Document:

exv10w30

 

Exhibit 10.30

PURCHASE AND SALE AGREEMENT

BY AND AMONG

JER O’HARE HOTEL, LLC,

AS SELLER

AND

ASHFORD HOSPITALITY LIMITED PARTNERSHIP

AS PURCHASER

DATED AS OF AUGUST 31, 2006

FOR THE

WESTIN O’HARE

6100 NORTH RIVER ROAD

ROSEMONT, ILLINOIS

 

 

LIST OF EXHIBITS

	 	 	 
	Exhibit A

	 	Form of Earnest Money Escrow Agreement
	Exhibit B

	 	Form of Deed
	Exhibit C

	 	Form of Seller’s Closing Certificate
	Exhibit D

	 	Form of Bill of Sale
	Exhibit E

	 	Form of General Assignment and Assumption
	Exhibit F

	 	Form of Assignment of Union Contract
	Exhibit G

	 	Form of Assignment of Hotel Management Agreement
	Exhibit H

	 	Form of Purchaser Closing Certificate
	Exhibit I

	 	Form of Representation Letter
	Exhibit J

	 	Form of Plat Act Affidavit

 

 

LIST OF SCHEDULES

	 	 	 
	Schedule 2.1.1

	 	Land
	Schedule 2.1.5

	 	IT Systems
	Schedule 2.1.12

	 	Trademarks, Trade Names, Service Marks or other Intellectual Property Rights
	Schedule 2.1.18

	 	Vehicles
	Schedule 2.2.4

	 	Third Parties’ Property
	Schedule 2.2.5

	 	Excluded IT Systems
	Schedule 3.4

	 	Allocation of the Purchase Price
	Schedule 4.3.1

	 	Due Diligence Materials
	Schedule 5.3.1

	 	Unpermitted Exceptions
	Schedule 7.1.3

	 	Consents and Approvals
	Schedule 7.1.4

	 	Encumbrances on Personal Property
	Schedule 7.1.6

	 	Notices from Governmental Authorities
	Schedule 7.1.7

	 	Pending or Threatened Litigation
	Schedule 7.1.8

	 	Employment Agreements
	Schedule 7.1.10

	 	Environmental Reports
	Schedule 7.1.11

	 	Licenses and Permits
	Schedule 7.1.12

	 	Tenant Leases
	Schedule 7.1.13

	 	Material Contracts
	Schedule 7.1.19

	 	Financial Information
	Schedule 8.2.2

	 	Contracts
	Schedule 8.16

	 	2006 Capital Work
	Schedule 11.2.6

	 	Proration of Management Fees
	Schedule 12.3

	 	IT Systems that are leased or licensed

 

 

PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of
this 6th day of September, 2006 (the “Effective Date”), by and among JER O’Hare Hotel, LLC,
a Delaware limited liability company (“Seller”), and Ashford Hospitality Limited
Partnership, a Delaware limited partnership (“Purchaser”). The Seller and Purchaser are
sometimes referred to herein individually as a “Party”, and collectively as the
“Parties”.

     WHEREAS, Seller is the fee simple owner of the land and improvements comprising the hotel
facility located at 6100 North River Road, Rosemont, Illinois, and commonly known as the Westin
O’Hare (the “Hotel”), as more specifically described in this Agreement.

     WHEREAS, Seller desires to sell the Hotel and the other Property (as hereinafter defined) to
Purchaser, and Purchaser desires to purchase the Property from Seller, on the terms set forth in
this Agreement.

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

ARTICLE 1

DEFINITIONS

     1.1 Definitions. In addition to the terms defined above in the introduction and
recitals to this Agreement, the following terms when used in this Agreement shall have the meanings
set forth in this Section 1.1.

     “2006 Capital Work” has the meaning set forth in Section 8.16.

     “Accounts Receivable” means all amounts which Seller is entitled to receive from the
Business which are not paid as of the Closing, including charges for the use or occupancy of any
guest, conference, meeting or banquet rooms or other facilities at the Hotel, any restaurant, bar
or banquet services, or any other goods or services provided by, for or on behalf of Seller at the
Hotel, but expressly excluding all items of income otherwise prorated for the benefit of Seller
pursuant to Section 11.2.

     “Adverse Proceeding” has the meaning set forth in Section 9.1.2.

     “Affiliate” means, with respect to the Person in question, any other Person that,
directly or indirectly, (i) owns or controls fifty percent (50%) or more of the outstanding voting
and/or equity interests of such Person, or (ii) controls, is controlled by or is under common
control with, the Person in question. For the purposes of this definition, the term “control” and
its derivations means having the power, directly or indirectly, to direct the management, policies
or general conduct of business of the Person in question, whether by the ownership of voting
securities, contract or otherwise.

     “Aging Receivables” has the meaning set forth in Section 11.3.2.

     “Anti-Terrorism Laws” means Executive Order 13224 issued by the President of the
United States, the USA PATRIOT Act, and all other present and future Applicable Law addressing or
in any way relating to terrorist acts and acts of war.

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     “Applicable Law” means (i) all statutes, laws, common law, administrative decisions,
rules, regulations, ordinances, codes or other legal requirements of any Governmental Authority,
stock exchange, board of fire underwriters and similar quasi governmental authority, and (ii) any
judgment, injunction, order or other similar requirement of any court or other adjudicatory
authority, in effect at the time in question and in each case to the extent the Person or property
in question is subject to the same.

     “Assumed Liabilities” has the meaning set forth in Section 2.3.

     “Bookings” has the meaning set forth in Section 2.1.16.

     “Books and Records” has the meaning set forth in Section 2.1.13.

     “Broker” means Molinaro Koger.

