of a notice delivered by a Horizon Party, or all of the Sun
Deferral Triggers, in the case of a notice delivered by a Sun Party, identified in such notice as
relating to such Acquired Hotel or Acquired Entity have been cured prior to the date on which such
exclusion otherwise would have been effective pursuant to this Section 6.18(c). In any
event in which (i) Horizon OP makes an election with respect to an alleged Horizon Deferral Trigger
or Sun makes an election with respect to an alleged Sun Deferral Trigger and (ii) within five (5)
business days of receiving notice of such Deferral Trigger, Sun or Horizon OP, as applicable,
delivers written notice to the other party claiming that such a Deferral Trigger has not occurred
or is not continuing, the parties hereto shall cooperate to reach an agreement with respect thereto
and, if no such agreement is reached, the dispute shall be submitted to, and resolved exclusively
pursuant to, arbitration in accordance with the Comprehensive Arbitration Rules and Procedures
(the “Rules”) of Judicial Arbitration and Mediation Services, Inc. (“JAMS”). This
clause shall not preclude the parties hereto from seeking equitable or provisional remedies in aid
of arbitration or to preserve the status quo from a court of competent jurisdiction, pending a
decision by the arbitrator. All arbitration shall take place in the County of Montgomery, State of
Maryland, with one mutually acceptable arbitrator experienced in the hotel industry presiding at
such arbitration proceeding. If after ten (10) business days the parties cannot agree on an




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acceptable arbitrator, then JAMS shall appoint an arbitrator in accordance with the Rules. The
arbitrator shall render a written decision stating reasons therefor in reasonable detail within 30
days after being appointed. Decisions pursuant to such arbitration shall be final, conclusive and
binding on the parties hereto for purposes of this Section 6.18. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction over the subject matter
and the party against whom enforcement is sought. The fees and expenses of such arbitration
(including the fees of the arbitrator and reasonable attorneys’ fees, costs and expenses) and of
any action to enforce an arbitration award shall be paid by the party that does not prevail in such
arbitration, and may be assessed in the arbitration award or the judgment entered on such award, as
the case may be. The parties hereto expressly waive all rights whatsoever to file an appeal in the
arbitration forum against any award by the arbitrator hereunder; provided, however,
that the foregoing shall not limit the rights of either party to bring a judicial proceeding in any
applicable jurisdiction to confirm, enforce or enter judgment upon such award or to vacate, modify
or correct the award. Except as necessary in judicial proceedings involving this arbitration
provision or an award rendered hereunder, or to obtain interim relief pending an award, or as
reasonably determined by the disclosing party to be required by applicable Law or by obligations
pursuant to any listing agreement with any national securities exchange, neither a party nor an
arbitrator may disclose the existence, content or results of any arbitration hereunder without the
prior written consent of all parties. Any disputed Deferral Trigger shall be deemed to have
occurred and be continuing (which the parties hereto shall be deemed to have elected to exclude
from the transactions contemplated by this Agreement and the Ancillary Agreements);
provided that, such Deferral Trigger shall be deemed to be not continuing at such time, if
ever, that (i) upon final conclusion of the arbitration referred to in this Section 6.18(c)
with respect thereto, it is determined that no such Deferral Trigger is continuing or (ii) the
parties hereto otherwise agree that such Deferral Trigger is not continuing.




          (d) With respect to each Acquired Hotel and Acquired Entity to be excluded pursuant to
Section 6.18(c) (a “Deferred Asset”):





     (i) the Sun Parties shall cause such Deferred Asset to be transferred, prior to
Closing, to a Retained Subsidiary in which no Acquired Entity has any direct or indirect
Interest; provided that, the Sun Parties shall have the right to delay the Closing
to the extent reasonably necessary to effect such transfer (such delay shall not exceed five
(5) business days after the date on which the election is made to exclude such Deferred
Asset from the transactions contemplated by this Agreement and the Ancillary Agreements and
the Horizon Transactions); provided, further, that Sun will not be entitled
to terminate this Agreement pursuant to Section 9.1(e) for a number of days
following the Termination Date equal to the number of days by which the Closing was delayed
pursuant to the immediately preceding proviso; and




     (ii) subject to Section 6.18(f), as of and subject to the Closing, such
Deferred Asset shall be deemed to be an Excluded Asset or Retained Subsidiary, as
applicable, and the representations, warranties, covenants and conditions in this Agreement
and the Ancillary Agreements (other than Section 6.18(f) and, for the purposes of
Section 6.18(f), the defined terms and Sections used or referenced therein), and any
applicable Schedules, Exhibits or sections of any disclosure letter shall, as of and subject
to the Closing, be modified accordingly with respect to such Deferred Asset.



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          (e) The Cash Amount shall be reduced by the aggregate Acquired Hotel Agreed Amounts for all
Deferred Assets; provided, however, that if the Acquired Hotel identified as the
“Sheraton Centre Toronto Hotel” on Schedule 10.1(d) (or one or more Acquired Entities in
which such Acquired Hotel is held) is a Deferred Asset, then the Cash Amount shall be reduced
further by $5,600,000.




          (f) Post-Closing Actions.





     (i) Notwithstanding anything to the contrary in this Agreement, with respect to each
Deferred Asset, Sun (or, in the case of a Deferral Trigger described in Section
6.18(a)(i), 6.18(a)(iv)(A)(1) or Section 6.18(a)(vii), Sun and Horizon)
shall be required, whether before, on or after the Closing, until the applicable
Post-Closing Deferral Deadline to use reasonable best efforts to cure each Deferral Trigger
with respect to each Deferred Asset; provided that, Sun shall not be required to use
reasonable best efforts to cure any Deferral Trigger arising from a casualty event or
condemnation event.




     (ii) With respect to any Deferred Asset, in the event that all of the Sun Deferral
Triggers, if any, applicable to such Deferred Asset have been cured (or there are otherwise
no Sun Deferral Triggers then occurring), Horizon OP may elect to acquire such Deferred
Asset by delivering to Sun, at any time, and from time to time, on or prior to the
Post-Closing Deferral Deadline for such Deferred Asset, a written notice (the
“Post-Closing Acquisition Notice”) setting forth the Deferred Asset to be acquired
and the Horizon Subsidiary that will acquire such Deferred Asset; provided,
however, that Horizon OP may not deliver a Post-Closing Acquisition Notice with
respect to any Deferred International Hotel so long as the Horizon Deferral Trigger under
Section 6.18(a)(ix) is continuing, unless such Post-Closing Acquisition Notice
elects the acquisition of all the Deferred International Hotels not then subject to a
Horizon Deferral Trigger (other than the Horizon Deferral Trigger under Section
6.18(a)(ix)) and at least one (1) of the Primary International Hotels. Horizon OP shall
acquire such Deferred Asset on a business day agreed upon by Sun and Horizon which shall be
no more than sixty (60) days after the date of such notice.




     (iii) With respect to any Deferred Asset, in the event that all of the Horizon Deferral
Triggers, if any, applicable to such Deferred Asset have been cured (or there are otherwise
no Horizon Deferral Triggers then occurring), Sun may elect to require Horizon OP (or a
Horizon Subsidiary designated by Horizon OP) to acquire such Deferred Asset by delivering to
Horizon OP, at any time, and from time to time, on or prior to the Post-Closing Deferral
Deadline for such Deferred Asset, a written notice (the
“Post-Closing Sale Notice” and together with the Post-Closing Acquisition
Notice, the “Post-Closing Notices”) setting forth the Deferred Asset to be acquired.
Horizon OP shall acquire such Deferred Asset on a business day agreed upon by Sun and
Horizon which shall be no more than sixty (60) days after the date of such Post-Closing Sale
Notice; provided that, Horizon OP’s obligations to acquire any Deferred Asset
pursuant to this Section 6.18(f)(iii) shall be subject to the following conditions,
any one or more of which may be waived by Horizon OP in its sole discretion: (A) no Horizon
Deferral Trigger has occurred and is continuing with respect to such Deferred Asset
(provided


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that, for purposes of this Section 6.18(f)(iii), all references to
the Closing and the Closing Date included or referenced in the definition of “Deferral
Trigger”, and in the other Sections of this Agreement that are incorporated or referenced
therein, shall be deemed to refer to the applicable closing or applicable closing date, as
the case may be, with respect to such Deferred Asset); (B) there shall not be or have been
any state of facts, change, development, effect, condition or occurrence that, individually
or in the aggregate, has resulted in, or would be reasonably expected to result in, a
Horizon Deferral Trigger with respect to such Deferred Asset; (C) Sun and Trust shall have
complied in all material respects with the covenants set forth in Sections 5.1,
6.2, 6.19(c) and 6.19(d) with respect to such Deferred Asset until
and including the applicable closing date; and (D) all lenders, trustees, agents and other
applicable third parties with respect to any Specified Indebtedness associated with such
Deferred Asset shall have provided all consents, waivers, approvals or other documents
required for such Specified Indebtedness to be assumed, or remain in place at the applicable
Acquired Entity, in connection with the acquisition of such Deferred Asset contemplated by
this Section 6.18(f), in each case without resulting in any violation of or default
(with or without notice or lapse of time, or both) under, or giving rise to a right of
termination, cancellation or acceleration of any material obligation or to the loss of a
material benefit under any material Specified Indebtedness.




     (iv) On the closing date set forth in any Post-Closing Notice (subject to the
conditions set forth in clause (iii) of this Section 6.18(f)), (A) Sun
shall, or shall cause its applicable Subsidiaries to, sell, convey, assign, transfer and
deliver to Horizon OP or one or more Horizon Subsidiaries designated by Horizon OP, and
Horizon OP or the applicable Horizon Subsidiaries shall purchase, acquire and accept from
Sun or its applicable Subsidiaries, all right, title and interest of Sun and the Sun
Subsidiaries in and to such Deferred Asset, (B) Sun or its applicable Subsidiaries, on the
one hand, and Horizon OP or its applicable Subsidiaries, on the other hand, shall execute
and deliver all Ancillary Agreements and other certificates, instruments and deliveries that
would have been delivered at Closing if such Deferred Asset had been transferred on the
Closing Date as an Acquired Hotel or Acquired Entity, as applicable, (C) without limiting
the deliveries required by clause (B), Horizon OP or one or more Horizon
Subsidiaries shall deliver or cause to be delivered, by wire transfer of immediately
available funds to an account designated by Sun in writing at least five (5) business days
prior to the applicable closing date, an amount equal to the sum of the Acquired Hotel
Agreed Amounts (in each case as adjusted pursuant to clause (v) of this Section
6.18(f)) for the Deferred Assets (plus $5,600,000 in the event the Acquired Hotel
identified as the “Sheraton Centre Toronto Hotel” on Schedule 10.1(d) (or the
Acquired Entities in which such Acquired
Hotel is held) is included in such Deferred Assets) being transferred to Horizon OP or
its Subsidiaries at such closing and (D) from and after that closing, each Deferred Asset
transferred to Horizon OP or its subsidiaries shall be deemed as of the Closing to have been
an Acquired Hotel or an Acquired Entity, as applicable, and the representations, warranties,
covenants and conditions in this Agreement and the Ancillary Agreements, and, with respect
thereto, any applicable Schedules, Exhibits or sections of any disclosure letter shall be
deemed to have reverted to their form prior to modification pursuant to Section
6.18(d)(ii).



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     (v) For the purposes of clause (iv) of this Section 6.18(f), Sun and
the Horizon Parties (including indirectly through the Acquired Entities and the Directly
Acquired Assets Owners) shall receive debits and credits against the Acquired Hotel Agreed
Amounts for the Deferred Assets in the manner set forth in Article 8 (other than
with respect to Adjusted Indebtedness); provided that, notwithstanding anything to
the contrary in Article 8, (A) the “Apportionment Time” with respect to any Deferred
Asset, including for the purposes of Adjusted Indebtedness, shall be based on the applicable
closing date under this Section 6.18(f), rather than the Closing Date and (B) the
applicable Horizon Parties shall receive a credit in the amount of any Adjusted Indebtedness
with respect to each Deferred Asset. All disputes with respect to adjustments with respect
to any Deferred Assets shall be resolved in the manner set forth in Section 8.4;
provided that, notwithstanding anything to the contrary in Article 8, the
time periods set forth therein shall run from the applicable closing date under this
Section 6.18 rather than the Closing Date.



          (g) In the event that one or more Acquired Hotels or Acquired Entities is designated a
Deferred Asset pursuant to this Section 6.18, the Sun Parties shall use commercially
reasonable efforts to provide Horizon OP as promptly as practicable with any revised financial
statements or other financial information reasonably requested, from time to time, by Horizon OP
with respect to the Acquired Business (excluding the Deferred Assets), including Audited Combined
Historical Financial Statements, 2005 Audited Financial Statements and Unaudited Combined Interim
Financial Statements. For the avoidance of doubt, (x) once such revised financial statements are
delivered, the representations and warranties in Section 3.5, the covenants in Sections
6.3(b) and 6.14, and (y) the conditions in Section 7.2 shall apply to such
revised financial statements in the same manner as such previously delivered financial statements.




     Section 6.19 Indebtedness.



          (a) Except as provided in Section 6.19(b), Sun shall use reasonable best efforts, and
Horizon OP shall cooperate with Sun, to obtain, prior to the Closing, all consents, waivers,
approvals or other documents from any lenders, trustees, agents and other applicable third parties
that are required for the Specified Indebtedness to be assumed by Horizon OP, or remain in place at
the applicable Acquired Entity.




          (b) The Sun Parties shall use commercially reasonable efforts, and Horizon OP and Sun shall
cooperate with each other, to effect a consent solicitation seeking the consent described in
Schedule 6.19(b), which consent shall be effective as of the Closing. Without limiting the
foregoing, each of the Horizon Parties, on the one hand, and the Sun Parties, on the other hand,
shall furnish all information about itself and its business and operations and all financial
information to the other parties as may be required to be included in the consent solicitation
materials to be circulated by the Sun Parties, or any prospectus, registration statement or other
materials or documents to be circulated, or filed with the SEC by, the Horizon Parties. The Sun
Parties shall afford Horizon OP a reasonable opportunity to review and comment on any applicable
consent solicitation materials and shall, in good faith, take such comments into consideration.
Each of Horizon, Sun and Trust promptly will notify the others if and to the extent that any
information provided by it for use in any such materials or filings shall have




87









 




become false or
misleading in any material respect. Each of Horizon, Sun and Trust will cooperate with the others
to take all steps reasonably necessary to amend or supplement such materials or filings, and, as
applicable, to cause such materials or filings, as amended or supplemented, to be filed with the
SEC and disseminated to the holders of SHC Indebtedness. Each of Horizon, Sun and Trust represents
and warrants that the information provided by it for inclusion in such materials or filings, and
each amendment or supplement thereto, at the time of mailing thereof (in the case of any consent
solicitation materials or prospectus or similar documents) and at the time it becomes effective (in
the case of any registration statement filed with the SEC) will not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading.
Notwithstanding anything to the contrary in this Agreement, if the applicable consent described in
this Section 6.19(b) is not obtained with respect to either tranche of SHC Indebtedness, or
Horizon OP otherwise notifies Sun prior to the mailing of the consent solicitation materials that
it elects to exclude the 2025 SHC Indebtedness, then such tranche of SHC Indebtedness will be
deemed not to be Specified Indebtedness for any and all purposes of this Agreement, including
Section 6.19(c) and the definition of Retained Liabilities in Section 10.1(mmm).




          (c) At or prior to the Closing (or, with respect to any Deferred Asset, prior to the earlier
of (i) the applicable Post-Closing Deferral Deadline and (ii) the applicable closing date, if any,
under Section 6.18(f)), the Sun Parties shall, at the sole expense of Sun, pay, or cause to
be paid, in full and cause to be terminated (or assumed by a Person other than an Acquired Entity)
all Indebtedness of the Acquired Entities, and shall cause to be removed all Encumbrances on any of
the Acquired Assets securing such Indebtedness, other than Specified Indebtedness.




          (d) Prior to the Closing (or, with respect to any Deferred Asset, prior to the earlier of (i)
the applicable Post-Closing Deferral Deadline and (ii) the applicable closing date, if any, under
Section 6.18(f)), the Sun Parties shall (x) use reasonable best efforts to avoid any
violation of or default (with or without notice or lapse of time, or both) under, or any
circumstance, condition or event that would reasonably be expected to give rise to a right of
termination, cancellation or acceleration of any material obligation or to the loss of a material
benefit under any Specified Indebtedness and (y) upon obtaining Knowledge of any such violation,
default or right, shall give prompt notice thereof to Horizon OP and shall cause such
violation, default or right, and the circumstances, conditions or events giving rise to such
violation, default or right, to be cured or prevented, as applicable.