     “Business” means the lodging business and all activities related thereto conducted at
the Hotel, including (i) the rental of any guest, conference, meeting or banquet rooms or other
facilities at the Hotel or on the Property, (ii) the operation of any restaurant, bar or banquet
services, together with all other goods and services provided at the Hotel, (iii) the rental of any
commercial or retail space to tenants at the Hotel or on the Property, (iv) the maintenance and
repair of the Real Property and tangible Personal Property, (v) the employment of the Employees by
Manager, and (vi) the payment of Taxes.

     “Business Day” means any day other than a Saturday, Sunday, federal, or State of
Illinois legal holiday.

     “Casualty” has the meaning set forth in Section 14.1.

     “Closing” has the meaning set forth in Section 10.1.

     “Closing Date” has the meaning set forth in Section 10.1.

     “Closing Escrow” has the meaning set forth in Section 10.2.

     “Closing Escrow Agreement” has the meaning set forth in Section 10.2.

     “Closing Statement” has the meaning set forth in Section 11.1.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any
regulations, rulings and guidance issued by the Internal Revenue Service.

     “Condemnation” has the meaning set forth in Section 14.2.

     “Confidential Information” has the meaning set forth in Section 8.1.1.

     “Contracts” means, collectively, the Equipment Leases and Operating Agreements.

     “Current Accounts Receivable” has the meaning set forth in Section 11.3.2.

     “Cut-Off Time” has the meaning set forth in Section 11.1.

     “Data Room Web Site” has the meaning set forth in Section 4.3.1.

     “Deed” has the meaning set forth in Section 10.3.1(b).

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     “Due Diligence Contingency” has the meaning set forth in Section 4.1.

     “Due Diligence Period” has the meaning set forth in Section 4.1.

     “Earnest Money” means the First Deposit and, once made, the Second Deposit.

     “Earnest Money Escrow Agreement” has the meaning set forth in Section 3.2.1.

     “Employees” means all persons employed by the Manager or any of its Affiliates in a
full-time or part-time capacity at the Hotel at the time in question, including Union Employees,
Non-Union Employees and employees on workers’ compensation, military leave, special military leave,
maternity leave, leave under the Family and Medical Leave Act of 1993, union leave, sick lease,
short-term or long-term disability, or layoff with recall rights, and employees on other approved
leaves of absence with a legal or contractual right to reinstatement.

     “Employer” means, with respect to any Employee, the Manager.

     “Employment Agreements” has the meaning set forth in Section 7.1.8.

     “Environmental Claims” means all claims for reimbursement, remediation, abatement,
removal, clean up, contribution, personal injury, property damage or damage to natural resources
made by any Governmental Authority or other Person arising from or in connection with the (i)
presence or actual or potential spill, leak, emission, discharge or release of any Hazardous
Substances over, on, in, under or from the Property, or (ii) violation of any Environmental Laws
with respect to the Property.

     “Environmental Laws” means any Applicable Laws which regulate the manufacture,
generation, formulation, processing, use, treatment, handling, storage, disposal, distribution or
transportation, or an actual or potential spill, leak, emission, discharge or release of any
Hazardous Substances, pollution, contamination or radiation into any water, soil, sediment, air or
other environmental media, including (i) the Comprehensive Environmental Response, Compensation and
Liability Act, (ii) the Resource Conservation and Recovery Act, (iii) the Federal Water Pollution
Control Act, (iv) the Toxic Substances Control Act, (v) the Clean Water Act, (vi) the Clean Air
Act, and (vii) the Hazardous Materials Transportation Act, and similar state and local laws, as
amended as of the time in question.

     “Environmental Liabilities” means all liabilities and obligations under any
Environmental Laws arising from or in connection with the Property, including any obligations to
manage, control, contain, remove, remedy, respond to, clean up or abate any actual or potential
spill, leak, emission, discharge or release of any Hazardous Substances, pollution, contamination
or radiation into any water, soil, sediment, air or other environmental media.

     “Environmental Reports” has the meaning set forth in Section 7.1.10.

     “Equipment Leases” has the meaning set forth in Section 2.1.9.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the rules and regulations promulgated thereunder.

     “Escrow Agent” means Chicago Title Insurance Company.

     “Exchange Party” has the meaning set forth in Section 3.5.

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     “Excluded F&B” has the meaning set forth in Section 2.2.6.

     “Excluded IT Systems” has the meaning set forth in Section 2.2.5.

     “Excluded Property” has the meaning set forth in Section 2.2.

     “Existing Lender” means Barclays Capital Real Estate Inc.

     “Existing Survey” means that certain survey prepared by Ron Sarko dated as of August
3, 2006.

     “F&B” has the meaning set forth in Section 2.1.6.

     “FF&E” has the meaning set forth in Section 2.1.3.

     “First Deposit” has the meaning set forth in Section 3.2.

     “Governmental Authority” means any federal, state or local government or other
political subdivision thereof, including any Person exercising executive, legislative, judicial,
regulatory or administrative governmental powers or functions, in each case to the extent the same
has jurisdiction over the Person or property in question.

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

     “Hazardous Substances” means any “hazardous” or “toxic” material as defined in any
Environmental Law, including hazardous or toxic substances, materials or waste, whether in solid,
semisolid, liquid or gaseous form, including asbestos, petroleum or petroleum by products and
polychlorinated biphenyls.

     “Hotel” has the meaning set forth in the Recitals.

     “IDR” has the meaning set forth in Section 8.14.1

     “IDR Notice” has the meaning set forth in Section 8.14.1.

     “Illinois Act” has the meaning set forth in Section 8.14.1.

     “Improvements” has the meaning set forth in Section 2.1.2.

     “Indemnification Cap” has the meaning set forth in Section 15.4.2.

     “Indemnification Claim” has the meaning set forth in Section 15.5.1.

     “Indemnification Deductible” has the meaning set forth in Section 15.4.2.

     “Indemnification Loss” means, with respect to any Indemnitee, any actual (and not
contingent) liability, damage (but expressly excluding any consequential and punitive damages),
loss, cost or expense, including reasonable attorneys’ fees and expenses and court costs, incurred
by such Indemnitee as a result of the act, omission or occurrence in question.

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     “Indemnitee” has the meaning set forth in Section 15.5.1.

     “Indemnitor” has the meaning set forth in Section 15.5.1.

     “Inspections” has the meaning set forth in Section 4.2.

     “Intellectual Property” has the meaning set forth in Section 2.1.12.

     “Inventoried Baggage” has the meaning set forth in Section 12.2.

     “Inventoried Safe Deposit Boxes” has the meaning set forth in Section 12.1.

     “IT Systems” has the meaning set forth in Section 2.1.5.

     “Knowledge” means (i) with respect to Seller, the actual knowledge of Mr. Gerald Best,
Mr. Alex Gilbert or Mr. Richard Banjo, without any duty of inquiry or investigation other than as
expressly set forth in the proviso below, and expressly excluding the knowledge of any other
shareholder, partner, member, trustee, beneficiary, director, officer, manager, employee, agent or
representative of Seller or any of its Affiliates; provided, Seller shall submit a copy of the
Seller’s representations and warranties contained in this Agreement to the Manager and request that
the Manager and the Hotel controller review such representations and warranties and provide a
written response to Seller setting forth any exceptions or inaccuracies of such representation and
warranties which are known to such persons, and Seller shall provide to Purchaser a copy of any
such written response promptly following receipt, and in any event, shall use commercially
reasonable efforts to cause Manager to respond prior to the expiration of the Due Diligence Period,
provided further however that in no event shall (1) Manager have any recourse or liability for the
contents of such response, (2) the delivery or non-delivery of such response be a condition
precedent to Purchaser’s obligations under this agreement and (3) Seller be deemed to have made any
representation or warranty as to the accuracy of such written response, and the knowledge of such
persons shall not be imputed to Seller, except to the extent of any information expressly contained
in such written response; and (ii) with respect to Purchaser, (A) the actual knowledge of David
Brooks, David Kimichik, Chris Peckham, Pat Webber and Douglass Kessler and expressly excluding the
knowledge of any other shareholder, partner, member, trustee, beneficiary, director, officer,
manager, employee, agent or representative of Purchaser or any of its Affiliates, (B) any matter
disclosed in any exhibits or schedules to this Agreement, (C) any matter disclosed in any Seller
Due Diligence Materials or any other documents or materials provided by Seller to Purchaser prior
to Closing, and (D) any matter disclosed by the Inspections or in the Purchaser Due Diligence
Reports. For the purposes of this definition, the term “actual knowledge” means, with respect to
any natural person, the conscious awareness of such person at the time in question, and expressly
excludes any constructive or implied knowledge of such person.

     “Land” has the meaning set forth in Section 2.1.1.

     “Liability” means any liability, obligation, damage, loss, diminution in value, cost
or expense of any kind or nature whatsoever, whether accrued or unaccrued, actual or contingent,
known or unknown, foreseen or unforeseen.

     “Licenses and Permits” has the meaning set forth in Section 2.1.11.

     “Liquor Licenses” has the meaning set forth in Section 8.3.

     “Management Agreement” means that certain Management Agreement dated as of November 1,
1981, by and between Seller (as successor-in-interest to the original party thereto) and Manager,
as

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amended by First Amendment to Management Agreement dated as of June 1, 1983, by Consolidated
Amendment to Joint Venture Agreement and Management Agreement dated as of June 28, 1991, by Third
Amendment of Management Agreement and Assignment of Owner’s Interest dated as of February 22, 1996,
by Second Consolidated Amendment to Joint Venture Agreement and Management Agreement dated as of
September 30, 1998 and by Fourth Amendment to Management Agreement dated as of October 18, 2005.

     “Management Agreement Estoppel” has the meaning given to such term in Section
9.2.1(e).

     “Manager” means SLC Operating Limited Partnership, a Delaware limited partnership.

     “Material Casualty” has the meaning set forth in Section 14.1.1.

     “Material Condemnation” has the meaning set forth in Section 14.2.1.

     “Material Contract” means any Contract requiring in any one calendar year after the
Closing, but during the term of such Contract, aggregate payments in excess of Fifty Thousand
Dollars ($50,000).

     “Mutual Closing Conditions” has the meaning set forth in Section 9.1.1.

     “National/Regional Operating Agreements” has the meaning set forth in Section 2.2.3.

     “Non-Union Employees” means those Employees that are not Union Employees.

     “Notice” has the meaning set forth in Section 16.1.1.

     “Operating Agreements” has the meaning set forth in Section 2.1.10.

     “Operating Lessee” means an Affiliate of Purchaser that may lease a portion of the
Property from Purchaser pursuant to an operating lease.

     “Ordinary Course of Business” means the ordinary course of business consistent with
Seller’s past custom and practice for the Business, taking into account the facts and circumstances
in existence from time to time.

     “Pending Receivables” has the meaning set forth in Section 11.3.2.

     “Permitted Exceptions” has the meaning set forth in Section 5.3.1.

     “Person” means any natural person, corporation, general or limited partnership,
limited liability company, association, joint venture, trust, estate, Governmental Authority or
other legal entity, in each case whether in its own or a representative capacity.

     “Personal Property” means the Property other than the Real Property.

     “Plan” means an “employee benefit plan” as defined in Section 3(3) of ERISA or Section
4975 of the Code.