     Section 6.20 Interest Total Certificate. Promptly following the close of business on
the business day immediately preceding the Closing Date, Sun shall deliver to Horizon OP a
certificate signed on behalf of Sun by the chief executive officer or chief financial officer of
Sun, in such capacity, to the effect that (i) the number of Class B Shares set forth on such
certificate will represent the precise Class B Share Total, (ii) the number of RP Units and Class A
RP Units (each as defined in the Third Amended and Restated Limited Partnership Agreement of SLT)
set forth on such certificate will represent precisely the number of issued and outstanding RP
Units and Class A RP Units, respectively, as of immediately prior to the Closing and (iii) no
Interests in SLT (other than the RP Units and Class A RP Units identified pursuant to clause
(ii)) will exist immediately prior to the Closing. Sun shall cause (i) the Class B Share Total
to be identical



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to the amount identified as the Class B Share Total in the certificate delivered
pursuant to this Section 6.20, (ii) the number of RP Units and Class A RP Units issued and
outstanding as of immediately prior to the Closing to be identical to the number of RP Units and
Class A RP Units identified in the certificate to be delivered pursuant to this Section
6.20 and (iii) there to be no Interests in SLT (other than such RP Units and Class A RP Units)
as of immediately prior to the Closing.



     Section 6.21 Liquor Licenses. As promptly as practicable after the date of this
Agreement, Horizon OP, at its sole cost and expense, shall make all necessary applications for, and
shall thereafter diligently pursue, issuance of all licenses and approvals, if any, required under
any Laws for the continued sale or service of alcoholic beverages at each Acquired Hotel from and
after the Closing Date (including temporary permits, to the extent available) consistent with the
practices and procedures in effect as of the date hereof (collectively, “Liquor Licenses”).
In respect of each Acquired Hotel located outside of the United States and Canada, if the Law and
practices and procedures in effect as of the date of this Agreement require that the holder of a
Liquor License be a Sun Affiliate (or an individual employee thereof) which is intended to operate
such Acquired Hotel pursuant to an Operating Agreement or a Sublease Agreement, as applicable,
Horizon OP and Sun shall consult and mutually agree on the appropriate licensee, which shall make
all necessary applications for, and shall thereafter diligently pursue, issuance of such Liquor
License. Each of Sun and Horizon OP shall keep the other informed of the status of such
applications, and shall promptly respond to the other’s inquiries regarding the status of the same.
If a Liquor License has not been issued with respect to any Acquired Hotel as of the Closing Date,
then Sun shall, or shall cause the applicable Acquired Entity or Asset Seller to, or shall use
commercially reasonable effort to cause the applicable operating manager of such Acquired Hotel to,
as applicable, enter into an interim liquor agreement in all material respects in the form of
Exhibit V (the “Interim Liquor Agreement”); provided that, the Interim
Liquor Agreement for each Acquired Hotel shall be modified, prior to its execution, in a manner
reasonably satisfactory to Horizon OP and Sun, to reflect applicable Law and local custom or
practice. For the purposes of this Section 6.21, “Closing Date” means, with
respect to any Deferred Asset, the applicable closing date under Section 6.18(f). Prior
to, at and after the Closing, each of Sun and Horizon OP shall cooperate
with the other in its efforts to obtain the issuances or transfers, as applicable, of the
Liquor Licenses in connection with the transactions contemplated by this Agreement.



     Section 6.22 Sun Indenture. The Sun Parties shall take all action necessary to ensure
that (i) no Trust Assumption Event (as such term is defined in Section 11.21(b) of the Sun
Indenture) shall occur and (ii) after the Closing, neither Horizon nor any Horizon Subsidiary
(including any Acquired Entity) shall have any obligation with respect to the Sun Indenture.



     Section 6.23 Title Insurance and Surveys. Sun, at no cost or expense to Sun other
than de minimis costs and expenses, shall use commercially reasonable efforts to cooperate with
Horizon OP in Horizon OP’s efforts to induce one or more title insurance companies (and, in respect
to any Acquired Property located outside of the United States and Canada, registered legal counsel
or notaries or other customary providers of title assurances, as appropriate for the respective
jurisdiction) reasonably satisfactory to Horizon OP and its counsel, to issue a policy of title
insurance or a date down endorsement for an existing policy of title insurance, or (with respect to
any Acquired Property located outside of the United States and Canada), render a title



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opinion or
title certificate or other customary evidence of title assurance, as appropriate for the respective
jurisdiction, showing good and indefeasible title to such Acquired Property in fee simple or valid
leasehold estate or its respective equivalent, as the case may be, vested in the applicable
Acquired Entity or Directly Acquired Assets Owner as of the Closing (each such policy or date down
endorsement, or title opinion or title certificate or other customary evidence of title assurance,
as appropriate for the respective jurisdiction, a “Title Policy” and collectively the
“Title Policies”), subject only to the Permitted Title Exceptions. Prior to Closing, Sun,
at no cost or expense to Sun other than de minimis costs and expenses, shall use commercially
reasonable efforts to cooperate with Horizon OP in any reasonable effort to remove Encumbrances
from the Title Policies, provided that Sun shall not be obligated to remove any such Encumbrances
and the removal of such Encumbrances shall not be a condition to Closing. Sun, at no cost or
expense to Sun other than de minimis costs and expenses, shall, and shall cause its Subsidiaries
to, cooperate with Horizon OP if Horizon OP, in its sole and absolute discretion, determines to
request from one or more title companies (and, with respect to any Acquired Property located
outside of the United States and Canada, registered surveyors or other licensed land survey
professionals, as appropriate and customary for the respective jurisdiction) a new ALTA survey, or
with respect to any Acquired Property located outside of the United States and Canada, the
customary survey utilized in the relevant jurisdiction, or an update or recertification of any
existing survey reflecting the total area of the applicable Acquired Property, the location of all
improvements, recorded easements and encroachments, if any, located thereon and all building and
setback lines and other matters of record typically reflected on a survey with respect thereto and
such matters as are customarily included in such surveys (the “Surveys”). In connection
with the foregoing, neither Sun nor any Sun Subsidiary shall be required to execute or deliver any
affidavits, indemnities or similar documents to any title companies, surveyors or other third
parties, except that prior to or at the Closing, Sun shall execute and deliver or cause any Sun
Subsidiary to execute and deliver to the applicable title insurance companies title affidavits in
substantially the form set forth in Schedule 
6.23 (without, in any event, indemnification by Sun or any Sun Party). As a condition
to Sun’s obligation to deliver such attached affidavit, Horizon agrees that it will date down each
applicable title commitment or preliminary date-down endorsement to a date that is as close as
reasonably practicable to the Closing Date, but in any event such date down shall not be dated more
than thirty (30) days prior to the Closing Date.



     Section 6.24 Rule 145 Affiliate Agreements. Prior to the REIT Merger Effective Time,
Trust shall cause to be prepared and delivered to Horizon OP a list identifying all Persons who, as
of the Horizon Stockholders Meeting, may be deemed to be “affiliates” of Trust, in each case as
that term is used in paragraphs (c) and (d) of Rule 145 under the Securities Act (the “Rule 145
Affiliates”). Each of Sun and Trust shall use commercially reasonable efforts to cause each
Person who is identified as a Rule 145 Affiliate in such list to deliver to Horizon OP at or prior
to the REIT Merger Effective Time a written agreement executed by such Person, substantially in the
form of Exhibit W.



     Section 6.25 Horizon Common Stock Transactions. Without the prior written consent of
Horizon OP, from the date hereof until the Closing, each Sun Party shall not, and shall cause their
respective Affiliates not to, directly, or indirectly, sell, transfer, pledge, or otherwise dispose
of, including through any hedging or derivative transactions or otherwise, any shares of Horizon
Common Stock or Interests therein.



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     Section 6.26 Sun Restructuring. The Sun Parties shall, and shall cause the Sun
Subsidiaries to, at or prior to the Closing, complete the Sun Restructuring Steps (and satisfy the
Restructuring Parameters) in all respects in accordance with the terms and subject to the
conditions of the Restructuring Plan. The parties to this Agreement shall amend the Restructuring
Plan in accordance with any Plan Modifications.



     Section 6.27 Employment Matters.



          (a) Employees. Sun shall, and shall cause the Sun Subsidiaries to, take all necessary
actions such that, immediately prior to the Closing, none of the Acquired Entities will employ any
employees.




          (b) Employee Plans. Sun shall, and shall cause the Sun Subsidiaries, including the
Acquired Entities, to take all necessary actions, such that immediately prior to the Closing, none
of the Acquired Entities shall sponsor, maintain, participate in, contribute to or have an
obligation to contribute to any Sun Employee Plan (other than by reason of payments to Sun pursuant
to the Operating Agreements, the Sublease Agreements or by operation of Law). Immediately prior to
the Closing, a Sun Employer shall employ the employees covered under applicable collective
bargaining agreements and shall be obligated to make any required contribution to each
Multiemployer Plan.




          (c) Employee Liabilities. Sun shall, and shall cause the Sun Subsidiaries to, take
all necessary actions such that immediately prior to the Closing, none of the Acquired Entities,
Horizon or any Horizon Subsidiary shall have any Liability, except pursuant to the terms of an
Operating Agreement, Sublease Agreement or by operation of Law with respect to any (i) Sun Employee
Plan, (ii) employee or former employee of Sun or any Sun Subsidiary, or the Acquired Business,
including any employee covered by an Operating Agreement or Sublease Agreement, as applicable, for
any amount payable as a result of employment, including any wages, incentive compensation, vacation
pay, expense reimbursement, statutory deductions or withholdings, employment termination costs or
benefits with respect to any Sun Employee Plan or (iii) collective bargaining agreement covering
any employee of Sun or any Sun Subsidiary.




          (d) Collective Bargaining Agreements. Notwithstanding any other provision in this
Agreement, prior to Closing, if required by the provisions of the collective bargaining agreements
in effect as of Closing at the Acquired Hotels identified as the “Sheraton Boston Hotel”, “Sheraton
Braintree”, “Sheraton New York Hotel & Towers” and “W New York” on Schedule 10.1(d), Sun
shall take such action as is necessary in relation to the transactions contemplated by this
Agreement under the terms of such collective bargaining agreements, including providing such notice
as may be required to the applicable collective bargaining representatives of such Acquired Hotels,
and Horizon OP or an appropriate Horizon Subsidiary shall agree to assume and be bound by and shall
cause any successor to agree to assume and be bound by such collective bargaining agreements. Sun
and Horizon OP’s respective duties and liabilities under the collective bargaining agreements shall
be as set forth in the applicable Operating Agreements or Sublease Agreements.




     Section 6.28 Sun Intellectual Property.



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          (a) Horizon OP, for itself and its Affiliates, acknowledges and agrees that, except as
provided in the Ancillary Agreements, and except for any Sun Intellectual Property that is covered
by a license agreement between Horizon OP or any of its Affiliates and Sun or any of its Affiliates
in effect immediately prior to the Closing, (x) Horizon OP and its Affiliates (including the
Acquired Entities) will have no, and will not assert any, right, title or interest in, or any
authority or license to use in any manner whatsoever, any Sun Intellectual Property as of the
Closing and (y) any right, title, interest, authority or license of any Acquired Entity to any Sun
Intellectual Property existing immediately prior to the Closing shall automatically terminate
simultaneously and effective with the Closing.




          (b) If, after the Closing Date, Horizon or Sun identifies any Sun Intellectual Property owned
of record by an Acquired Entity or included in any of the Directly Acquired Assets that as of the
Closing Date should have been but was not previously transferred by such Acquired Entity to Sun or
a Retained Subsidiary or that should have been but was not included in the Excluded Assets, then
Horizon shall, or shall cause such Acquired Entity or other Horizon Subsidiary that acquired such
Sun Intellectual Property to, transfer such Sun Intellectual Property to Sun or such Retained
Subsidiary designated by Sun as promptly as practicable and for no consideration.




          (c) Horizon OP shall cause each of the Acquired Entities to change its name, effective as of
the Closing or as promptly thereafter as is practicable (but in no event later than eight (8) weeks
after the Closing Date), and thereafter to cease to use any name or trademark of Sun or any of its
Affiliates, including the Sun Trademarks, or any confusingly similar name, mark or variation
thereof, in each case except as permitted under the License Agreements.




     Section 6.29 Certain Contribution Agreements. From and after the Closing Date, the
Horizon Parties shall, and shall cause any applicable Affiliates to, comply with such Contribution
Agreements as remain in effect.



     Section 6.30 Increased Share Amount.



          (a) The Sun Parties shall take, and shall cause their Subsidiaries to take, all actions
necessary to cause the Pre-Merger Share Amount to be less than or equal to the sum of (i) the
Maximum Share Amount and (ii) 11,764,706 shares, subject to adjustment pursuant to Section
1.10 (the sum of clauses (i) and (ii) being referred to herein as the
“Increased Share Amount”). Without limiting the generality of the foregoing, Sun shall
purchase (in a manner that would not constitute or be deemed to constitute a tender offer) such
number of Class B Shares (including as part of Paired Shares), and cause Class B Shares to be
contributed to the Trust, to the extent required to comply with the requirements of the immediately
preceding sentence. If the Pre-Merger Share Amount is greater than the Maximum Share Amount but
less than or equal to the Increased Share Amount, then the Cash Amount and the Class A Cash
Consideration shall be reduced by the amount equal to (i) $17.00 multiplied by (ii) the amount by
which the Pre-Merger Share Amount exceeds the Maximum Share Amount.




          (b) Notwithstanding anything to the contrary in this Agreement, if the Pre-Merger Share Amount
exceeds the Increased Share Amount, Horizon OP, in it sole and absolute discretion, can elect, in
whole or in part, to waive compliance with Section 6.30 and the Cash




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Amount and the Class A
Cash Consideration shall be reduced by the amount equal to (i) $17.00 multiplied by (ii) the amount
by which the Pre-Merger Share Amount exceeds the Increased Share Amount.




     Section 6.31 SLT Provisions.



          Prior to any redemption, repurchase or other transfer of any SLT Units held by Sun or any Sun
Subsidiary, Sun shall, and shall cause the Sun Subsidiaries to, use commercially reasonable efforts
to (i) obtain all consents, authorizations and approvals from any holders of Interests in SLT
(including those set forth on Section 3.24 of the Sun Disclosure Letter and contemplated by
Section 3.24 hereof) that are required in connection with the consummation of the
transactions contemplated by this Agreement, the Ancillary Agreements and the Horizon Transactions,
including the SLT Merger, and (ii) cause to be made all amendments with respect to the SLT LP
Agreement, the Exchange Rights Agreements (as defined in the SLT LP Agreement) and any other
Contracts with respect to SLT Units or SLC Units applicable to Sun or any Sun Subsidiary or their
respective Assets (collectively, the “SLT Agreements”) in order to reflect such
transactions, as set forth on Schedule 6.31. Subject to the terms and conditions herein
provided, each of the parties hereto shall cooperate in good faith with respect to all consents,
approvals and authorizations to be obtained and all other actions to be taken pursuant to this
Section 6.31. Prior to the Closing, notwithstanding any Plan Modification, Sun shall, and
shall cause the Sun Subsidiaries to, take all actions necessary to effect the redemption or
repurchase by SLT in full of all limited partnership interests in SLT held by Sun or any Sun
Subsidiary.




     Section 6.32 Recapture Provisons.



          (a) For purposes of this Section 6.32:





     (i) “Hotel EBITDA” means, with respect to any Acquired Hotel (other
than the Sheraton Royal Denarau Resort), for any specified period, EBITDA
calculated in a manner consistent with the accounting principles and practices
applied by Sun in the preparation of its financial statements and adjusted to
reflect (i) the fees under the License Agreements and the Operating Agreements and
(ii) European regional costs historically charged to the related Acquired Hotels
that will no longer be charged to such Acquired Hotels after the Closing Date.




     (ii) “Additional EBITDA Amount” means the annualized net amount of
any increase in the aggregate amount of Hotel EBITDA of the Acquired Hotels (other
than the Sheraton Royal Denarau Resort) as a result of any additional compensation
to be paid to (or any reduction in the current allocation of costs and expenses
currently paid by) such Acquired Hotels under the License Agreements and Operating
Agreements relating to certain uses or activities currently engaged in by Sun and
its Affiliates at certain of such Acquired Hotels, which uses and activities are
more specifically identified as the “Affiliate Transactions” on Section 3.10 of
the Sun Disclosure Letter, to the extent such uses or activities (i) do not
currently reflect payment of arm’s



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length compensation, and/or (ii) are for
corporate, regional or other purposes not for the direct benefit of the subject
Acquired Hotels, and/or (iii) do not currently reflect appropriate allocations of
costs and expenses on a fair and consistent basis among all hotels or other
parties benefiting from such use or activities. The parties hereto shall use
their reasonable efforts to agree on appropriate amounts of additional
compensation or allocations of costs and expenses, as the case may be, for such
disclosed Affiliate Transactions no later than December 15, 2005.




     (iii) “Target EBITDA Amount” means the sum of the amounts set forth
in the column titled “Target EBITDA Amount” opposite the name of each Acquired
Hotel (other than the Sheraton Royal Denarau Resort) in Schedule 6.32.




     (iv) “Revised EBITDA Amount” means the sum of the amounts set forth
in the column titled “Revised EBITDA Amount” opposite the name of each Acquired
Hotel (other than the Sheraton Royal Denarau Resort) in Schedule 6.32.



          (b) Sun shall prepare in good faith and deliver to Horizon OP no later than January 31, 2006
(but in any event at least ten (10) business days prior to the Closing Date), a statement, based on
the Operating Reports (as such term is defined in Article 10.2 of the form of Operating Agreement),
that shall set forth Sun’s good faith calculation of the amount of the actual Hotel EBITDA for
Operating Year 2005 for all Acquired Hotels (other than the Sheraton Royal Denarau Resort) (in the
aggregate and on an individual hotel-by-hotel basis) (as so estimated, the “Estimated EBITDA
Amount”). If Horizon OP notifies Sun within fifteen (15) business days after receiving such
statement, but in any event prior to the Closing Date, that it disagrees with the Estimated EBITDA
Amount, the parties hereto shall cooperate in good faith to reach an agreement as to the Estimated
EBITDA Amount and the Estimated EBITDA Amount will be revised to reflect such agreement, if any.
In the event that the sum of (i) the Estimated EBITDA Amount (or, if known, the Actual EBITDA
Amount) and (ii) the Additional EBITDA Amount is less than the Target EBITDA Amount, the aggregate
amount of all Transfer Taxes and Transaction Costs up to the $50 million payable by Horizon OP and
the Horizon Subsidiaries, in the aggregate, pursuant to Section 8.3 at Closing shall be
decreased (the “Reduction”) in an amount (but not by a number less than zero) equal to (I)
the lesser of (x) the Target EBITDA Amount less the sum of the Estimated EBITDA Amount (or, if
known, the Actual EBITDA Amount) plus the Additional EBITDA Amount and (y) the Target EBITDA Amount
less the sum of the Revised EBITDA Amount plus the Additional EBITDA Amount multiplied by (II)
12.8.




          (c) In the event one or more Acquired Hotels or Acquired Entities is excluded from the
transactions contemplated by this Agreement and the Ancillary Agreements pursuant to Section
6.18, the calculations set forth in Section 6.32(b) shall be revised as follows: (i)
the Estimated EBITDA Amount (or, if known, the Actual EBITDA Amount) associated with each such
excluded Acquired Hotel or Acquired Entity shall be disregarded; (ii) the Target EBITDA Amount
shall be reduced by the amount set forth in the column titled “Target EBITDA Amount” opposite the
name of such Acquired Hotel in Schedule 6.32; and (iii) the Revised EBITDA




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Amount shall be
reduced by the amount set forth in the column titled “Revised EBITDA Amount” opposite the name of
such Acquired Hotel in Schedule 6.32; provided, however, that if any such
Acquired Hotel or Acquired Entity is later acquired in accordance with this Agreement, the
adjustments calculated above shall be promptly revised and settled as if such acquisition had taken
place on the Closing Date.




     (d) The procedure set forth in this Section 6.32(d) shall be available upon request of
either party made within 15 business days after the delivery by Horizon OP of a notice of
disagreement pursuant to Section 6.32(b). As promptly as practicable following the
delivery of the 2005 Audited Financial Statements but in no event later than thirty (30) days
thereafter, the parties shall use the supporting schedules thereto to calculate the amount of the
actual Hotel EBITDA for Operating Year 2005 for all Acquired Hotels (other than the Sheraton Royal
Denarau Resort) (in the aggregate and on an individual hotel-by-hotel basis) (the “Actual
EBITDA Amount”). In the event the Closing has
already occurred, no more than five (5) business days after the determination of the Actual
EBITDA Amount in accordance with this Section 6.32(d), (i) if the Actual EBITDA Amount
exceeds the Estimated EBITDA Amount, Horizon OP shall deliver to Sun, by wire transfer of
immediately available funds, a U.S. dollar amount equal to such difference (but no more than the
lesser of (x) the amount of the Reduction and (y) the amount of the additional Transfer Taxes and
Transaction Costs actually paid by Sun as a consequence of the application of the Reduction) and
(ii) if the Estimated EBITDA Amount exceeds the Actual EBITDA Amount, Sun shall deliver to Horizon
OP, by wire transfer of immediately available funds, a U.S. dollar amount equal to such difference
(up to the amount of Transfer Taxes and Transaction Costs that would not have been paid by Horizon
had the Actual EBITDA Amount been applied instead of the Estimated EBITDA Amount), together with,
in each case of clause (i) and (ii), interest on such difference accrued at a
variable rate equal to the rate of interest from time to time announced publicly by Citibank, N.A.,
at its principal office in New York, New York, as its annual base rate, calculated on the basis of
the actual number of days elapsed over 365, from the Closing Date to the date such amount is
payable pursuant to this Section 6.32(d).



ARTICLE 7.

CONDITIONS




     Section 7.1 Conditions to Each Party’s Obligation to Effect the Closing Transactions.
The obligations of each party to consummate the Closing Transactions shall be subject to the
fulfillment at or prior to the Closing of the following conditions:



          (a) Horizon Stockholder Approval. The Horizon Stockholder Approval shall have been
obtained.




          (b) Required Antitrust Approvals. Any Required Antitrust Approvals shall have been
made or obtained, as applicable, and any required waiting periods in connection with the Required
Antitrust Approvals shall have expired or been terminated.




          (c) Listing of Shares. The NYSE shall have approved for listing the Horizon Common
Stock to be issued in the Closing Transactions, subject to official notice of issuance.




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          (d) Form S-4. The Form S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order suspending its effectiveness issued by the SEC, and no
proceedings seeking such a stop order shall have been initiated or, to the Knowledge of Horizon,
threatened by the SEC.




          (e) No Injunctions or Restraints; Illegality. No temporary restraining order,
preliminary or permanent injunction or other order shall have been issued by any court of competent
jurisdiction which is then in effect making illegal or otherwise preventing, in material part, the
consummation of the transactions contemplated by this Agreement and the Ancillary Agreements or the
Horizon Transactions. There shall not be any action taken, or any Law enacted, entered, enforced
or deemed applicable to the transactions contemplated by this Agreement and the Ancillary
Agreements or the Horizon Transactions, by any Governmental Entity of competent jurisdiction that
makes, in material part, the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements or the Horizon
Transactions illegal or prevents their consummation.




          (f) REIT Articles of Merger. The REIT Articles of Merger shall have been accepted for
record by the Department.




     Section 7.2 Conditions to Obligations of Horizon and Horizon OP. The obligations of
the Horizon Parties to consummate the Closing Transactions are further subject to the following
conditions, any one or more of which may be waived by Horizon OP:



          (a) Representations and Warranties. The representations and warranties of Sun and
Trust set forth in this Agreement, disregarding all qualifications and exceptions contained therein
relating to materiality, Sun Material Adverse Effect, Sun Material Impairment, or specified
numerical threshold, shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to the extent that such
representations and warranties are expressly limited by their terms to another date, in which case
such representations and warranties shall be true and correct as of such other date), except where
the failure of such representations and warranties to be true and correct would not, individually
or in the aggregate, reasonably be expected to (A) have a Sun Material Adverse Effect or (B) result
in a material default by Sun or any Sun Subsidiary under any of the Operating Agreements, License
Agreements or Sublease Agreements; provided, however, that each of the
representations and warranties of Sun and Trust set forth in Sections 3.1(a) (Organization,
Standing and Power) (with respect to Sun, Trust, SHC and SLT), 3.4(a) (Authority) (with
respect to Sun, Trust, SHC and SLT), 3.5(b), (c), (i) and (j)
(Financial Statements) (other than with respect to the line items set forth on Schedule
7.2(a)) and 3.23 (State Takeover Statutes) shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date (in each case, except to the
extent that such representations and warranties are expressly limited by their terms to another
date, in which case such representations and warranties shall be true and correct as of such date).




          (b) Performance of Obligations of the Sun Parties. The Sun Parties shall have
performed in all material respects (and, with respect to Section 6.30, in all respects) all
obligations required to be performed by them under this Agreement at or prior to the Closing (other
than any obligations of Sun and Trust under Section 6.7).




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          (c) Material Adverse Effect. Since the date of this Agreement, there shall not be or
have been any state of facts, change, development, effect, condition or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to have a Sun Material
Adverse Effect.




          (d) Tax Opinions Relating to REIT Status and Partnership Status. Horizon OP shall
have received an opinion of Sidley Austin Brown & Wood LLP or other counsel to Sun reasonably
satisfactory to Horizon OP, dated as of the Closing Date and in form and substance reasonably
satisfactory to Horizon OP, to the effect that (i) commencing with its taxable year ended December
31, 1998, and through the REIT Merger Effective Time, W&S Seattle Corp.
was organized and has operated in conformity with the requirements for qualification as a REIT
under the Code, (ii) commencing with its taxable year ended December 31, 1998, and through the REIT
Merger Effective Time, W&S Denver Corp. was organized and has operated in conformity with the
requirements for qualification as a REIT under the Code and (iii) SLT has been since the date (for
federal income tax purposes) it was formed, and continues to be, treated for federal income tax
purposes as a partnership and not as a corporation or publicly traded partnership or association
taxable as a corporation (in the case of each of clauses (i), (ii) and (iii), with
customary exceptions, assumptions and qualifications and based upon customary representations and
with such additional exceptions, assumptions, qualifications and representations as are set forth
in writing and are reasonably satisfactory to Horizon OP).




          (e) Excluded Assets; No Deferral Triggers.





     (i) With respect to each Excluded Asset that Horizon OP is required to hold
pursuant to Section 6.8(e), (A) Horizon OP shall not have determined, in
its good faith judgment, after consultation with its outside tax counsel, that
such Excluded Asset or the income generated by such Excluded Asset could
reasonably be expected to cause a significant risk that Trust, W&S Seattle Corp.,
W&S Denver Corp., Horizon, SHC or any Horizon Foreign Currency REIT would fail to
qualify as a REIT under the Code or (B) the assignment, license, sublicense,
lease, sublease, conveyance or transfer from the Acquired Entity that holds such
Excluded Asset to a taxable REIT subsidiary of Horizon and the holding of such
Excluded Asset by such taxable REIT subsidiary (x) would not require a consent or
approval which has not been obtained and (y) in the good faith judgment of Horizon
OP, after consultation with its outside tax counsel, would not reasonably be
expected to cause Trust, W&S Seattle Corp., W&S Denver Corp., Horizon, SHC or any
Horizon Foreign Currency REIT to qualify as a REIT under the Code.




     (ii) The Acquired Hotels with respect to which (x) one or more Horizon
Deferral Triggers shall have occurred (including the Acquired Hotels owned by
Acquired Entities with respect to which one or more Horizon Deferral Triggers
shall have occurred) and not have been cured or (y) Sun has made an effective
election to exclude pursuant to Section 6.18, shall not, in either case,
include: (A) any one Acquired Hotel set forth on Schedule 7.2(e)(1); (B)
any two or more of the Acquired Hotels set forth on Schedule 7.2(e)(2); or
(C) Acquired Hotels (other than the Deferred



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International Hotels deferred
pursuant to Section 6.18(a)(ix)) for which the sum of the applicable
Acquired Hotel Agreed Amounts exceeds $1,000,000,000.



          (f) E&P Study. Horizon OP shall have received a copy of a study prepared for Sun by a
Qualifying Accounting Firm, dated no later than the Closing Date, to the effect that, (1)
immediately after the Closing and taking into account all of the transactions contemplated by this
Agreement to be consummated through the Closing, no Acquired Entity (other than Trust) that is
domestic and is treated as a corporation for United States federal income tax purposes will have
any C Corporation Earnings and Profits and (2) immediately after the Closing and taking into
account all of the transactions contemplated by this Agreement to be consummated through
the Closing, the aggregate amount of C Corporation Earnings and Profits of the Acquired
Entities that are foreign and are treated as corporations for United States federal income tax
purposes will not exceed $50,000,000 (taking into account only the C Corporation Earnings and
Profits of such entities that have positive C Corporation Earnings and Profits); provided
that (i) prior to the issuance of such study, each of Sun and Horizon OP shall have furnished the
applicable Qualifying Accounting Firm with an access letter substantially in the form of the
document previously reviewed by Sun or Horizon OP, respectively, and (ii) for purposes of such
study, the applicable Qualifying Accounting Firm shall be permitted to utilize such other
assumptions and other methods as are customarily utilized in studies of its type.




          (g) Horizon Transactions.





     (i) The Horizon Transactions (other than the Post-Closing Horizon
Transactions) shall have been completed on the Closing Date; provided
that, the Horizon Parties shall have used their reasonable best efforts to
complete the Horizon Transactions (other than the Post-Closing Horizon
Transactions).




     (ii) No material consent, approval, order or authorization of, or
registration, declaration or filing (other than any applicable certificates or
articles of merger or similar documents that are effective immediately upon filing
or acceptance for record) with, any Governmental Entity or other Person shall be
required for the Post-Closing Horizon Transactions to be effected.



          (h) No Assumption of Sun Indenture. There shall not have occurred any Trust
Assumption Event (as such term is defined in Section 11.21(b) of the Sun Indenture) and there shall
not be or have been any state of facts, change, development, effect, condition or occurrence that,
individually or in the aggregate, would reasonably be expected to result in a Trust Assumption
Event occurring.




          (i) Delivery of Financial Statements. All financial statements and certificates
required to be delivered by Sun pursuant to Section 6.7 (other than Section 6.7(c)
and, if the Closing Date is prior to February 28, 2006, Section 6.7(d) and, if the Closing
Date is prior to March 30, 2006, Section 6.7(e)) of this Agreement shall have been
delivered prior to the Closing Date.




          (j) Restructuring Parameters. The Restructuring Parameters shall have been satisfied.





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          (k) Assumption of Specified Indebtedness. All lenders, trustees, agents and other
applicable third parties with respect to any Specified Indebtedness shall have provided all
consents, waivers, approvals or other documents required for such Specified Indebtedness to be
assumed, or remain in place at the applicable Acquired Entity, in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements and the Horizon Transactions, in each
case without resulting in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or acceleration of any material
obligation or to the loss of a material benefit under any material Specified Indebtedness;
provided that, this condition shall be deemed satisfied if the failure to obtain such
consents, waivers, approvals or other documents resulted from the failure of any Horizon Party
to fulfill its obligations under this Agreement.



          (l) Officer’s Certificate. Horizon and Horizon OP shall have received a certificate
of the chief executive officer or chief financial officer of each of Sun and Trust, in such
capacity, certifying that the conditions set forth in clauses (a), (b),
(c), (e), (h), (j), (k) and (m) of this Section
7.2 have been satisfied.



          (m) Ancillary Agreements. There shall not be or have been any state of facts, change,
development, effect, condition or occurrence that, individually or in the aggregate, with notice or
passage of time or both, would reasonably be expected to result in a material default by Sun or any
of its Subsidiaries under any of the Operating Agreements, License Agreements or Sublease
Agreements.



          (n) Share Value. The Share Value shall be not less than $13.60.



     Section 7.3 Conditions to Obligations of Sun and Trust. The obligations of Sun and
Trust to consummate the Closing Transactions are further subject to the following conditions, any
one or more of which may be waived by Sun and Trust:



          (a) Representations and Warranties. The representations and warranties of Horizon and
Horizon OP set forth in this Agreement, disregarding all qualifications and exceptions contained
therein relating to materiality, Horizon Material Adverse Effect or specified numerical threshold,
shall be true and correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (except to the extent that such representations and warranties
are expressly limited by their terms to another date, in which case such representations and
warranties shall be true and correct as of such other date), except where the failure of such
representations and warranties to be true and correct would not, individually or in the aggregate,
reasonably be expected to (A) have a Horizon Material Adverse Effect or (B) result in a material
default by Horizon or any Horizon Subsidiary under any of the Operating Agreements, License
Agreements or Sublease Agreements; provided, however, that each of the
representations and warranties of Horizon and Horizon OP set forth in Sections 4.1(a)
(Organization, Standing and Power) and 4.5(a) (Authority) (with respect to Horizon and
Horizon OP) shall be true and correct in all material respects as of the date of this Agreement and
as of the Closing Date (in each case, except to the extent that such representations and warranties
are expressly limited by their terms to another date, in which case such representations and
warranties shall be true and correct as of such date).



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          (b) Performance of Obligations of the Horizon Parties. The Horizon Parties shall have
performed in all material respects all obligations required to be performed by them under this
Agreement at or prior to the Closing.



          (c) Material Adverse Effect. Since the date of this Agreement, there shall not be or
have been any state of facts, change, development, effect, condition or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to have a Horizon
Material Adverse Effect.



          (d) Tax Opinion Relating to REIT Status. Sun shall have received the opinion of Hogan
& Hartson LLP or other counsel to Horizon reasonably satisfactory to Sun, dated as of the Closing
Date, in form and substance reasonably satisfactory to Sun, that, commencing with its taxable year
ended December 31, 1999, Horizon was organized and has operated in conformity with the requirements
for qualification as a REIT under the Code and that, after giving effect to the REIT Merger,
Horizon’s proposed method of operation will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code (with customary exceptions, assumptions and
qualifications and based upon customary representations and with such additional exceptions,
assumptions, qualifications and representations as are set forth in writing and are reasonably
satisfactory to Sun).



          (e) Officer’s Certificate. Sun shall have received a certificate of the chief
executive officer, chief financial officer or chief operating officer of Horizon, in such capacity,
certifying that the conditions set forth in clauses (a), (b), and (c) of
this Section 7.3 have been satisfied.