     “Plans and Specifications” has the meaning set forth in Section 2.1.14.

     “Post-Execution Disclosure” has the meaning set forth in Section 16.13.

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     “Pre-Closing Access” has the meaning set forth in Section 8.12.

     “Prime Rate” means the rate of interest published in the Wall Street Journal from time
to time as the prime rate of interest, changing simultaneously and automatically with each
announced change in said rate. In the event the Wall Street Journal ceases to publish a prime rate
of interest, the Prime Rate shall be determined by reference to another publication, as Seller may
reasonably select, that publishes a prime rate of interest.

     “Property” has the meaning set forth in Section 2.1.

     “Prorations” has the meaning set forth in Section 11.2.

     “Purchase Price” has the meaning set forth in Section 3.1.

     “Purchaser” has the meaning set forth in the Recitals.

     “Purchaser Closing Conditions” has the meaning set forth in Section 9.2.

     “Purchaser Closing Deliveries” has the meaning set forth in Section 10.3.2.

     “Purchaser Cure Period” has the meaning set forth in Section 13.9.

     “Purchaser Default” means a material breach or default by Purchaser in any of its
representations, warranties, covenants or obligations under this Agreement, to the extent such
breach or default is not caused by a Seller Default and (except for a breach or default under
Sections 3.2.1, 3.3 and 16.4, or a failure to make any material delivery set forth in Section
10.3.2 required to be made by Purchaser at Closing, which in each case shall have the cure period
set forth in Section 13.9) which breach or default is not cured within ten (10) Business Days after
Purchaser’s receipt of written notice of such breach or default from Seller.

     “Purchaser Default or Failure” has the meaning set forth in Section 13.9.

     “Purchaser Documents” has the meaning set forth in Section 7.2.2.

     “Purchaser Due Diligence Reports” has the meaning set forth in Section 4.4.

     “Purchaser Indemnitees” means Purchaser and its Affiliates, and each of their
respective shareholders, members, partners, trustees, beneficiaries, directors, officers and
employees, and the successors, permitted assigns, legal representatives, heirs and devisees of each
of the foregoing.

     “Purchaser’s Inspectors” has the meaning set forth in Section 4.2.

     “Purchaser’s Lender” means any lender(s) selected by Purchaser to provide financing
for Purchaser’s acquisition of the Property.

     “Real Property” has the meaning set forth in Section 2.1.2.

     “Required Removal Exceptions” means (i) any mortgages, deeds of trust or other
security instruments for any financing (other than those caused by Purchaser or any of its
Affiliates), (ii) Taxes which are due and payable as of Closing (but if a portion of such Taxes
relate to a period subsequent to Closing, the foregoing will have no affect on the obligation to
apportion such Taxes pursuant to Article 11), (iii) any exception to title which Seller or any
Affiliate of Seller willfully creates in breach of this

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Agreement and (iv) any other Title Exceptions which may be removed by payment of an
ascertainable and liquidated amount, which in the aggregate does not exceed Five Hundred Thousand
Dollars ($500,000.00).

     “Retailer’s Act” has the meaning set forth in Section 8.14.1.

     “Retail Merchandise” has the meaning set forth in Section 2.1.7.

     “Retained Liabilities” has the meaning set forth in Section 2.4.

     “Scheduled Closing Date” means the date on which the Closing is scheduled to occur as
the same may be postponed pursuant to the terms of this Agreement.

     “Second Deposit” has the meaning set forth in Section 3.2.

     “Seller” has the meaning set forth in the Recitals.

     “Seller Closing Conditions” has the meaning set forth in Section 9.3.

     “Seller Closing Deliveries” has the meaning set forth in Section 10.3.1.

     “Seller Cure Period” has the meaning set forth in Section 13.8.

     “Seller Default” means a material breach or default by Seller in any of its
representations, warranties, covenants or obligations under this Agreement, to the extent such
breach or default is not caused by a Purchaser Default and (except for the failure to make any
material delivery set forth in Section 10.3.1 which is required to be made by Seller at Closing,
which shall have the cure period set forth in Section 13.8) which breach or default is not cured
within ten (10) Business Days after Seller’s receipt of written notice of such default from
Purchaser.

     “Seller Default or Failure” has the meaning set forth in Section 13.8.

     “Seller Documents” has the meaning set forth in Section 7.1.2.

     “Seller Due Diligence Materials” has the meaning set forth in Section 4.3.1.

     “Seller Indemnitees” means Seller and its Affiliates, and each of their respective
shareholders, members, partners, trustees, beneficiaries, directors, officers and employees, and
the successors, permitted assigns, legal representatives, heirs and devisees of each of the
foregoing.

     “Seller’s Possession” means in the physical possession of (a) any officer or employee
of Seller or any of its Affiliates that has primary responsibility for the Business or (b) the
Manager, to the extent that Manager has, pursuant to a request that Seller agrees to make, agreed
to provide Seller with requested documents or materials or to the extent that Seller has the right
under the Management Agreement to obtain relevant documents or materials without incurring any
material costs; provided, however, that any reference in this Agreement to Seller’s Possession of
any documents or materials expressly excludes the possession of any such documents or materials
that (i) are legally privileged or constitute attorney work product, (ii) are subject to a
confidentiality agreement or to Applicable Law prohibiting their disclosure, or (iii) constitute
confidential internal assessments, reports, studies, memoranda, notes or other correspondence
prepared by or on behalf of any officer or employee of Seller or any of its Affiliates and

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not delivered to any third party (other than a third party which is bound by a confidentiality
agreement or other confidentiality obligation).

     “Starwood” means Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation.

     “Starwood Entity(ies)” means Starwood or any of its Affiliates.