          (f) No Deferral Triggers. The Acquired Hotels or Acquired Entities with respect to
which (x) one or more Sun Deferral Triggers shall have occurred (including the Acquired Hotels
owned by Acquired Entities with respect to which any Sun Deferral Trigger shall have occurred) and
not have been cured or (y) Horizon OP has made an effective election to exclude pursuant to
Section 6.18 shall not include (i) SHC, (ii) any one of the Acquired Hotels identified as
the “Sheraton New York Hotel & Towers”, “Sheraton Boston Hotel” and “Sheraton San Diego Hotel &
Marina” on Schedule 10.1(d), (iii) any five (5) or more of the Acquired Hotels set forth on
Schedule 7.3(f) or (iv) Acquired Hotels owned, directly or indirectly, by Trust for which
the sum of the applicable Acquired Hotel Agreed Amounts exceeds $400,000,000, in the case of
clause (iii) or (iv) other than the Deferred International Hotels deferred pursuant
to Section 6.18(a)(ix).



          (g) Substantial Detriment. Since the date of this Agreement, there shall not be
enacted, promulgated, issued or proposed any Tax Law (or any amendment, modification, expiration or
written interpretation of any Tax Law) by any Governmental Entity with respect to the consolidated
return rules as currently set forth in Section 1502 of the Code and the Treasury Regulations
promulgated thereunder, or with respect to other Treasury Regulations applicable to one or more
members of a Consolidated Group, which, individually or in the aggregate, has resulted in, or would
reasonably be expected to result in, a material risk of Sun incurring an economic cost of more than
$200,000,000 that Sun did not expect, as of the time this Agreement was signed, to bear from the
transactions contemplated by this Agreement; provided that, prior to any termination of
this Agreement arising from the failure of the condition set forth in this



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Section 7.3(g)
to be satisfied: (A) Sun shall have delivered to Horizon OP, at least twenty (20) business days
prior to such termination (or, if there are no more than twenty-one (21) business days to a
potential Closing Date at the time of the Subject Change (as defined below), then no later than the
later of (I) five (5) business days prior to such termination and (II) the day following the date
of the Subject Change), (i) a written notice identifying the applicable enactment, promulgation,
issuance, proposal, amendment, modification, expiration or interpretation (the “Subject
Change”), and (ii) a copy of a written letter furnished by a Qualifying Accounting Firm to Sun
to the effect that the Subject Change meets the standard set forth in this Section 7.3(g)
(applied without taking into account
this proviso to Section 7.3(g)); and (B) each of the Sun Parties and the Horizon
Parties shall have used commercially reasonable efforts, for at least ten (10) business days (or
such fewer number of days as is reasonable, in view of the number of days remaining, at the time of
the Subject Change, to a potential Closing Date) following Sun’s provision of the notice described
in Section 7.3(g)(A)(i), to restructure the transactions contemplated by this Agreement in
a manner that (x) is mutually satisfactory to the Sun Parties and the Horizon Parties, and (y)
results in the restructured transactions not meeting the standard set forth in this Section
7.3(g) (applied without taking into account this proviso to Section 7.3(g)).



          (h) Ancillary Agreements. There shall not be or have been any state of facts, change,
development, effect, condition or occurrence that, individually or in the aggregate, with notice or
the passage of time or both, would reasonably be expected to result in a material default by
Horizon or any of its Subsidiaries under any of the Operating Agreements, License Agreements or
Sublease Agreements.



          (i) Share Value. The Share Value shall be not less than $13.60.



ARTICLE 8.

CERTAIN ADJUSTMENTS AND EXPENSES.




     Section 8.1 Sun Capital Budget. As provided in Section 8.4, (i) Horizon OP or
one or more Horizon Subsidiaries shall receive a credit for the amount, if any, by which (x) the
sum (the “Remaining Capital Budget Amount”) of (A) the amount budgeted in the Sun Capital
Budget for 2005 for capital expenditure projects with respect to the Acquired Hotels that have not
been started prior to the Closing Date (the “Not Commenced Capital Budget Amount”) and (B)
the amount equal to five percent (5%) of the revenue of the Acquired Business during the period, if
any, beginning January 1, 2006 and ending on the Closing Date, calculated in accordance with the
Closing Statement Principles exceeds (y) the sum (the “Qualified Capital Expenditure
Amount”) of the aggregate dollar amount of capital expenditures made by Sun with respect to the
Acquired Hotels in accordance with the Sun Capital Budget for 2006 (other than with respect to
projects contemplated by the Sun Capital Budget for 2005) at any time prior to the Apportionment
Time and (ii) Sun shall receive a credit for the amount, if any, by which the Qualified Capital
Expenditure Amount exceeds the Remaining Capital Budget Amount. Sun shall complete each of the
projects contemplated to be completed by the Sun Capital Budget for 2005 (other than those 2005
capital expenditure projects with respect to the Acquired Hotels that have not been started prior
to the Closing Date) at its own expense prior to or as promptly as commercially reasonable after
the Closing (notwithstanding anything to the contrary in this Agreement or any Ancillary
Agreement).



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     Section 8.2 Casualty and Condemnation.



          (a) Casualty Events. If any portion of an Acquired Hotel is damaged by fire or other
casualty prior to the Closing (with respect to such Acquired Hotel, a “casualty event”)
and such Acquired Hotel shall not be deemed an Excluded Asset pursuant to Section
6.18, then (i) at the Closing or, in the case of a Deferred Asset, at the applicable closing
date under Section 6.18, (A) the applicable Acquired Entity or Directly Acquired Assets
Owner shall receive the aggregate insurance proceeds then collected or received by Sun and the Sun
Subsidiaries with respect to such casualty event, less the amount of the actual and reasonable
unreimbursed, out-of-pocket expenses incurred by Sun and the Sun Subsidiaries in connection with
collecting such proceeds and making any repairs to such Acquired Hotel occasioned by such casualty
event pursuant to any Contract approved by Horizon OP, such approval not to be unreasonably
withheld, conditioned or delayed (except no such approval shall be necessary to repair or restore
any emergency or hazardous condition) or as required by any applicable third party Contract in
existence prior to the date of such casualty event (“net casualty insurance proceeds”), (B) Sun
shall, and shall cause the applicable Sun Subsidiaries to, assign its rights to all then unpaid net
casualty insurance proceeds with respect to such casualty event to the applicable Acquired Entity
or Directly Acquired Assets Owner and (C) the applicable Acquired Entity or Directly Acquired
Assets Owner shall receive a credit for the sum of (1) the amount of any deductible under
applicable insurance policies and (2) the amount of any casualty that is uninsured or by which the
cost of repair exceeds the coverage limitations of the applicable insurance policies;
provided that, such credit does not exceed the amount by which the Acquired Hotel Agreed
Amount for such Acquired Hotel exceeds the net casualty insurance proceeds received with respect to
such casualty event and (ii) Sun and the other Sun Parties shall not adjust or settle any insurance
claim with respect to such casualty event without the prior written consent of Horizon OP, which
consent shall not be unreasonably withheld, conditioned or delayed, and Horizon OP shall be
entitled to participate in all negotiations with third parties in respect of any such adjustment or
settlement.



          (b) Condemnation Events. If condemnation proceedings are commenced against any
portion of an Acquired Hotel prior to the Closing (with respect to such Acquired Hotel, a
“condemnation event”) and such Acquired Hotel shall not be deemed an Excluded Asset pursuant to
Section 6.18, then (i) at the Closing or, in the case of a Deferred Asset, at the closing
date under Section 6.18, (A) the applicable Acquired Entity or Directly Acquired Assets
Owner shall receive the proceeds of the condemnation award then collected or received by Sun and
the Sun Subsidiaries with respect to such condemnation event, less the amount of the actual and
reasonable unreimbursed, out-of-pocket expenses incurred by Sun and the Sun Subsidiaries in
connection with any appeal of such award (it being understood that no Sun Party shall be under any
obligation to appeal any such award) and (B) Sun shall, and shall cause the applicable Sun
Subsidiaries to, assign its rights to all then unpaid condemnation proceeds with respect to such
condemnation event to the applicable Acquired Entity or Directly Acquired Assets Owner (or such
Acquired Entity or Directly Acquired Assets Owner shall become the substitute party thereto, if
applicable) and (ii) Sun and the Sun Parties shall not, and shall not permit any Sun Subsidiary to,
adjust or settle any condemnation award with respect to such condemnation event without the prior
written consent of Horizon OP, which consent shall not be unreasonably withheld, conditioned or
delayed, and Horizon OP shall be entitled to participate in all negotiations with third parties in
respect of any such adjustment or settlement. Notwithstanding



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anything to the contrary contained
in this Agreement, the foregoing shall not require any Sun Party to pay over to any Horizon Party
any funds in excess of proceeds actually received by such Sun Party in respect of any condemnation
event.



     Section 8.3 Transaction Expenses.



          (a) Subject to Section 8.3(b) and any other express allocation of expenses or other
Losses in this Agreement, the Horizon Parties and the Sun Parties shall each pay their own legal,
investment banking and other fees and expenses (including expenses of their respective
Subsidiaries) incurred in connection with the transactions contemplated by this Agreement and the
Ancillary Agreements or the Horizon Transactions, whether or not any such transactions are
consummated.



          (b) Each party shall cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added stock transfer and stamp taxes, stamp duties, any transfer,
recording, registration and other fees, charges, premiums and any similar taxes which become
payable in connection with the transactions contemplated by this Agreement (excluding the Ancillary
Agreements) and the Local Purchase Agreements or the Horizon Transactions (together with any
related interests, penalties or additions to tax, “Transfer Taxes”). At and after the
Closing, notwithstanding the language of any Local Purchase Agreement stating that a particular
party thereto is to pay any amounts otherwise addressed by this Section 8.3(b), Horizon OP
and Sun each shall, or shall cause their respective Subsidiaries to, pay or cause to be paid an
amount equal to 50% of the aggregate amount of (A) Transfer Taxes (which term shall not in any
event be construed to include for these purposes any Tax imposed under the Code or any other income
Tax) and (B) (i) any income taxes payable with respect to the transfer of Westin Indianapolis,
Westin Cincinnati and Westin South Coast Plaza in the transactions contemplated by this Agreement
or the Horizon Transactions (including pursuant to Section 1374 of the Code and the Treasury
Regulations promulgated under Section 337 of the Code), (ii) any Losses incurred in connection with
obtaining consents, waivers or amendments from any Person in connection with the transactions
contemplated by this Agreement and the Local Purchase Agreements or the Horizon Transactions,
including the net present value (using a 10% discount rate) of any future economic impact resulting
in connection with such consents, waivers or amendments (all Losses described in this clause
(ii), “Consent Costs”), (iii) any Losses incurred in connection with severance or other
similar payment obligations to employees in connection with the direct or indirect purchase by
Horizon OP or any Horizon Subsidiary of any Acquired Hotels not located in the United States or the
related Horizon Transactions, (iv) mortgage transfer costs or mortgage transfer expenses in
connection with the transactions contemplated by this Agreement and the Local Purchase Agreements
or the Horizon Transactions, (v) costs associated with the defeasance of Sun’s CMBS Indebtedness,
and (vi) any Losses (other than (A) the amount of any associated Adjusted Indebtedness included in
the Final Adjustment and (B) any Losses expressly allocated to Sun or Horizon OP pursuant to
Section 6.19) incurred in connection with respect (x) the 7 3/8% debentures due November
15, 2015 issued by SHC (the “2015 SHC Indebtedness”) or (y) the 7 3/4% debentures due
November 15, 2025 issued by SHC (the “2025 SHC Indebtedness” and, together with the 2015
SHC Indebtedness, the “SHC Indebtedness”), in each case in connection with the transactions
contemplated by this Agreement or the Horizon Transactions (the items described in clause
(B)



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collectively, “Transaction Costs”); provided, however, that in no
event shall the aggregate amount of all Transfer Taxes and Transaction Costs payable by Horizon OP
and the Horizon Subsidiaries, in the aggregate, pursuant to this Section 8.3 be greater
than $50 million (other than with respect to any Transaction Costs (included in clause
(iii) above) in connection with the Sublease Agreements arising from the works council review
with respect to the Acquired Hotels in Italy and Spain, which Transaction Costs shall not be
subject to such limitation). At and after the Closing, Sun shall be responsible for all Transfer
Taxes and Transaction Costs not payable by Horizon OP and the Horizon Subsidiaries pursuant to this
Section 8.3.



          (c) At and after the Closing, Sun shall, or shall cause its Subsidiaries to, pay the aggregate
amount of the costs of any non-imputation endorsements to the Title Policies to be issued to
Horizon OP (or its Subsidiaries) by one or more title insurance companies at Closing;
provided that, Sun shall not be obligated to pay in excess of $25,000 in the aggregate with
respect thereto. Horizon OP shall, or shall cause its Subsidiaries to, pay or cause to be paid an
amount equal to (w) the aggregate amount of the premium for the Title Policies to be issued to
Horizon OP (or its Subsidiaries) by one or more title insurance companies at Closing, (x) the
aggregate amount of the costs of any endorsements, other than non-imputation endorsements, thereto,
(y) the aggregate amount of the cost of the Surveys and (z) the fees for recording the deed
conveying each Acquired Hotel to Horizon OP or its applicable Subsidiaries. Notwithstanding the
foregoing, with respect to the date-down endorsements to the Existing Title Policies with Stewart
Title Guaranty Company (“Stewart”) and LandAmerica (“LandAmerica”) title insurance
companies which Horizon OP contemplates receiving at Closing for the Acquired Hotels identified on
Schedule 10.1(d) of the Merger Agreement as the “Sheraton San Diego Hotel & Marina”
(Stewart), the “Sheraton Tucson Hotel & Suites” (LandAmerica), the “Sheraton Stamford Hotel”
(LandAmerica), the “Capital Hill Suites DC” (LandAmerica) and the “Sheraton Providence Airport
Hotel” (LandAmerica), to the extent Sun is unable to obtain the agreement of Stewart or LandAmerica
to a form of title affidavit acceptable to Sun and otherwise sufficient for such title companies to
provide Horizon OP with a non-imputation endorsement in connection with the foregoing date-down
endorsements, then, to the extent Horizon OP obtains new title insurance policies (in lieu of such
date-down endorsements), Sun shall at and after the Closing pay an amount toward the cost of such
new title policies equal to the difference between (i) the actual premium cost of the basic title
coverage (without endorsements) for the new title policies required and (ii) the premium cost that
Horizon OP would otherwise have paid for the basic title coverage of the date-down endorsements
(without endorsements), such amount not to the exceed, in the aggregate, the sum of $250,000. For
purposes of this Agreement, the costs and fees set forth in this Section 8.3(c) shall not
be included in the Transaction Costs.



     Section 8.4 Closing Working Capital; Adjusted Indebtedness; Determination of
Adjustments.



          (a) The aggregate purchase price for the Closing Transactions was determined on the assumption
that, the sum of (i) the Working Capital of the Acquired Business at the Apportionment Time
determined in accordance with Schedule 8.4(a) (the “Closing Working Capital”), (ii)
the Adjusted Indebtedness at the Appointment Time, (iii) the Remaining Capital Budget Amount less
the Qualified Capital Expenditure Amount (such difference, the “Required Capital Expenditure
Amount”) and (iv) the aggregate credits to the Acquired Entities and Directly Acquired Assets
Owners under Section 8.2 (the “Casualty Adjustment Amount”) would



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be negative $704
million. In the event that the Closing Working Capital, less the Adjusted Indebtedness, less the
Required Capital Expenditure Amount (such net amount, the “Closing Net Adjustment Amount”),
is greater than negative $704 million (the “Stated Net Adjustment Amount”) (and for the
avoidance of doubt a Closing Net Adjustment Amount of negative $1.00 is greater than a Closing Net
Adjustment Amount of negative $2.00), the Cash Amount shall be increased by the difference between
the Closing Net Adjustment Amount and the Stated Net Adjustment Amount, and in the event that the
Closing Net Adjustment Amount is less than the Stated Net Adjustment Amount (and for the avoidance
of doubt a Closing Net Adjustment Amount of negative $2.00 is less than a Closing Net Adjustment
Amount of negative $1.00), the Cash Amount shall be decreased by the difference between the Closing
Net Adjustment Amount and the Stated Net Adjustment Amount.



          (b) At least ten (10) business days prior to the Closing Date, Sun shall prepare in good faith
and deliver to Horizon OP a statement, together with reasonable documentation supporting such
estimated calculation (collectively, the “Estimated Closing Statement”), that shall set
forth Sun’s good faith calculation of (i) the Closing Working Capital (in the aggregate and on an
individual Hotel-by-Hotel basis), (ii) the Adjusted Indebtedness (in the aggregate and on an
individual Hotel-by-Hotel basis), (iii) the Required Capital Expenditure Amount (in the aggregate
and on an individual Hotel-by-Hotel basis), (iv) the Casualty Adjustment Amount (in the aggregate
and on an individual Hotel-by-Hotel basis) and (v) the Closing Net Adjustment Amount (as so
estimated, the “Estimated Adjustment Amount”). The Estimated Closing Statement shall be
accompanied by a written certification of the controller of Sun (solely in his capacity as an
officer of Sun) to the effect that the Estimated Closing Statement and the calculation of the
Estimated Adjustment Amount have been prepared in good faith in accordance with the Closing
Statement Principles and this Article 8. If Horizon OP notifies Sun, at least three (3)
business days prior to the Closing Date, that it disagrees with the Estimated Adjustment Amount,
the parties hereto shall cooperate in good faith to reach an agreement as to the Estimated
Adjustment Amount and the amount of the Estimated Adjustment Amount will be revised to reflect any
such agreement, if any. The Cash Amount payable by Horizon OP at Closing shall be (x) increased in
the amount by which the Estimated Adjustment Amount exceeds the Stated Net Adjustment Amount or (y)
decreased in the amount by which the Stated Net Adjustment Amount exceeds the Estimated Adjustment
Amount, as applicable.



          (c) As promptly as practicable following the Closing Date but in no event later than ninety
(90) days thereafter, Sun shall deliver to Horizon OP a statement, together with reasonable
documentation supporting such calculation (collectively, the “Preliminary Closing
Statement”), that shall set forth Sun’s calculation of (i) the Closing Working Capital (in the
aggregate and on an individual Hotel-by-Hotel basis), (ii) the Adjusted Indebtedness (in the
aggregate and on an individual Hotel-by-Hotel basis), (iii) the Required Capital Expenditure Amount
(in the aggregate and on an individual Hotel-by-Hotel basis), (iv) the Casualty Adjustment Amount
(in the aggregate and on an individual Hotel-by-Hotel basis) and (v) the Closing Net Adjustment
Amount based on the Preliminary Closing Statement (the “Preliminary Adjustment Amount”).



          (d) Horizon OP shall have forty-five (45) days (unless Sun and Horizon OP mutually agree to an
extension; provided, however, that Sun shall not unreasonably withhold its
agreement to such an extension of an additional forty-five (45) days) following delivery to



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Horizon
OP of the Preliminary Closing Statement and the calculation of the Preliminary Adjustment Amount
during which to review the Preliminary Closing Statement and such calculations, and to notify Sun
if it believes that (i) the Preliminary Closing Statement was not prepared in accordance with the
Closing Statement Principles, as applicable, and this Article 8 (in which case such
notification shall be accompanied by a report of KPMG stating that it concurs with Horizon OP’s
position that the Preliminary Closing Statement was not prepared in accordance with the Closing
Statement Principles, as applicable, and this Article 8), (ii) the Preliminary Closing
Statement contains mathematical error or (iii) the calculation of the Preliminary Adjustment was
not in accordance with this Article 8. In connection with such review, Horizon OP and its
Representatives shall have the right to communicate with E&Y, and Sun shall use commercially
reasonable efforts to cause E&Y to permit Horizon OP to review all work papers, schedules,
memoranda and other documents prepared or reviewed by Sun or E&Y during the course of its review,
and such access shall be provided promptly after request by Horizon OP or its Representatives;
provided that, the foregoing shall be subject to professional standards and E&Y’s firm
policy, which may include the requirement that Horizon OP and its Representatives sign an
“indemnification letter” in a form customarily accepted by E&Y prior to receiving access to any
materials prepared by E&Y. If Horizon OP fails to properly notify Sun of any such dispute within
such 45-day (or extended period) period, the Preliminary Closing Statement and the calculation of
the Preliminary Adjustment Amount shall be deemed final. In the event that Horizon OP shall so
notify Sun of any dispute, Horizon OP and Sun shall cooperate in good faith to resolve such dispute
as promptly as possible, and upon such resolution, if any, any adjustments to the Preliminary
Closing Statement and the Preliminary Adjustment Amount shall be made in accordance with the
agreement of Horizon OP and Sun.



          (e) If Horizon OP and Sun are unable to resolve any such dispute within fifteen (15) days (or
such longer period as Horizon OP and Sun shall mutually agree in writing) of Horizon OP’s delivery
of such notice, such dispute shall be resolved by the accounting firm selected in the manner set
forth below (the “Independent Accounting Firm”), and such determination shall be final and
binding on the parties hereto; provided, however, that (i) the calculation of the
aggregate amount of adjustments to be made pursuant to this Section 8.4 (the “Final
Adjustment Amount”) shall be based on the Final Closing Statement and the definitions and terms
contained herein and (ii) unless the Independent Accounting Firm determines that the Preliminary
Closing Statement was not prepared in accordance with the Closing Statement Principles, as
applicable, and this Section 8.4 or contains mathematical errors, the Preliminary Closing
Statement shall be the Final Closing Statement. Sun and Horizon OP shall mutually select the
Independent Accounting Firm, but if Sun and Horizon OP cannot mutually agree on the identity of the
Independent Accounting Firm, then Sun and Horizon OP shall each submit to the other party’s
independent auditor the name of a national accounting firm other than E&Y and KPMG, and the
Independent Accounting Firm shall be selected by lot from these two firms by the independent
auditors of the two parties. If no national accounting firm shall be willing to serve as the
Independent Accounting Firm, then a nationally recognized (in the United States) expert in public
accounting shall be selected to serve as such, such selection to be according to the above
procedures. Any expenses relating to the engagement of the Independent Accounting Firm in respect
of its services pursuant to this Section 8.4(e) shall be shared equally by Sun and Horizon
OP. The Independent Accounting Firm shall be instructed to use every commercially reasonable
effort to perform its services within thirty (30) days of submission of the Preliminary Statement
to it and, in any case, as promptly as practicable after such submission. The Final



106









 







Closing
Statement and the calculation of the Final Adjustment Amount shall then be prepared by Sun based on
the determination of the Independent Accounting Firm. For purposes of this Section 8.4(e),
the “Final Closing Statement” shall mean (i) the Preliminary Closing Statement if deemed
final pursuant to Section 8.4(d) or this Section 8.4(e), (ii) any closing statement
deemed by mutual agreement of Sun and Horizon OP to be the Final Closing Statement or (iii) the
statement determined by the Independent Accounting Firm to be the Final Closing Statement in
accordance with this Section 8.4(e), whichever shall first occur.



          (f) No more than five (5) business days after the determination of the Final Adjustment in
accordance with Section 8.4(e), (i) if the Estimated Adjustment Amount exceeds the Final
Adjustment Amount, the Cash Amount shall be decreased by the amount of such difference, and Sun or
the applicable Seller shall deliver to the applicable Horizon Parties (including the Acquired
Entities and the Directly Acquired Assets Owners), by wire transfer of immediately available funds,
a U.S. dollar amount equal to such difference and (ii) if the Final Adjustment Amount exceeds the
Estimated Adjustment Amount, the Cash Amount shall be increased by the amount of such difference,
and the applicable Horizon Parties (including the Acquired Entities and the Directly Acquired
Assets Owners) shall deliver to Sun or the applicable Seller, by wire transfer of immediately
available funds, a U.S. dollar amount equal to such difference, together with, in each case of
clauses (i) and (ii), interest on such difference accrued at a variable rate equal
to the rate of interest from time to time announced publicly by Citibank, N.A., at its principal
office in New York, New York, as its annual base rate, calculated on the basis of the actual number
of days elapsed over 365, from the Closing Date to the date such amount is payable pursuant to this
Section 8.4(f) (and, thereafter, accrued at such annual base rate plus 3% per annum,
calculated on the basis of the actual number of days elapsed over 365).



          (g) For the purposes of this Section 8.4, “Adjusted Indebtedness” means all
Indebtedness included in the Assumed Liabilities as of the Apportionment Time after giving effect
to the completion of the transactions contemplated by this Agreement to take place at or prior to
the Closing and as determined in accordance with the Closing Statement Principles;
provided, however, that (i) the Adjusted Indebtedness shall not in any event
include (A) any Retained Liabilities or (B) any amount of Indebtedness to the extent all rights to
receive payment in respect of, and each other right with respect to, such amount is an Acquired
Asset (except to the extent such rights are included in the Closing Working Capital) and (ii) the
adjustments for Adjusted Indebtedness described in this Section 8.4 are not intended to be
duplicative of any adjustments provided for elsewhere in this Section 8.4 and there shall
be no double counting of adjustments.



          (h) Except as otherwise expressly set forth in this Section 8.4, all adjustments shall
be on an accrual basis in accordance with the Closing Statement Principles, and based on the actual
number of days in the applicable period.



          (i) All references to “Acquired Business” in this Section 8.4 shall mean the Acquired
Business excluding any Deferred Assets, and Closing Working Capital as used in this Section
8.4 shall be deemed not to include Working Capital to the extent associated with any Deferred
Asset.



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          (j) For purposes of determining the Closing Working Capital set forth on the Final Closing
Statement, Sun and Horizon OP shall recalculate and readjust (in accordance with the Closing
Statement Principles) any current Acquired Assets and current Assumed Liabilities (i) which were
not included on the Estimated Closing Statement or Preliminary Closing Statement because of the
unavailability of information or (ii) which were included on the Estimated Closing Statement or
Preliminary Closing Statement based upon estimated information. The Closing Working Capital set
forth on the Final Closing Statement shall be final and, except as otherwise expressly set forth in
this Article 8, there shall be no further adjustment under this Article 8 between
Sun and Horizon OP for Closing Working Capital; provided, however, if, after the
determination of the Final Adjustment pursuant to Section 8.4(e) but within 12 months of
the Closing Date, the actual amount of any one or more of the items described in clause
(iii) above, individually or in the aggregate, is asserted in good faith by Horizon OP or Sun
to vary from the amount reflected in the Final Adjustment by more than $500,000, the Final
Adjustment shall be recalculated to equal the actual amount of such item, subject to determination
as promptly as practicable thereafter in a manner consistent with the determination of the Final
Adjustment, and the parties hereto shall promptly thereafter make the appropriate payments and
adjustments to the Cash Amount.



ARTICLE 9.

TERMINATION, AMENDMENT AND WAIVER




     Section 9.1 Termination. This Agreement may be terminated at any time prior to the
REIT Merger Effective Time:



          (a) by mutual written consent of Horizon OP and Sun;



          (b) by Horizon OP, if (1) (A) any Sun Party has breached any covenant or agreement set forth
in this Agreement (other than Section 6.7(a), (c), (d) or (e)
thereof unless Sun failed to use its reasonable best efforts to deliver the Unaudited 2005 Interim
Financial Statements or, if applicable, the Unaudited Stub Period Financial Statements, the 2005
Audited Financial Statements or Unaudited 2006 Interim Financial Statements, in any case within the
applicable time periods specified therein) or (B) any representation or warranty of Sun or Trust
shall have become untrue, (2) such breach or misrepresentation is incapable of being cured or, if
capable of being cured, is not cured within twenty (20) business days after written notice thereof
and (3) such breach or misrepresentation would cause the conditions set forth in Section
7.2(a) or 7.2(b) not to be satisfied;



          (c) by Sun, if (1) (A) either Horizon or Horizon OP has breached any covenant or agreement set
forth in this Agreement or (B) any representation or warranty of Horizon or Horizon OP shall have
become untrue, (2) such breach or misrepresentation is incapable of being cured or, if capable of
being cured, is not cured within twenty (20) business days after written notice thereof and (3)
such breach or misrepresentation would cause the conditions set forth in Sections 7.3(a) or
7.3(b) not to be satisfied;



          (d) by either Horizon OP or Sun, if any Governmental Entity shall have issued a judgment,
injunction, order, decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement or the



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Horizon Transactions,
and such judgment, injunction, order, decree, ruling or other action shall have become final and
nonappealable (which judgment, injunction, order, decree, ruling or other action the terminating
party and its Affiliates shall have used their reasonable best efforts to resist, resolve or lift,
as applicable);



          (e) by either Horizon OP or Sun, if the Closing Transactions shall not have been consummated
prior to April 17, 2006 (such date, as extended pursuant to this Section 9.1(e), the
“Termination Date”); provided, however, that (i) if the Closing Notice is
delivered on or prior to the Termination Date, then neither Horizon OP nor Sun may terminate this
Agreement pursuant to this Section 9.1(e) until the first Monday (or, if such Monday is not
a business day, the next business day) that is at least three (3) business days following the date
on which the Closing Notice is delivered to Sun, (ii) the right to terminate this Agreement under
this Section 9.1(e) shall not be available to any party whose failure, or the failure of
whose Affiliate, to fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing Transactions to occur on or before such date and (iii) Sun shall not
be entitled to terminate this Agreement pursuant to this Section 9.1(e) if the announcement
or pendency of a Paired Share Proposal, or discussions, negotiations or other activities with
respect thereto, has been the cause of, or resulted in, the failure of the Closing Transactions to
occur on or before such date;



          (f) by either Horizon OP or Sun if, upon a vote at a duly held Horizon Stockholders Meeting or
any adjournment thereof, the Horizon Stockholder Approval shall not have been obtained as
contemplated by Section 6.1;



          (g) by either Horizon OP or Sun upon written notice to the other if the Share Value is less
than $13.60;



          (h) by either Horizon OP or Sun, upon written notice to the other, if any condition to the
obligation of such party to consummate the Closing Transactions becomes incapable of satisfaction
prior to the Termination Date; provided, however, that the right to terminate this
Agreement under this Section 9.1(h) shall not be available to any party whose failure, or
the failure of whose Affiliate, to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of such conditions;



          (i) by Sun or Trust prior to February 12, 2006 in accordance with Section 9.6;



          (j) by Sun if (i) Sun (A) delivers to Horizon OP a written notice (1) describing in reasonable
detail actual or alleged breaches or failures to be true of one or more of its representations or
warranties in this Agreement, including the estimated Losses arising therefrom, and (2) requesting
that Horizon OP agree to limit the Purchaser Indemnified Parties’ rights to indemnification under
clause (i) of Section 2(a) of the Indemnification Agreement with respect to the breaches and
failures described in reasonable detail in such notice to an amount no greater than $50 million
(the “Pre-Closing Cap Amount”) and (B) provides Horizon OP with reasonably detailed
responses to inquiries from Horizon OP with respect to the matters described in Sun’s notice and
(ii) Horizon OP does not, at least five (5) business days prior to the date the Closing would
otherwise occur (except for the existence of such acts, failures and events), deliver written
notice to Sun agreeing to the indemnification limitations set forth in



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clause (i)(A)(2);
provided, however, that (I) if Sun delivers the notice set forth in
clause
(i) to Horizon OP less than fifteen (15) business days prior to the date scheduled to be the
Closing Date, Horizon OP shall have the right to extend the Closing by the number of business days
equal to fifteen (15) minus the number of business days prior to such scheduled Closing Date on
which such notice is delivered to Horizon OP and (II) Sun shall not be entitled to receive any
limitation under this Section 9.1(j) with respect to (a) its obligations under any
provision of the Indemnification Agreement other than clause (i) of Section 2(a) thereof or (b) any
breaches or failures to be true of representations and warranties contained in Section
3.1(a) (Organization, Standing and Power), Section 3.2 (Capital Structure), Section
3.4(a) (Authority), Section 3.15 (No Brokers) and Section 3.24 (No Vote
Required);



          (k) by Horizon OP if (A) Sun enters into any definitive agreement relating to a Paired Share
Proposal or (B) any transaction contemplated by any Paired Share Proposal is consummated; or



          (l) by Horizon OP if (i) Horizon OP (A) delivers to Sun a written notice (1) describing in
reasonable detail actual or alleged breaches or failures to be true of one or more of its
representations or warranties in this Agreement that would be subject to the Cap (as defined in the
Indemnification Agreement), including the estimated Losses arising therefrom, the sum of Sun’s
liability for which under the Indemnification Agreement (giving effect to all limitations on
liability in the Indemnification Agreement other than the Cap) could reasonably be expected to
exceed the Cap and (2) requesting that Sun agree that the Cap shall not apply with respect to the
breaches and failures described in reasonable detail in such notice and (B) provides Sun with
reasonably detailed responses to inquiries from Sun with respect to the matters described in
Horizon OP’s notice and (ii) Sun does not, at least five (5) business days prior to the date the
Closing would otherwise occur (except for the existence of such actual or alleged breaches or
failures to be true), deliver written notice to Horizon OP agreeing that the Cap shall not apply
with respect to such breaches and failures as set forth in clause (i)(A)(2);
provided, however, that if Horizon OP delivers the notice set forth in clause
(i) to Sun less than fifteen (15) business days prior to the date scheduled to be the Closing
Date, Sun shall have the right to extend the Closing by the number of business days equal to
fifteen (15) minus the number of business days prior to such scheduled Closing Date on which such
notice is delivered to Sun.



     Section 9.2 Effect of Termination.



          (a) In the event of termination of this Agreement by either Sun or Horizon OP as provided in
Section 9.1, this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of any Horizon Party or Sun Party, other than Section
3.15 (No Brokers), clause (ii) of each of Section 6.2(a) and (b)
(Access to Information; Confidentiality), Section 8.3 (Transaction Expenses), this
Section 9.2 (Effect of Termination) and Article 10 (General Provisions), and except
to the extent that such termination results from a breach (or, solely for purposes of Section
9.2(e), a willful or intentional breach) by any party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.



          (b) If this Agreement is terminated by either Horizon OP or Sun pursuant to Section
9.1(f), then Horizon OP shall, on the date of such termination, reimburse Sun for all of the
out-of-pocket expenses reasonably incurred by the Sun Parties directly related to this



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Agreement
and the transactions contemplated by this Agreement since April 1, 2005 up to a maximum amount of
$20 million.



          (c) If this Agreement is terminated by Sun or Trust pursuant to Section 9.1(i), then
Sun shall, at or prior to such termination, (A) reimburse Horizon OP for all of the out-of-pocket
expenses reasonably incurred by the Horizon Parties directly related to this Agreement and the
transactions contemplated by this Agreement since April 1, 2005 up to a maximum amount of $20
million and (B) pay Horizon OP a cash fee of $100 million.