     “Starwood Proprietary Marks” has the meaning set forth in Section 2.2.2.

     “Subsequent Taxable Period” has the meaning set forth in Section 8.6.1.

     “Supplies” has the meaning set forth in Section 2.1.4.

     “Survey” has the meaning set forth in Section 5.2.

     “Survey Defects” has the meaning set forth in Section 5.3.2.

     “Survival Period” has the meaning set forth in Section 15.1.2.

     “Tax-Free Exchange” has the meaning set forth in Section 3.5.

     “Taxes” means any federal, state, local or foreign, real property, personal property,
sales, use, room, occupancy, ad valorem or similar taxes, assessments, levies, charges or fees
imposed by any Governmental Authority on Seller with respect to the Property or the Business,
including any interest, penalty or fine with respect thereto, but expressly excluding any (i)
federal, state, local or foreign income, capital gain, gross receipts, capital stock, franchise,
profits, estate, gift or generation skipping tax, or (ii) transfer, documentary stamp, recording or
similar tax, levy, charge or fee incurred with respect to the transaction described in this
Agreement.

     “Tenant Leases” has the meaning set forth in Section 2.1.8.

     “Third-Party Claim” means, with respect to the Person in question, any claim, demand,
lawsuit, arbitration or other legal or administrative action or proceeding against the Person in
question by any other Person which is not an Affiliate of the Person in question.

     “Title and Survey Election Notice” has the meaning set forth in Section 5.3.2.

     “Title and Survey Objection Notice” has the meaning set forth in Section 5.3.2.

     “Title and Survey Response Notice” has the meaning set forth in Section 5.3.2.

     “Title Commitment” has the meaning set forth in Section 5.1.

     “Title Company” means the Escrow Agent or such other national title insurer as
Purchaser may select.

     “Title Exceptions” has the meaning set forth in Section 5.3.2.

     “Title Policy” has the meaning set forth in Section 5.4.

     “Trade Payables” has the meaning set forth in Section 11.2.12.

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     “Union Contract” has the meaning set forth in Section 2.1.20.

     “Union Employees” means any Employees whose employment is subject to the terms of the
Union Contract.

     “Unpermitted Exceptions” has the meaning set forth in Section 5.3.1.

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

     “Warranties” has the meaning set forth in Section 2.1.15.

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

          1.2.1 Singular words shall connote the plural as well as the singular, and plural words shall
connote the singular as well as the plural, and the masculine shall include the feminine and the
neuter, as the context may require.

          1.2.2 All references in this Agreement to particular articles, sections, subsections or
clauses (whether in upper or lower case) are references to articles, sections, subsections or
clauses of this Agreement. All references in this Agreement to particular exhibits or schedules
(whether in upper or lower case) are references to the exhibits and schedules attached to this
Agreement, unless otherwise expressly stated or clearly apparent from the context of such
reference.

          1.2.3 The headings in this Agreement are solely for convenience of reference and shall not
constitute a part of this Agreement nor shall they affect its meaning, construction or effect.

          1.2.4 Any reference to any agreement (including this Agreement), document, instrument, tax or
tariff means such agreement, document, instrument, tax or tariff as amended or modified in effect
from time to time in accordance with the terms thereof, and if applicable the terms hereof.

          1.2.5 The terms “hereby,” “hereof,” “hereto,” “herein,” “hereunder” and any similar terms
shall refer to this Agreement, and not solely to the provision in which such term is used.

          1.2.6 The terms “include,” “including” and similar terms shall be construed as if followed by
the phrase “without limitation.”

          1.2.7 The term “sole discretion” with respect to any determination to be made a Party under
this Agreement means the sole and absolute discretion of such Party, without regard to any standard
of reasonableness or other standard by which the determination of such Party might be challenged.

          1.2.8 Seller, Purchaser and their respective counsel have reviewed and revised (or requested
revisions of) this Agreement and have participated in the preparation of this Agreement, and
therefore any rules of construction requiring that ambiguities are to be resolved against the Party
which drafted the Agreement or any exhibits hereto shall not be applicable in the construction and
interpretation of this Agreement or any exhibits hereto.

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ARTICLE 2

THE PROPERTY AND LIABILITIES

     2.1 Description of the Property. Subject to the terms set forth in this Agreement, at
the Closing, Seller shall sell, convey, transfer, assign and deliver, as applicable, to Purchaser,
and Purchaser shall purchase and accept from Seller, all right, title and interest of Seller, if
any, in and to the Hotel and the other property set forth in this Section 2.1, but expressly
excluding the Excluded Property (collectively, the “Property”):

          2.1.1 Land. The land legally described in Schedule 2.1.1, together with all
appurtenant easements and any other rights and interests appurtenant thereto (the “Land”);

          2.1.2 Improvements. All buildings, structures and improvements located on or affixed
to the Land and all fixtures on the Land which constitute real property under Applicable Law (the
“Improvements”; the Land and the Improvements are referred to collectively herein as the
“Real Property”);

          2.1.3 FF&E. All fixtures (other than those which constitute Improvements), furniture,
furnishings, equipment, machinery, tools, vehicles, appliances, art work and other items of
tangible personal property which are located at the Hotel and used in the Business, or ordered for
future use at the Hotel as of the Closing, other than the Supplies, IT Systems, F&B, Retail
Merchandise, Books and Records and Plans and Specifications (the “FF&E”);

          2.1.4 Supplies. All china, glassware and silverware, linens, uniforms, engineering,
maintenance, cleaning and housekeeping supplies, matches and ashtrays, soap and other toiletries,
stationery, menus, directories and other printed materials, and all other similar supplies and
materials, which are located at the Hotel or ordered for future use at the Hotel as of the Closing
(the “Supplies”);