          (d) If this Agreement is terminated by Sun or Horizon OP as a result of the failure or alleged
failure of the conditions set forth in Section 7.3(g) to be satisfied or waived, then Sun
shall at or prior to, and as a condition of, such termination by Sun (or within five (5) business
days of any such termination by Horizon OP) (A) reimburse Horizon OP for all of the out-of-pocket
expenses reasonably incurred by the Horizon Parties directly related to this Agreement and the
transactions contemplated by this Agreement since April 1, 2005 up to a maximum amount of $20
million and (B) pay Horizon OP a cash fee of $25 million.



          (e) If this Agreement is terminated pursuant to Section 9.1(j) then, without limiting
the recourse of the Horizon Parties under Section 9.2(a), Sun shall, within five (5)
business days of the date of such termination, reimburse Horizon OP for all of the out-of-pocket
expenses reasonably incurred by the Horizon Parties directly related to this Agreement and the
transactions contemplated by this Agreement since April 1, 2005 up to a maximum amount of $20
million.



          (f) All payments under this Section 9.2 shall be made by wire transfer of same day
funds. Each of Sun and Horizon acknowledges that the agreements contained in this Section
9.2 are an integral part of the transactions contemplated by this Agreement, and that, without
these agreements, each of the parties hereto would not enter into this Agreement; accordingly, if
any party fails to promptly pay the amount due pursuant to this Section 9.2, and, in order
to obtain such payment, the other party commences a suit which results in a judgment against such
party for any of the amounts set forth in this Section 9.2, such party shall pay to the
other party its costs and expenses (including attorneys’ fees) in connection with such suit,
together with interest on the amount of the fee at the prime rate of Citibank, N.A. in effect on
the date such payment was required to be made.



     Section 9.3 Deferral Provisions to Insure Compliance with REIT Gross Income Tests.
Notwithstanding any other provisions in this Agreement, any payments otherwise to be made by Sun to
Horizon OP under Section 9.2 for any calendar year shall not exceed the sum of (a) the
amount that it is determined should not be gross income of Horizon for purposes of the requirements
of Sections 856(c)(2) and (3) of the Code, with such determination to be set forth in a No Gross
Income Opinion (as such term is defined in the Tax Sharing and Indemnification Agreement) plus (b)
such additional amount that it is estimated can be paid to Horizon in such taxable year without
creating a risk that the payment would cause Horizon to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code, determined as if the payment of such amount did not constitute
Qualifying Income, which determination shall be made by independent tax accountants to Horizon and
(c) in the event Horizon receives an Alternative Tax Letter (as such term is defined in the Tax
Sharing and Indemnification Agreement) indicating that Horizon



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has received a ruling from the
Internal Revenue Service holding that Horizon’s receipt of the additional amount otherwise to be
paid under Section 9.2 either would constitute Qualifying Income or would be excluded from
gross income of Horizon for purposes of Sections 856(c)(2) and (3) of the Code, the aggregate
payments otherwise required to be made under this Agreement (determined without regard to this
Section 9.3) less the amount otherwise previously paid under clauses (a) and
(b) above. The obligation of Sun to pay any unpaid portion of any payment otherwise
required under this Agreement that remains unpaid solely by reason of this Section 9.3
shall terminate five years from the date such payment otherwise would have been made but for this
Section 9.3. Sun shall place the full amount of any payments otherwise to be made by Sun
to Horizon OP under Section 9.2 in a mutually agreed escrow account upon mutually
acceptable terms which shall provide that any portion thereof shall not be released to Horizon OP
unless and until Sun receives any of the following: (x) a letter from Horizon’s independent tax
accountants indicating the amount that it is estimated can be paid at that time to Horizon OP
without creating a risk that the payment would cause Horizon to fail to meet the Specified REIT
Requirements (as such term is defined in the Tax Sharing and Indemnification Agreement) for the
taxable year in which the payment would be made, which determination shall be made by such
independent tax accountants, (y) an Alternative Tax Letter or (z) an opinion of outside tax counsel
selected by Horizon, which such opinion shall be reasonably satisfactory to Horizon, to the effect
that, based upon a change in law after the date on which payment was first deferred hereunder,
receipt of the additional amount otherwise to be paid under this Agreement either would be excluded
from gross income of Horizon for purposes of the Specified REIT Requirements or would constitute
Qualifying Income, in any of which events Sun shall pay to Horizon OP the lesser of the unpaid
amounts due under this Agreement (determined without regard to this Section 9.3) or the
maximum amount stated in the letter referred to in clause (x) above. At the end of the
five year period referred to above in this Section 9.3 with respect to any amount placed in
such escrow, if none of the events referred to in clauses (x), (y) or (z)
of the preceding sentence shall have occurred, such amount shall be released from such escrow to be
used as determined by Sun in its sole and absolute discretion.



     Section 9.4 Amendment. This Agreement may be amended by the parties hereto in writing
by action of the Board of Directors of Horizon (or any duly constituted committee thereof with
proper authority as to such matters), the Board of Trustees of the Trust and the Board of Directors
of Sun (or any duly constituted committee thereof with proper authority as to such matters). The
parties hereto agree to amend this Agreement in the manner provided in the immediately preceding
sentence to the extent required to continue the status of Horizon and each applicable Horizon
Subsidiary as a REIT.



     Section 9.5 Extension; Waiver. At any time prior to the Closing, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered pursuant to this Agreement or (c) waive
compliance with any of the agreements or conditions of the other party contained in this Agreement.
Any such extension or waiver shall be valid only if set forth in an instrument in writing signed
by the party or parties to be bound thereby, and such extension or waiver or failure to insist on
strict compliance with an obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.



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     Section 9.6 Procedure for Termination. Sun or Trust may terminate this Agreement
pursuant to Section 9.1(i) only if (i) Sun, Trust or any Sun Subsidiary has received a
Superior Proposal, (ii) in light of such Superior Proposal a majority of the Board of Trustees of
Trust or a majority of the Board of Directors of Sun, as applicable, shall have determined in good
faith, after consulting with outside counsel, that a termination of this Agreement would be
consistent with its duties to holders of Trust Shares or Sun Common Stock, as applicable, under
applicable Law, (iii) Trust has notified Horizon in writing of the determination described in
clause (ii) above, (iv) at least five (5) business days following receipt by Horizon of the
notice referred to in clause (iii) above, and taking into account any revised proposal made
by Horizon since receipt of the notice referred to in clause (iii) above, the Board of
Trustees of Trust or the Board of Directors of Sun, as applicable, has determined in good faith,
after consultation with its outside financial advisor, that any such revised proposal made by
Horizon is less favorable, after taking into account the likelihood of consummation of such
transaction on the terms set forth therein, taking into account all legal, financial (including the
financing terms of any such proposal), regulatory and other aspects of such proposal and any other
relevant factors permitted under applicable law, to holders of Trust Shares or Sun Common Stock, as
applicable, than such Superior Proposal and (v) at or prior to such termination, Sun makes the
payment required by Section 9.2(c).



ARTICLE 10.

GENERAL PROVISIONS




     Section 10.1 Definitions. As used in this Agreement, the following terms shall have
the following meanings:



          (a) “Acquired Assets” means any and all right, title and interest of the Acquired
Entities and the Asset Sellers in and to (i) the Acquired Hotels and (ii) payment in respect of,
and any other rights under, Indebtedness to the extent such Indebtedness is an Assumed Liability.



          (b) “Acquired Business” means the business, operations and activities of (i) the
Acquired Hotels, including the ownership thereof, and (ii) the Acquired Entities to the extent
related to the ownership, operation and activities of the Acquired Hotels, excluding in each case
the Excluded Business.



          (c) “Acquired Entities” means Trust and the other Sun Subsidiaries set forth on
Schedule 10.1(c) as such Schedule may be amended from time to time in accordance with
permitted changes to the Restructuring Plan.



          (d) “Acquired Hotel” means each individual hotel set forth on Schedule
10.1(d), together with the Related Property with respect thereto; collectively, the
“Acquired Hotels”.



          (e) “Acquired Hotel Agreed Amount” means, with respect to each Acquired Hotel, as
adjusted (for the purposes of Section 6.18(f)) in accordance with clause (v) of
Section 6.18(f), the amount set forth on Schedule 10.1(e).



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          (f) “Acquired Property” means, with respect to each Acquired Hotel, each parcel of
Land and the associated Improvements; collectively, the “Acquired Properties”.



          (g) “Apportionment Time” means, with respect to any Hotel, 12:01 a.m. local time on
the Closing Date and, with respect to the Adjusted Indebtedness, 12:01 a.m. New York City time on
the Closing Date.



          (h) “Assets” means all assets, properties, claims, Contracts and businesses of every
kind, character and description, whether real, personal or mixed, tangible or intangible, whether
accrued, contingent or otherwise, and wherever located, in each case whether or not recorded or
reflected on the books and records or financial statements of any Person.



          (i) “Assumed Liabilities” means, other than the Retained Liabilities, (i) all
Liabilities of the Acquired Entities and the Asset Sellers to the extent relating to the Acquired
Business, (ii) the Specified Indebtedness and (iii) any Indebtedness of an Acquired Entity that can
be settled, offset or discharged in full by such Acquired Entity immediately following the Closing
without such Acquired Entity incurring any Liability in connection therewith, but only to the
extent all associated rights to receive payment in respect of such Indebtedness, and other rights
with respect to such Indebtedness, constitute Acquired Assets.



          (j) “C Corporation Earnings and Profits” means, with respect to an Acquired Entity,
earnings and profits (within the meaning of the Code) that have been accumulated in, or are
attributable to, any taxable period of such Acquired Entity for which such Acquired Entity was not
taxable as a REIT.



          (k) “Class A Cash Consideration” means, subject to Section 6.30, the sum of
(i) the portion of the Cash Amount allocated to the Class A Shares in the REIT Merger in accordance
with Section 2.5 and (ii) a cash amount equal to (A) the Excess Dividend Amount multiplied
by (B) the number of shares of Horizon Common Stock issuable in exchange for the Class A Shares
pursuant to Section 1.6(a)(i).



          (l) “Class B Cash Consideration” means the sum of (i) the aggregate Class B Cash
Amount payable by Horizon to all holders of Class B Shares as of the Determination Time and (ii)
the Class A EPS Horizon Cash Amount.



          (m) “Class B Excess Dividend Amount” means a cash amount equal to (i) the Excess
Dividend Amount multiplied by (ii) the Exchange Ratio.



          (n) “Closing Restructuring Steps” means the transactions referred to in Exhibit
A and Exhibit B as the Closing Restructuring Steps.



          (o) “Closing Statement Principles” means GAAP consistent with the accounting
principles and practices applied in the preparation of the Audited Combined Historical Financial
Statements, applied on a consistent basis for the periods involved, except as set forth in the
Preparation Principles and, with respect to Working Capital, Section 8.4 and Schedule
8.4(a).



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          (p) “CMBS Indebtedness”means the Indebtedness incurred under the Loan Agreement, dated
as of January 27, 1999, as amended, among the Borrowers named therein, as borrowers, Starwood
Operator I LLC, as operator, Starwood Operator II LLC, as manager, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc.



          (q) “Code” means the Internal Revenue Code of 1986, as amended.



          (r) “Consolidated Group” means an “affiliated group” within the meaning of Section
1504 of the Code.



          (s) “Contract” means any contract, agreement, lease, concession, license, sales order,
purchase order, note, instrument or other commitment, whether written or oral, that is binding on
any Person or entity or any part of its property under applicable Law, including any amendments
thereto.



          (t) “Directly Acquired Assets” means the Acquired Assets other than to the extent held
by an Acquired Entity immediately prior to the Closing.



          (u) “Directly Acquired Assets Owner” means, with respect to any Directly Acquired
Asset, Horizon OP or the Horizon Subsidiary designated by Horizon OP to acquire such Acquired Asset
from the applicable Asset Seller at the Closing.



          (v) “EC Merger Regulations” means Council regulation (EEC) No. 4064/89 of December 21,
1989 on the Control of Concentrations Between Undertakings, OJ (1989) L 395/1 and the regulations
and decisions of the Council or Commission of the European Community or other organs of the
European Union or European Community implementing such regulations.



          (w) “Encumbrance” means any pledge, claim, lien, security interest, privilege, charge,
option, mortgage, deed of trust, deed to secure debt, claim against title, right-of-way, easement,
covenant, condition or restriction, lease, license, right to occupy, right of first refusal or
offer, encroachment, building or use restriction, conditional sales agreement, license, restriction
on transfer of title or voting, or any other encumbrance of any nature whatsoever.



          (x) “Excess Dividend Amount” means a cash amount equal to the sum of the per-share
value of all dividends or distributions on Horizon Common Stock in excess of $0.15 per share in any
calendar quarter with a record date after the date of this Agreement and prior to the Closing Date.



          (y) “Excluded Assets” means: (i) all Assets of Sun and the Sun Subsidiaries to the
extent (x) used or held for use (other than at any Acquired Property, other than, with respect to
personal property, in a regional office described in Section 3.10 of the Sun Disclosure
Letter), in the general administration of the business of Sun or the Retained Subsidiaries or (y)
not used or held for use primarily in the Acquired Business, including, (A) with respect to each
Hotel, all Assets to the extent owned by Sun or any Sun Subsidiary in its capacity as a manager of
such Hotel and (B) all Sun Intellectual Property, including Hotel Guest Information and Guest Data
(in each case as defined in the form of Operating Agreement), but excluding any Hotel



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Guest
Information with respect to guests checking in or out of an Acquired Hotel on or after the Closing
Date; (ii) the Excluded Hotels; (iii) all National/Regional Operating Agreements; (iv) all Assets
of Sun and the Sun Subsidiaries identified on Schedule 10.1(y); (v) any Interests other
than Interests in the Acquired Entities; and (vi) subject to the terms and conditions of
Section 6.18, the Deferred Assets.



          (z) “Excluded Business” means (i) the hotel management and franchise business, (ii)
the business, operations and activities of Sun and the Sun Subsidiaries associated with or included
in the Excluded Assets, including the ownership thereof, and (iii) all terminated, divested or
discontinued businesses, hotels or other facilities which, at or prior to the time of termination,
divestiture or discontinuation, related to or otherwise would have been part of the Acquired
Business.



          (aa) “Excluded Hotel” means each individual hotel owned by Sun or any Sun Subsidiary
that is not an Acquired Hotel, including each individual hotel set forth on Schedule
10.1(aa), together with the Related Property with respect thereto; collectively, the
“Excluded Hotels”.



          (bb) “FF&E Reserves” means the account or accounts that hold funds comprising any
“FF&E reserve”, “reserve for replacements” or similar reserve under the applicable operating or
management agreement for a Hotel (including all funds deposited in the FF&E Reserves for the
portion of the final accounting period prior to the Apportionment Time).



          (cc) “Governmental Entity” means any federal, state, provincial, regional or local
government or any court, administrative or regulatory agency or commission or other governmental
authority, bureau or agency, domestic or foreign.



          (dd) “Guest Ledger” means, with respect to any Hotel, all charges accrued to the open
accounts of any guests or customers of such Hotel for (x) the use or occupancy of any guest rooms,
suites, banquet or meeting rooms, convention facilities or other facilities in such Hotel, (y) any
restaurant, bar, catering or banquet services and (z) any other goods or services provided by or on
behalf of the applicable owner at such Hotel.



          (ee) “Horizon Foreign Currency REIT” means any Subsidiary of Horizon OP that (i)
elects to be a REIT effective as of a time on the Closing Date, and (ii) acquires Acquired Assets
that are not located in the United States.



          (ff) “Horizon Material Adverse Effect” means any circumstance, event, occurrence,
change or effect that is materially adverse to the business, Assets, financial condition or results
of operations of Horizon, Horizon OP and the Horizon Subsidiaries, taken as a whole;
provided, however, any adverse effect arising out of or resulting primarily and
directly from any of the following shall be disregarded when determining whether there has been a
Horizon Material Adverse Effect: (1) any change in the market price or trading volume of Horizon
Common Stock (but not the underlying cause(s) of such change in market price or trading volume),
(2) changes in the United States economy generally which do not disproportionately affect Horizon
in any material respect, (3) the announcement and pendency of the transactions contemplated by this
Agreement, (4) seasonal fluctuations in the business of Horizon and the



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Horizon Subsidiaries, (5)
(A) changes in law or regulation generally affecting the hotel and leisure industry or (B) changes
in GAAP, except, in the case of this clause (5), to the extent Horizon is
disproportionately affected in any material respect; provided, further,
however, that changes resulting from (I) the commencement or material worsening of a war or
armed hostilities or other national or international calamity or (II) any terrorist activities
shall not be so disregarded..



          (gg) “Horizon Subject Foreign Currency REIT” means any Horizon Foreign Currency REIT
that acquires Acquired Assets that are located in Chile, Poland or Canada.



          (hh) “Horizon Subsidiaries” means the Subsidiaries of Horizon.



          (ii) “Horizon Transactions” means the transactions set forth in Exhibit X.



          (jj) “Hotel” means any Acquired Hotel or Excluded Hotel.



          (kk) “Improvements” means the buildings and other improvements (other than those
fixtures identified on Schedule 10.1(kk)) that are located on the Land.