          2.1.5 IT Systems. All computer hardware, telecommunications and information technology
systems located at the Hotel, and all computer software used at the Hotel (subject to the terms of
the applicable license agreements and Manager’s and Manager’s Affiliates’ rights in and to the
same) as more particularly described on Schedule 2.1.5, to the extent the same are
assignable or transferable (all such hardware, systems and software being referred to collectively
as the “IT Systems”), but expressly excluding the Excluded IT Systems;

          2.1.6 Food and Beverage. All food and beverages (including both alcoholic and non
alcoholic) which are located at the Hotel (whether opened or unopened), or ordered for future use
at the Hotel as of the Closing, including all food and beverages located in the guest rooms (the
“F&B”), but expressly excluding the Excluded F&B;

          2.1.7 Retail Merchandise. All merchandise located at the Hotel and held for sale to
guests and customers of the Hotel, or ordered for future sale at the Hotel as of the Closing,
including the inventory held for sale in any gift shop, or newsstand operated by Seller or Manager
at the Hotel, but expressly excluding the F&B (the “Retail Merchandise”);

          2.1.8 Tenant Leases. All leases, subleases, licenses, concessions and similar
agreements granting to any other Person the right to use or occupy any portion of the Real
Property, other than the Management Agreement and the Bookings (the “Tenant Leases”),
together with all security deposits held by Seller thereunder;

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          2.1.9 Equipment Leases. All leases and purchase money security agreements for any
equipment, machinery, vehicles, furniture or other personal property located at the Hotel which are
held by, for or on behalf of Seller and used in the Business, to the extent same are assignable or
transferable (the “Equipment Leases”) together with all deposits made thereunder, to the
extent such deposits are assignable or transferable;

          2.1.10 Operating Agreements. All maintenance, service and supply contracts, booking
and reservation agreements, credit card service agreements, and all other similar agreements for
goods or services, other than (a) any National/Regional Operating Agreements, which are held by,
for or on behalf of Seller in connection with the Business and (b) the Management Agreement,
Equipment Leases and Licenses and Permits, to the extent the same are assignable or transferable,
and Tenant Leases, together with all deposits made or held by Seller thereunder, to the extent the
same and such deposits are transferable (the “Operating Agreements”);

          2.1.11 Licenses and Permits. All licenses, permits, consents, authorizations,
approvals, registrations and certificates issued by any Governmental Authority which are held by,
for or on behalf of Seller with respect to the Hotel and are material to the conduct of the
Business and/or the use or occupancy of the Hotel, to the extent the same are assignable or
transferable (the “Licenses and Permits”), together with any deposits made by Seller
thereunder, to the extent such deposits are assignable or transferable;

          2.1.12 Intellectual Property. All of the following (a) owned by Seller or (b)
exclusively issued or licensed to Seller and used in connection with the operation of the Hotel to
the extent transferable: (i) trademarks, trade names, service marks or other intellectual property
rights, including those set forth in Schedule 2.1.12; (ii) direct telephone numbers for the
Hotel and (iii) all goodwill in connection with the ownership, operation and maintenance of the
Hotel, but excluding any trademark, servicemark or logo relating to the Starwood Proprietary Marks
(the “Intellectual Property”);

          2.1.13 Books and Records. All books and records located at the Hotel which relate
exclusively to the Hotel or the Business, but expressly excluding all documents and other materials
which (i) are legally privileged or constitute attorney work product, (ii) are subject to an
Applicable Law prohibiting their disclosure or a confidentiality agreement between Seller or
Manager and Persons other than their respective Affiliates or any Starwood Entities prohibiting
their disclosure, or (iii) constitute confidential internal assessments, reports, studies,
memoranda, notes or other correspondence prepared by, for or on behalf of any officer or employee
of any Starwood Entity, including all (A) internal financial analyses, appraisals, tax returns,
financial statements, (B) corporate or other entity governance records, (C) Employee personnel
files, (D) any work papers, memoranda, analysis, correspondence and similar documents and materials
prepared by or for any Starwood Entity in connection with the transaction described in this
Agreement (the “Books and Records”);

          2.1.14 Plans and Specifications. All plans and specifications, blueprints,
architectural plans, engineering diagrams and similar items located at the Hotel or in Seller’s
possession which relate exclusively to the Hotel, to the extent the same are assignable or
transferable (the “Plans and Specifications”);

          2.1.15 Warranties. All warranties and guaranties held by, for or on behalf of Seller
with respect to any Improvements or Personal Property, to the extent the same are transferable (the
“Warranties”);

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          2.1.16 Bookings. All bookings and reservations for guest, conference and banquet rooms
or other facilities at the Hotel (the “Bookings”) as of the Closing, together with all
deposits with respect thereto;

          2.1.17 Accounts Receivable. All Accounts Receivable (including the Guest Ledger) as
set forth in Section 11.3; and

          2.1.18 Vehicles. All vehicles owned or leased by Seller which serve the Hotel, as set
forth on Schedule 2.1.18.

          2.1.19 Management Agreement. The Management Agreement.

          2.1.20 Union Contract. That certain Collective Bargaining Agreement, by and between
Westin O’Hare Lodging Corporation and International Union of Operating Engineers of Chicago,
Illinois and Vicinity Local No. 399, dated as of July 1, 2003 (the “Union Contract”).

For purposes of this Section 2.1, the IT Systems, the Tenant Leases and the security deposits
thereunder, the Equipment Leases and deposits thereunder, the Operating Agreements and deposits
thereunder, the Warranties, the Plans and Specifications, and the Licenses and Permits where the
terms “assignable” or “transferable” mean such items under which assignment or transfer is
permitted without the consent or approval of any Person other than Seller or any of its Affiliates.
Purchaser, at its cost and expense (subject to the proviso below), shall be responsible for
obtaining, to the extent required for the continuation of the Business, the transfer or replacement
of all IT Systems, the Equipment Leases and deposits thereunder, the Operating Agreements and
deposits thereunder.