          (ll) “Indebtedness” means (i) indebtedness for borrowed money, whether secured or
unsecured, (ii) obligations under notes, bonds, debentures or similar instruments, (iii)
obligations upon which interest charges are customarily paid, (iv) obligations under conditional
sale or other title retention agreements relating to property purchased by any Person, (v)
capitalized lease obligations, (vi) obligations under interest rate cap, swap, collar or similar
transaction or currency hedging transaction (valued at the termination value thereof), (vii) all
Liabilities with respect to any preference shares in Dubbo Limited, a company duly incorporated in
the Republic of Fiji, or Barton Limited, a a company duly incorporated in the Republic of Fiji, and
(viii) guarantees of any of the foregoing.



          (mm) “Intellectual Property” means all patents, copyrights, trademarks, trade names,
trade dress, brandmarks, brand names, domain names, service marks, designs, logos, slogans and
general intangibles of like nature, any registrations and applications for registration thereof,
trade secrets and all non-public or proprietary processes, formulae, methods, models, schematics,
technology, know-how, mailing lists, customer and guest lists, business plans, computer software
programs or applications and tangible or intangible proprietary information or material.



          (nn) “Interests” means, with respect to any Person, all rights, title and interests in
and to stock, shares, beneficial interests, limited liability company interests, membership
interests, partnership interests and other equity and other ownership interests, whether voting or
non-voting, including options, warrants, convertible Indebtedness and other derivative interests
(whether or not vested or unvested, or currently exercisable, exchangeable, redeemable or
convertible for the underlying Interest).



          (oo) “Knowledge” means (i) with respect to any Horizon Party, the actual knowledge of
those individuals identified in Section 10.1(oo)(1) of the Horizon Disclosure Letter and
(ii) with respect to any Sun Party, the actual knowledge of those individuals identified in
Section 10.1(oo)(2) of the Sun Disclosure Letter.



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          (pp) “Land” means those parcels of land of the Hotels, as more particularly described
on Section 3.8(a) of the Sun Disclosure Letter (with respect to Acquired Hotels) and
Schedule 10.1(aa) (with respect to Excluded Hotels), including all land lying in the bed of
any street or highway adjoining each such parcel to the center line thereof, all water and mineral
rights, development rights and all easements, rights and other interests appurtenant thereto.



          (qq) “Laws” means any judgment, order, court decision, rule of common or civil law,
injunction, decree, arbitral award, statute, law, ordinance, rule or regulation of any Governmental
Entity.



          (rr) “Liabilities” means any and all Indebtedness, liabilities and obligations,
whether accrued, fixed or contingent, mature or inchoate, known or unknown, reflected on a balance
sheet or otherwise.



          (ss) “Local Purchase Agreements” means the four Local Purchase Agreements and the
Schedules and Exhibits thereto to be entered into by the Local Entity Sellers and Local Asset
Sellers, as the case may be, on the one hand, and Horizon OP or its designated Horizon
Subsidiaries, on the other hand, providing for the sale, conveyance, assignment, transfer, delivery
and, as applicable, the license, sublicense, lease or sublease, of the Local Stock Transfer Shares
and the Local Directly Acquired Assets, as the case may be, in all material respects (including
with respect to the portion of the Local Other Closing Transaction Purchase Price set forth
therein), with respect to (A) the Acquired Hotel identified as the “Westin Palace Madrid” on
Schedule 10.1(d), in the form of Exhibit Y-1, (B) the Acquired Hotel identified as
the “Westin Europa & Regina” on Schedule 10.1(d), in the form of Exhibit Y-2 and
(C) the Acquired Hotels identified as the “Westin Palace Milan” and the “Sheraton Roma Hotel &
Convention Centre” on Schedule 10.1(d), in the form of Exhibit Y-3.



          (tt) “Market Price” means, with respect to a share of Horizon Common Stock or a Paired
Share, on any date, the average of the daily closing prices per share of Horizon Common Stock or
Paired Share, as applicable, as reported on the NYSE Composite Transactions reporting system (as
published in the Wall Street Journal or, if not published therein, in another authoritative source
mutually selected by Sun and Horizon OP) for the twenty (20) consecutive trading days immediately
preceding such date.



          (uu) “Material Sun Space Lease” means any Sun Space Lease where the annual base rent
collected thereunder exceeds $150,000.



          (vv) “Miscellaneous Hotel Assets” means, with respect to any Hotel, (i) all general
intangibles relating to design and development of such Hotel (other than, in the case of an
Acquired Hotel, elements of trade dress or other brand specific design elements associated with the
Sun Trademarks, which shall be within the definition of Sun Intellectual Property); (ii) all rights
and work product under construction, service, consulting, engineering, architectural and other
Contracts, receipts, accounting and business records, books and files relating solely to ownership
or operation of such Hotel; (iii) all keys and lock and safe combinations relating to such Hotel;
(iv) all surveys, architectural, consulting and engineering blueprints, plans and specifications
(together with architects’ certificates, if any, indicating that renovation and reconstruction to
such Hotel has been completed in accordance therewith), drawings and reports



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related to such Hotel;
(v) all books and records (financial and otherwise) with respect to such Hotel (including, in the
case of an Acquired Hotel, the associated Books and Records); and (vi) all telephone numbers for
such Hotel.



          (ww) “National/Regional Operating Agreements” means all operating agreements or
contracts pursuant to which goods, services, licenses or other items are provided to other hotels
which are owned, leased or operated by Sun or any Sun Subsidiary in addition to the Acquired
Hotels.



          (xx) “Ordinary Course” means the ordinary course of business consistent with past
practice.



          (yy) “Organizational Documents” means certificates or articles of incorporation or
other formation, bylaws, partnership agreements, limited liability company agreements or other
joint venture agreements, or other comparable governing documents of any Person.



          (zz) “Other Share Consideration” means the shares of Horizon Common Stock, if any,
allocated to the Other Closing Transactions in accordance with Section 2.5.



          (aaa) “Paired Share Proposal” means any proposal or offer (including any proposal or
offer to Sun’s or Trust’s equityholders) with respect to any transaction or a series of
transactions to the extent such one or more transactions relate to the issuance, offer or sale of
Paired Shares that has resulted or, if not yet consummated, as proposed would result, in the
acquisition by any Person or group of Persons, including any “person” within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of more than 50 percent of the Paired Shares.



          (bbb) “Person” means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization or other entity.



          (ccc) “Personal Property” means, with respect to any Hotel: (i) all furniture,
furnishings, fixtures, fittings, vehicles, rugs, mats, draperies, carpeting, appliances, signage,
devices, engines, telephone and other communications equipment, artwork, televisions and other
audio and video equipment, computers, electrical, mechanical, HVAC and plumbing fixtures and
cabling and other equipment located in or used in the operation of the Hotel (the “FF&E”);
(ii) all items included within the non-real property definition of “Property and Equipment” under
the Uniform System of Accounts for the Lodging Industry, Ninth Edition Revised 1996, as published
by the Hotel Association of New York City, Inc. (the “Uniform System of Accounts”),
including linen, china, glassware, tableware, uniforms and other consumables, in use or in
circulation in connection with the operation of the Hotel; (iii) all “Inventories” as defined in
the Uniform System of Accounts, such as provisions in refrigerators, pantries and kitchens,
alcoholic and non-alcoholic beverages, other merchandise intended for sale or resale, fuel and
other similar supplies and materials, in use or in circulation in connection with the operation of
the Hotel; (iv) all Miscellaneous Hotel Assets; (v) with respect to any Acquired Hotel, all Hotel
Guest Information (as defined in the form of Operating Agreement) with respect to guests checking
in or out of such Acquired Hotel on or after the Closing Date; (vi) with respect to any Acquired



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Hotel, the applicable names, trademarks and service marks set forth on Schedule 10.1(ccc)
(the “Acquired Names”); and (vii) all operating accounts and reserves, including FF&E
Reserves and working capital of the Hotel; but (in the case of Acquired Hotels) in each case (other
than clause (v) and (vi)) excluding the Excluded Assets.



          (ddd) “Post-Closing Deferral Deadline” means (i) subject to clauses (iii) and
(iv), with respect to any Deferred Asset that does not include any Acquired Property
identified on Schedule 10.1(ddd), the day that is ninety (90) days after the Closing Date,
(ii) subject to clauses (iii) and (iv), with respect to any Deferred Asset that does include an
Acquired Property identified on Schedule 10.1(ddd), the day that is the amount of time
after the Closing Date specified on Schedule 10.1(ddd) with respect to such Deferred Asset,
(iii) with respect to Deferred International Hotels deferred pursuant to Section
6.18(a)(ix), October 17, 2006 and (iv) notwithstanding anything to the contrary in clause
(i) or (ii), with respect to any Deferred Asset for which an associated Deferral
Trigger is the subject of arbitration pursuant to Section 6.18(c), the business day that is
thirty (30) business days after the final conclusion of such arbitration.



          (eee) “Post-Closing Horizon Transactions” means the Horizon Transactions identified as
such on Exhibit X.



          (fff) “Privacy Laws” means Laws relating to privacy, data protection and the
collection and use of personal information and user information gathered or accessed in the course
of the operations of any Acquired Hotel, including the regulations and decisions of the Council or
Commission of the European Community or other organs of the European Union or European Community
implementing such regulations.



          (ggg) “Qualifying Accounting Firm” means Deloitte & Touche LLP, PricewaterhouseCoopers
LLP or E&Y.



          (hhh) “Related Property” means, with respect to any Hotel: (i) the Land;
provided that, with respect to any Acquired Hotels that are held pursuant to a Ground
Lease, the parties acknowledge that, unless expressly stated otherwise, the Sun Parties are not
making any representations as to, or agreeing to transfer any interest other than the right, title
and interest of the Sun Parties in, the Land subject to such Ground Lease; (ii) the Improvements;
(iii) the Personal Property; (iv) except (in the case of Acquired Hotels) for any Excluded Assets,
Permits; (v) the Guest Ledger; (vi) each ground lease, space lease or other right of occupancy
affecting or relating to the Hotel; (vii) except (in the case of Acquired Hotels) for any Excluded
Assets, any other leases or Contracts to the extent related to the maintenance, ownership, use,
possession or operation of the Hotel; and (viii) in the case of each Acquired Hotel, the corporate
or other company franchises, certificates of incorporation (and other Organizational Documents),
corporate or other company seals, minute books, corporate or similar company records of, equity
interests in, and all partnerships, joint ventures or other similar governance agreements with
respect to, each Acquired Entity directly or indirectly owning an interest in such Acquired Hotel.



          (iii) “Representatives” means (i) with respect to Horizon or any Horizon Subsidiaries,
their respective Horizon Representatives and (ii) with respect to Sun or any Sun Subsidiaries,
their respective Sun Representatives.



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          (jjj) “Required Antitrust Approvals” means all filings and approvals under the
following Laws required to be made or obtained, as the case may be, in order to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements and the Horizon
Transactions: the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act, and
the EC Merger Regulations, in each case as amended, and all other Laws that are designed or
intended to regulate competition or investment or to prohibit, restrict or regulate actions having
the purpose or effect of monopolization or restraint of trade.



          (kkk) [Intentionally Omitted.]



          (lll) “Restructuring Parameters” has the meaning accorded to such term by Exhibit
A.



          (mmm) “Retained Liabilities” means any and all Liabilities, whether arising before, on
or after the Closing Date, (i) of the Sun Parties, their businesses, or any of their respective
current or former Affiliates, Subsidiaries, predecessor companies or divisions (including the
Acquired Entities), to the extent resulting from, arising out of or related to: (A) the past,
present or future operation of the Retained Sun Business; (B) the past, present or future ownership
or use of any Assets (other than the Acquired Assets) owned or used by Sun or any of its
Affiliates; (C) the Restructuring Plan or the transactions contemplated hereby or thereby, except
to the extent the Horizon Parties (x) are obligated to pay such Liabilities under Section
8.3 or (y) receive a credit for such Liabilities under Article 8; (D) shareholders or
creditors of, or other holders of any Interests in, Sun or any Sun Subsidiary (including any
Acquired Entity with respect to events occurring on or prior to the Closing Date), including Losses
related to any claims regarding fiduciary duties, appraisal or dissenters’ rights (except, in the
case of appraisal or dissenters’ rights relating to the Mergers, for Losses, in the aggregate, that
equal no more than the value of consideration not paid in the Mergers due to such claims) or
securities Laws or under any Contracts with such holders of Interests, except that this clause
(D) shall exclude the amount of any Indebtedness excluded from clause (F) below; (E)
with respect to events occurring on or prior to the Closing Date, obligations under ERISA, all Laws
applicable to any Employee Plan, any Employee Plan or, except to the extent Horizon or the Horizon
Subsidiaries received a credit for such Liability pursuant to Article 8, any other
Liability related to employees; (F) Indebtedness other than Specified Indebtedness to the extent
(1) the Horizon Parties receive a credit therefor under Article 8 or (2) any and all rights
to receive payment in respect thereof, and other rights with respect thereto, constitute Acquired
Assets; (G) the Contracts or matters identified on Schedule 10.1(mmm); or (H) any claim by
a third party that there had occurred any default or breach (or alleged default or breach) by Sun
or Horizon OP or any of their respective Subsidiaries to the extent it arises by reason of the fact
that (in accordance with the Assumption Agreement) Horizon OP or one of its Subsidiaries, rather
than Sun or one of its Subsidiaries, is, or has been, performing Sun’s or its Subsidiary’s
obligations under, or obtaining Sun’s or its Subsidiary’s benefits under, an Acquired Hotels
Contract (as such term is defined in the Assumption Agreement) that has not been assigned to
Horizon OP or one of its Subsidiaries, but excluding from the foregoing any default or breach (or
alleged default or breach) to the extent related to any defect in the performance by Horizon OP or
its Subsidiary itself and (ii) related to Taxes for which Sun is required to furnish
indemnification under the Tax Sharing and Indemnification Agreement.



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          (nnn) “Retained Subsidiary” means each Sun Subsidiary that is not an Acquired Entity.



          (ooo) “Retained Sun Business” means any and all businesses, activities and operations
(other than the Acquired Business) as to which any of Sun and the Sun Subsidiaries, including any
Acquired Entity, has been formerly or is currently engaged, including the Excluded Businesses.



          (ppp) “Share Value” means an amount equal to the Market Price for a share of Horizon
Common Stock on the date on which, pursuant to Section 1.2, the Closing Notice is delivered
to Sun (or, if no such notice is delivered, the date on which Horizon OP and Sun establish the
Closing Date).



          (qqq) “SLC” means SLC Operating Limited Partnership, a Delaware limited partnership.



          (rrr) “SLC LP Agreement” means the Third Amended and Restated Agreement of Limited
Partnership of SLC.



          (sss) “SLC Units” means all issued and outstanding OP Units, Class A OP Units and
Class B OP Units, each as defined in the SLC LP Agreement, of SLC.



          (ttt) “Specified Indebtedness” means any Indebtedness of an Acquired Entity or
included in the Assumed Liabilities that is set forth on Schedule 10.1(ttt).



          (uuu) “Subsidiary” with respect to any Person, means (i) any corporation, partnership,
limited liability company, joint venture, trust or other legal entity of which such Person (either
directly or through or together with another Subsidiary or other intermediary of such Person)
either (A) owns capital stock or other equity interests having ordinary voting power to elect a
majority of the board of directors (or equivalent) of such Person, (B) controls the management, (C)
is a general partner or managing member or (D) directly or indirectly through Subsidiaries owns 50%
or more of the equity interests and (ii) any “subsidiary” (as such term is defined in Section
1-02(x) of Regulation S-X of the Exchange Act) of such Person. For the avoidance of doubt, prior
to the Closing, each Acquired Entity and each Subsidiary of an Acquired Entity is a Sun Subsidiary.



          (vvv) “Sun Capital Budget” means (i) with respect to the fiscal year 2005, the capital
expenditure budget and schedule for each Acquired Hotel, including a description in reasonable
detail of the capital expenditures that any Sun Subsidiary has budgeted for such Acquired Hotel
(including any carry-over items from the capital expenditure budget for fiscal year 2004) for the
period running through December 31, 2005 and attached as Schedule 10.1(vvv) and (ii) with
respect to such Acquired Hotel during periods after December 31, 2005, the capital expenditure
budget and schedule for each Acquired Hotel, which budget and schedule shall be prepared by Sun, in
form comparable to the budget and schedule described in clause (i), and be subject to
approval by Horizon OP, which approval shall not be unreasonably withheld or delayed.



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          (www) “Sun Common Stock Value” means an amount equal to (i) the Market Price for a
Paired Share as of the Closing Date minus (ii) the sum of (x) the number equal to (A) the Market
Price for a share of Horizon Common Stock as of the Closing Date multiplied by (B) the Exchange
Ratio and (y) the Class B Cash Amount.



          (xxx) “Sun Indenture” means that certain Indenture, dated as of May 16, 2003, by and
among Sun, Trust, SHC and U.S. Bank National Association, as trustee, as amended.



          (yyy) “Sun Intellectual Property” means any and all Intellectual Property owned by Sun
or any Sun Subsidiary or which Sun or any Sun Subsidiary has a right to use; provided that,
Sun Intellectual Property shall exclude the Acquired Names.



          (zzz) “Sun Material Adverse Effect” means any circumstance, event, occurrence, change
or effect that is materially adverse to the business, Assets, financial condition or results of
operations of the Acquired Business, taken as a whole (provided that the likely impact on the
Acquired Business after the Closing of any circumstance, event, occurrence, change or effect shall
be considered taking into account the operation of the Acquired Business contemplated by this
Agreement and the Ancillary Agreements, including the likely impact, if any, on the ability of Sun
and the Retained Subsidiaries to comply, in all material respects, with their respective
obligations under the Operating Agreements, License Agreements and Sublease Agreements);
provided, however, any adverse effect arising out of or resulting primarily and
directly from any of the following shall be disregarded when determining whether there has been a
Sun Material Adverse Effect: (1) any change in the market price or trading volume of the Paired
Shares (but not the underlying cause(s) of such change in market price or trading volume), (2)
changes in the United States economy (or the economy of another country in which any Acquired Hotel
is located) generally which do not disproportionately affect the Acquired Business in any material
respect, (3) the announcement and pendency of the transactions contemplated by this Agreement, (4)
seasonal fluctuations in the Acquired Business, (5) (A) changes in law or regulation generally
affecting the hotel and leisure industry or (B) changes in GAAP, except, in the case of this
clause (5), to the extent the Acquired Business is disproportionately affected in any
material respect; provided, further, however, that changes resulting from
(I) the commencement or material worsening of a war or armed hostilities or other national or
international calamity or (II) any terrorist activities shall not be so disregarded.



          (aaaa) “Sun Material Impairment” means any of the following: (i) with respect to any
Acquired Hotel or Acquired Entity, any circumstance, event, occurrence, change or effect that is
materially adverse to the business, Assets, financial condition or results of operations of the
Acquired Hotel or Acquired Entity, in each case taken as a whole; or (ii) any Sun Material Adverse
Effect.



          (bbbb) “Sun Restructuring Steps” means the transactions referred to in Exhibit
A as the Sun Restructuring Steps.



          (cccc) “Sun Rights Agreement” means that certain Rights Agreement, dated March 15,
1999, between Sun and ChaseMellon Shareholder Services, L.L.C., as amended.



123









 





          (dddd) “Sun Space Lease” means any lease or other right of occupancy affecting or
relating to an Acquired Property in which an Acquired Entity or, with respect to the Acquired
Business, Sun or a Sun Subsidiary is the landlord, either pursuant to the terms of the lease
agreement or as successor to any prior landlord.



          (eeee) “Sun Trademarks” means the trademarks, service marks and trade names
“Starwood”, “Sheraton”, “Westin”, “CIGA”, “SLT” and “W”.



          (ffff) “Superior Proposal” means any unsolicited bona fide written offer made by any
Person (other than Sun and its Affiliates) to acquire, directly or indirectly, for consideration
consisting of cash and/or securities and/or other property, Acquired Assets representing more than
42% of the aggregate Acquired Hotel Agreed Amount of all the Acquired Assets and otherwise on terms
which a majority of Trust’s Board of Trustees or a majority of Sun’s Board of Directors, as
applicable, determines in its reasonable good faith judgment (after consultation with its financial
advisors) to be more favorable, after taking into account the likelihood of consummation of such
transaction on the terms set forth therein, and all legal, financial (including the financing terms
of any such proposal), regulatory and other aspects of such proposal and any other relevant factors
permitted under applicable law, to holders of Trust Shares or Sun Common Stock, as applicable, than
the transactions contemplated by this Agreement (and any revised proposal made by Horizon).



          (gggg) “Tax-Deferred Exchange” means an exchange (rather than a purchase and sale) of
or for all or a portion of any Acquired Hotel for other property of like kind in one or more
concurrent or delayed tax-deferred exchanges which shall qualify under Section 1031 of the Code.



          (hhhh) “Westin Transaction Agreement” means the Transaction Agreement, dated as of
September 9, 1997, by and among WHWE L.L.C., Woodstar Investor Partnership, Nomura Asset Capital
Corporation, Juergen Bartels, W&S Hotel L.L.C., Westin Hotels & Resorts Worldwide, Inc., W&S
Lauderdale Corp., W&S Seattle Corp., Westin St. John Hotel Company, Inc., W&S Denver Corp., W&S
Atlanta Corp., Starwood Lodging Trust, SLT Realty Limited Partnership, Starwood Lodging Corporation
and SLC Operating Limited Partnership.



          (iiii) WD Parent” means WD Parent, Inc., a Delaware corporation.



          (jjjj) “Working Capital” means, with respect to the Acquired Business or any Deferred
Asset, the applicable Acquired Assets classified as current assets on Schedule 8.4(a), less
the applicable Assumed Liabilities classified as current liabilities on Schedule 8.4(a),
all determined in accordance with the Closing Statement Principles.



     Section 10.2 Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants and agreements of the parties contained in this Agreement
and in any instrument delivered pursuant to this Agreement confirming the representations and
warranties in this Agreement shall not survive the Closing, except to the extent expressly set
forth in the Indemnification Agreement; provided, however, that the foregoing shall
not limit any covenant or agreement of the parties which by its terms contemplates performance at
or after the Closing.



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     Section 10.3 Notices. All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be delivered personally, sent by overnight
courier (providing proof of delivery) to the parties hereto or sent by telecopy (providing
confirmation of transmission) at the following addresses or telecopy numbers (or at such other
address or telecopy number for a party as shall be specified by like notice):



          (a) if to any Horizon Party, to:




Host Marriott, L.P.

6903 Rockledge Drive, Suite 1500

Bethesda, MD 20817

Attn: W. Edward Walter

Fax: 240.744.5155



          with copies (which shall not constitute notice) to:




Host Marriott Corporation

6903 Rockledge Drive, Suite 1500

Bethesda, MD 20817

Attn: Elizabeth A. Abdoo, Esq.

Fax: 240.744.5155




Latham & Watkins LLP

555 Eleventh Street, Suite 1000

Washington, DC 60606-6401

Attn: Scott C. Herlihy, Esq.

     David I. Brown, Esq.

Fax: 312.993.9767



          (b) if to any Sun Party to:




Starwood Hotels & Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, NY 10604

Attn: Kenneth S. Siegel

Fax: 914.640.8310



          with a copy (which shall not constitute notice) to:




Sidley Austin Brown & Wood LLP

10 South Dearborn Street

Chicago, IL 60603

Attn: Michael A. Gordon, Esq.

     Paul C. Adams, Esq.

Fax: 312.853.7036



          All notices shall be deemed to have been given only when actually received.



125









 





     Section 10.4 Interpretation.



          (a) When a reference is made in this Agreement to an Article, Section, Schedule or Exhibit,
such reference shall be to an Article, Section, Schedule or Exhibit to this Agreement unless
otherwise indicated. The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement,
they shall be deemed to be followed by the words “without limitation.” The words “hereof”,
“herein”, “hereto” and “hereunder” and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision in this Agreement.



          (b) Each of the Sun Parties and the Horizon Parties has or may have set forth information in
its respective disclosure letter in a section or subsection thereof that corresponds to the section
of this Agreement to which it relates. Nothing in any disclosure letter shall be deemed adequate
to disclose an exception to a representation or warranty (referenced by subsection) made herein
unless such exception is identified in the applicable section or subsection of the disclosure
letter with particularity and the relevant facts are described therein in reasonable detail;
provided that, a matter set forth in one section or subsection of a disclosure letter need
not be set forth in any other section or subsection of the disclosure letter, but only to the
extent that the relevance of such disclosure to such other section or subsection is reasonably
apparent from the facts specified in such disclosure. Matters reflected in a disclosure letter are
not necessarily limited to matters required by this Agreement to be reflected in a disclosure
letter. Such additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature. The fact that any item of information or
matter is disclosed in a disclosure letter to this Agreement shall not be construed to mean that
such item or matter is required to be disclosed by this Agreement, and the disclosure of any such
item or matter, and the dollar thresholds set forth herein, shall not be used as a basis for
interpreting the terms “material,” “Sun Material Adverse Effect,” “Horizon Material Adverse Effect”
or other similar terms in this Agreement.



          (c) The transactions contemplated by this Agreement shall be deemed to include the Sun
Restructuring Steps, the Closing Restructuring Steps and the Closing Transactions and the execution
and delivery of the Ancillary Agreements.



          (d) Any representation or warranty, covenant or condition in this Agreement that refers to any
prevention, delay or impairment (or words of similar import) of any transactions shall be deemed to
refer to such transactions as initially contemplated by this Agreement, any Ancillary Agreement or
the Horizon Transactions, as applicable, and not such transactions as they may be modified by
Section 6.8, 6.18 or 6.26, the Restructuring Plan or any other provision of
this Agreement or the Ancillary Agreements.



          (e) Solely for purposes of Sections 3.8(a) and 3.17(a), the words “delivered
or made available to Horizon OP” and words of similar import, when used in this Agreement with
respect to any documents or other information, shall mean such documents or other information that
are (i) delivered by any of the Sun Parties to Horizon OP or its attorneys or other representatives
or (ii) made available on the date of this Agreement, and for at least two (2)



126









 







business days prior
to the date of this Agreement, to Horizon OP and its representatives through the Sun Parties’
virtual data room established for purposes of the transactions contemplated by this Agreement.



          (f) Neither Trust nor any of its Subsidiaries, on the one hand, nor Sun or any of its
Subsidiaries (other than Trust and its Subsidiaries), on the other hand, shall have any obligations
hereunder to the other.



          (g) Any references in this Agreement to requirements or the terms of the form of Operating
Agreement or the form of License Agreement (in each case other than in Section 6.16) shall
be deemed to refer to the requirements or terms of such form, as are contemplated to be modified by
the terms of the form of the Corporate Level Agreement.



     Section 10.5 Counterparts; Facsimile. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties hereto and
delivered to the other parties hereto. This Agreement may be executed by facsimile signature.



     Section 10.6  Entire Agreement; No Third-Party Beneficiaries. This Agreement, the Sun
Disclosure Letter, the Horizon Disclosure Letter, the Confidentiality Agreement, the Ancillary
Agreements, including the schedules and exhibits hereto and thereto, and the other agreements
entered into in connection with the transactions contemplated hereby and thereby or the Horizon
Transactions constitute the entire agreement of the parties hereto and supersede all prior
agreements and understandings, both written and oral, between the parties hereto, or any of them,
with respect to the subject matter of this Agreement and are not (i) intended to confer upon any
Person other than the parties hereto any rights or remedies or (ii) intended to be enforceable by
any Person who is not a party hereto or entitled to enforce rights hereunder pursuant to the
Contracts (Rights of Third Parties) Act of 1999 or any similar legislation of any other
jurisdiction.



     Section 10.7 Governing Law; Consent to Jurisdiction.



          (a) To the extent required by Maryland law, the REIT Merger shall be governed by, and
construed in accordance with, the laws of the State of Maryland regardless of the laws that might
otherwise govern under applicable principles of conflict of laws thereof. To the extent required
by Delaware law, the SLT Merger shall be governed by, and construed in accordance with, the laws of
the State of Delaware regardless of the laws that might otherwise govern under applicable
principles of conflict of laws thereto. Except as provided in the immediately preceding two
sentences, this Agreement, and all claims arising out of or related thereto, shall be governed by,
and construed in accordance with, the laws of the state of New York, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.



          (b) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the exclusive jurisdiction of any Delaware State court, or Federal court of the
United States of America, sitting in Delaware, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or the



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agreements delivered in
connection herewith or the transactions contemplated hereby or thereby or the Horizon Transactions
or for recognition or enforcement of any judgment relating thereto, and each of the parties hereby
irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in
such courts, (ii) agrees that any claim in respect of any such action or proceeding may be heard
and determined in such Delaware court or, to the extent permitted by law, in such Federal court,
(iii) waives, to the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any such action or proceeding in any such
Delaware State or Federal court and (iv) waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding in any such
Delaware State or Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section 10.3. Nothing
in this Agreement will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.



     Section 10.8 Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned or delegated, in whole or in part, by operation
of law or otherwise by any of the parties hereto without the prior written consent of the other
parties hereto; provided, however, that without the consent of the Sun Parties, the
Horizon Parties may assign its rights under this Agreement in whole or in part to any Horizon
Subsidiary; provided, further, that (i) notwithstanding anything in the Tax Sharing
and Indemnification Agreement to the contrary, the Horizon Parties indemnify the Sun Parties
against any incremental Tax liability that results from such assignment and that would not have
been incurred absent such assignment, and (ii) the Horizon Parties remain bound by the terms of
this Agreement and the Ancillary Agreements, as applicable. Subject to the preceding sentence,
this Agreement and the Ancillary Agreements will be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted assigns.



     Section 10.9 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled, without posting any bond, to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.



     Section 10.10 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable. Notwithstanding anything to the contrary in this Section 10.10,
in the event any such invalidity or unenforceability would materially and adversely affect the
economic benefits of the transactions contemplated by this Agreement or the Horizon Transactions to
any party, the parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original



128









 







intent of the parties hereto as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement or the Horizon Transactions, as
applicable, are fulfilled to the extent possible.



     Section 10.11 Joint and Several Obligations. In each case where both Sun and Trust,
on the one hand, or Horizon and Horizon OP, on the other hand, are obligated to perform the same
obligation hereunder, such obligation shall be joint and several; provided,
however, that, from and after the Closing, the Acquired Entities shall have no Liabilities
with respect to the Liabilities of any Sun Parties hereunder. The Sun Parties shall cause the
other Sellers and any other applicable Sun Subsidiaries to perform the obligations required of such
Sellers and other Sun Subsidiaries under this Agreement.



     Section 10.12 Mutual Drafting. Each party hereto has participated in the drafting of
this Agreement, which each party acknowledges is the result of extensive negotiations between the
parties hereto.



     Section 10.13 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE HORIZON TRANSACTIONS. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH
WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
10.13.



     Section 10.14 No Agreement Until Executed. Irrespective of negotiations among the
parties hereto or the exchange of drafts of this Agreement, this Agreement shall not constitute or
be deemed to evidence a contract, agreement, arrangement or understanding among the parties hereto
unless and until, subject to Section 10.5, this Agreement is executed by the parties
hereto.



     Section 10.15 Bulk Transfer Laws. The parties to this Agreement hereby waive
compliance by the other parties hereto with the provisions of any so-called bulk sales or bulk
transfer Laws of any jurisdiction in connection with the sales, conveyances, assignments and
deliveries of Global Directly Acquired Assets and Local Directly Acquired Assets contemplated by
this Agreement. Sun shall indemnify the Purchaser Indemnified Parties for any Losses resulting
from any failure to comply with such Laws.



[Remainder of page intentionally left blank.]




129









 








          IN WITNESS WHEREOF, Horizon, Horizon OP, REIT Merger Sub, SLT Merger Sub, Sun, Trust,
SHC and SLT have caused this Agreement to be signed by their respective officers (or general
partner or managing member, as applicable) thereunto duly authorized all as of the date first
written above.



	 	 	 	 	 
	 	HOST MARRIOTT CORPORATION

 	 
	 	By:  	/s/
W. Edward Walter	 
	 	 	Name:  	W. Edward Walter	 
	 	 	Title:  	Chief Financial Officer	 
	 



	 	 	 	 	 
	 	HOST MARRIOTT, L.P.

 	 
	 	By:  	                       Host Marriott Corporation,
its sole general partner
 	 
	 	 	 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	/s/
W. Edward Walter	 
	 	 	Name:  	W. Edward Walter	 
	 	 	Title:  	Chief Financial Officer	 
	 



	 	 	 	 	 
	 	HORIZON SUPERNOVA MERGER SUB, L.L.C.

 	 
	 	By:  	                       Host Marriott, L.P.,
its sole member
 	 
	 	 	 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	                       Host Marriott Corporation,
its sole general partner
 	 
	 	 	 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	/s/
W. Edward Walter	 
	 	 	Name:  	W. Edward Walter	 
	 	 	Title:  	Chief Financial Officer	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	HORIZON SLT MERGER SUB, L.P.

 	 
	 	By:  	                  Horizon Supernova Merger Sub, L.L.C.,
its sole general partner
 	 
	 	 	 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	                  Host Marriott, L.P.,
its sole member
 	 
	 	 	 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	                  Host Marriott Corporation,
its sole general partner
 	 
	 	 	 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	/s/
W. Edward Walter	 
	 	 	Name:  	W. Edward Walter	 
	 	 	Title:  	Chief Financial Officer	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

 	 
	 	By:  	/s/ Kenneth Siegel	 
	 	 	Name:  	Kenneth Siegel	 
	 	 	Title:  	Executive Vice President, General Counsel & Secretary	 
	 



	 	 	 	 	 
	 	STARWOOD HOTELS & RESORTS

 	 
	 	By:  	/s/
Kenneth Siegel	 
	 	 	Name:  	Kenneth Siegel	 
	 	 	Title:  	Vice President, General Counsel & Secretary	 
	 



	 	 	 	 	 
	 	SHERATON HOLDING CORPORATION

 	 
	 	By:  	/s/
Kenneth Siegel	 
	 	 	Name:  	Kenneth Siegel	 
	 	 	Title:  	Vice President & Secretary	 
	 



	 	 	 	 	 
	 	SLT REALTY LIMITED PARTNERSHIP

 	 
	 	By:  	                       Starwood Hotels & Resorts,
its sole general partner
 	 
	 	 	 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	/s/
Kenneth Siegel	 
	 	 	Name:  	Kenneth Siegel	 
	 	 	Title:  	Vice President, General Counsel & Secretary