     2.2 Excluded Property. Notwithstanding anything to the contrary in Section 2.1, the
property, assets, rights and interests set forth in this Section 2.2 (the “Excluded
Property”) shall not be transferred, assigned or conveyed to Purchaser, and shall not be
included in the definition of Property:

          2.2.1 Cash. Except for deposits expressly included in Section 2.1, all cash on hand or
on deposit in any house bank, operating account or other account or reserve maintained in
connection with the Business (and Seller shall receive a credit on the Closing Statement for any
such reserves (including any capital reserves and/or replacement reserves required under the
Management Agreement) that are not refunded to the Seller prior to or at Closing);

          2.2.2 Starwood Proprietary Property. All (i) trademarks, trade names, service marks,
symbols, logos and other intellectual property rights held by Seller or any Starwood Entity, except
as set forth in Schedule 2.1.12 (the “Starwood Proprietary Marks”); (ii) signs and
other fixtures and personal property at the Hotel which bear any of the Starwood Proprietary Marks;
(iii) Starwood Entity internal management, operational, employee and similar manuals, handbooks and
publications; and (iv) Starwood Entity centralized systems and programs used in connection with the
Business, including the (A) sales and marketing, (B) Starwood Preferred Guest program, and (C)
purchasing, systems and programs. Notwithstanding the foregoing, it is contemplated that certain
of the items listed in subsections (i) through (iv) above may continue to be used in the Business
at the Hotel pursuant to and subject to the terms of the Management Agreement, but Seller shall in
no event have any obligation with respect thereto nor shall the continued use of such items be a
condition to Purchaser’s obligations under this Agreement;

          2.2.3 National/Regional Operating Agreements. All Operating Agreements pursuant to
which goods, services, licenses or other items are provided to other hotels which are owned, leased
or operated by any Starwood Entity, in addition to the Hotel (the “National/Regional Operating
Agreements”), which shall be terminated by Seller at Closing with respect to the Hotel at
Seller’s cost and

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expense. Notwithstanding the foregoing, it is contemplated that certain of the
National/Regional Operating Agreements may continue to be used in the Business at the Hotel
pursuant to and subject to the terms of the Management Agreement;

          2.2.4 Third-Party Property. Any fixtures, personal property owned by (i) the lessor
under any Equipment Leases, (ii) the supplier, vendor, licensor or other party under any Operating
Agreements, National/Regional Operating Agreements or Licenses and Permits, (iii) the tenant under
any Tenant Leases, (iv) the Manager to the extent set forth on Schedule 2.2.4, (v) any
Employees, or (vi) any guests or customers of the Hotel;

          2.2.5 Excluded IT Systems. The IT Systems set forth in Schedule 2.2.5 (the
“Excluded IT Systems”). Notwithstanding the foregoing, it is contemplated that certain of
the Excluded IT Systems may continue to be used in the Business at the Hotel pursuant to and
subject to the terms and provisions of the Management Agreement;

          2.2.6 Excluded F&B. Any alcoholic beverages to the extent the sale or transfer of the
same as contemplated in this Agreement is not permitted under Applicable Law (the “Excluded
F&B”).

          2.2.7 Employment Contracts. Any employment contracts between Employer and Employees.

     2.3 Assumed Liabilities. At Closing, Purchaser shall assume all Liabilities arising
from, relating to or in connection with the Property or the Hotel, including all Liabilities with
respect to the condition of the Property, first arising on or after the Closing, subject to
Seller’s express representations and warranties in Section 7.1, including any such Liabilities
relating to the design, construction, engineering, maintenance and repair or environmental
condition of the Property arising on or after the Closing, but expressly excluding the Retained
Liabilities (the “Assumed Liabilities”).

     2.4 Retained Liabilities. At Closing, Seller shall retain all Liabilities for (i) the
payment of any amounts due and payable or accrued but not yet due or payable prior to the Closing
Date under the Tenant Leases, the Management Agreement (with the agreement that any amounts payable
under the Union Contract by virtue of the Management Agreement shall be covered by clause (ii)
below), Contracts and Licenses and Permits, except to the extent Purchaser has received a credit
for and in the amount of such Liabilities under Section 11.2, (ii) the payment of any amounts due
and payable (meaning then due and payable under the terms of the Union Contract but excluding any
payment or contribution for any actual or alleged “unfunded liability” under the Union Contract
with respect to a multi-employer pension plan (including any withdrawal liability assessed with
respect to any multi-employer pension plan to which contributions are made pursuant to the Union
Contract)) prior to the Closing Date under the Union Contract, except to the extent Purchaser has
received a credit for and in the amount of such Liabilities under Section 11.2, (iii) the payment
of all Taxes due and payable or accrued but not yet due or payable prior to the Closing, except to
the extent Purchaser has received a credit for and in the amount of such Taxes under Section 11.2,
and (iv) all other Liabilities arising from, relating to or in connection with the Property or the
Hotel based on any event which occurred at the Hotel prior to the Closing Date, including the
litigation disclosed on Schedule 7.1.7 (the “Retained Liabilities”).

ARTICLE 3

PURCHASE PRICE

     3.1 Purchase Price. The purchase price for the Property is One Hundred Twenty Five
Million and no/100 Dollars ($125,000,000.00) (the “Purchase Price”), which shall be
adjusted at Closing

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for the Prorations pursuant to Section 11.2, the Accounts Receivable pursuant to Section 11.3,
and as otherwise expressly provided in this Agreement.

     3.2 Earnest Money.

          3.2.1 Deposit of Earnest Money. Purchaser shall on or before the Business Day
following the Effective Date deposit the amount of Five Million and no/100 Dollars ($5,000,000.00)
(the “First Deposit”) with Escrow Agent which is held in a strict joint order escrow as
earnest money pursuant to that certain Earnest Money Escrow Agreement, dated as of September 6,
2006, among Seller, Purchaser and Escrow Agent in the form of Exhibit A (the “Earnest
Money Escrow Agreement”). If Purchaser terminates this Agreement pursuant to the Due Diligence
Contingency in accordance with Article 4, the Earnest Money shall be refunded to Purchaser in
accordance with Section 3.2.4 and the Earnest Money Escrow Agreement. If Purchaser does not desire
to terminate this Agreement pursuant to the Due Diligence Contingency, then Purchaser shall be
obligated to deposit with Escrow Agent on the Business Day following the end of the Due Diligence
Period an additional Two Million and 00/100 ($2,000,000.00) (the “Second Deposit”) to be
held pursuant to the Earnest Money Escrow Agreement and the Earnest Money shall be non refundable
to Purchaser, except as otherwise expressly provided in this Agreement.

          3.2.2 Investment of Earnest Money. The Earnest Money shall be invested in accordance
with the Earnest Money Escrow Agreement.

          3.2.3 Disbursement of Earnest Money to Seller. At Closing, Purchaser and Seller shall
direct Escrow Agent to disburse the Earnest Money to Seller, and Purchaser shall receive a credit
against the Purchase Price in the amount of the Earnest Money so disbursed to Seller. If this
Agreement is terminated and Seller is entitled to the Earnest Money under an express provision of
this Agreement, then Purchaser and Seller shall provide a written direction to Escrow Agent to
disburse the Earnest Money to Seller no later than two (2) Business Days after such termination.

          3.2.4 Refund of Earnest Money to Purchaser. If this Agreement is terminated and
Purchaser is entitled to a refund of the Earnest Money under an express provision of this
Agreement, then Seller and Purchaser shall provide a written direction to Escrow Agent to disburse
the Earnest Money to Purchaser no later than two (2) Business Days after such termination.

     3.3 Payment of Purchase Price.

          3.3.1 Payment at Closing. At Closing, Purchaser shall pay to Escrow Agent for payment
to Seller by wire transfer of immediately available funds an amount equal to the Purchase Price (as
adjusted pursuant to Section 3.1), less the Earnest Money disbursed to Seller. Purchaser shall
cause the wire transfer of funds to be received by Seller no later than 1:00 p.m. (Eastern Time) on
the Closing Date. In the event that the Purchase Price (as adjusted pursuant to Section 3.1) is not
yet determined at 12:00 p.m. (Eastern Time), Purchaser shall wire transfer an amount that it
estimates in good faith to be the amount of the Purchase Price (as adjusted pursuant to Section
3.1) less the Earnest Money disbursed to Seller, and the Purchaser and Seller shall make the
requisite adjustments on the immediately following Business Day in order that the amount paid by
Purchaser to Seller equals the amount of the Purchase Price (as adjusted pursuant to Section 3.1)
agreed between the Purchaser and Seller.

          3.3.2 Method of Payment. All amounts to be paid by Purchaser to Seller pursuant to
this Agreement shall be paid by wire transfer of immediately available U.S. federal funds.

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     3.4 Allocation of Purchase Price. Purchaser hereby acknowledges that Seller will
allocate the Purchase Price among the Land, the Improvements and the Personal Property as set forth
in Schedule 3.4 for state and local transfer tax purposes, and that Seller’s allocation is
based on Seller’s best judgment as to the fair market value of the Land, the Improvements and the
Personal Property, respectively.

     3.5 Like-Kind Exchange. Notwithstanding anything to the contrary in this Agreement,
Seller acknowledges and agrees that Purchaser may wish to acquire the Property as a replacement
property in a transaction intended to qualify as a tax-free exchange under Section 1031 of the Code
(the “Tax-Free Exchange”). If Purchaser elects to effect a Tax-Free Exchange pursuant to
this Section 3.4, Purchaser shall provide written notice to Seller prior to Closing, in which case
Purchaser shall enter into an exchange agreement and other exchange documents with a “qualified
intermediary” (as defined in Treas. Reg. § 1.1031(k)-1(g)(4) of the Code) (the “Exchange
Party”), pursuant to which Purchaser shall assign all of its right, title and interest (but not
its liabilities or obligations) under this Agreement to the Exchange Party. Seller shall execute
and deliver such documents as may be required to complete the transactions contemplated by the
Tax-Free Exchange which are in form and substance reasonably acceptable to Seller, and otherwise
cooperate with Purchaser in all reasonable respects to effect the Tax-Free Exchange.
Notwithstanding the foregoing in this Section 3.4, the Tax-Free Exchange shall not diminish
Seller’s rights, nor increase Seller’s liabilities or obligations, under this Agreement or cause
any undue delay or any other adverse consequence to Seller as determined by Seller in its sole
discretion and Seller shall have no liabilities with respect to whether the Tax-Free Exchange
qualifies under Section 1031 of the Code or with respect to any other matter relating to the
Tax-Free Exchange. Purchaser shall pay for all fees, costs and expenses in connection with the
Tax-Free Exchange.

ARTICLE 4

DUE DILIGENCE

     4.1 Due Diligence Contingency. Purchaser shall have a period from the Effective Date
until 5:00 p.m. (Eastern Time) on September 20, 2006 or such shorter time period as may be set
forth in a written notice to Seller and Escrow Agent from Purchaser (the “Due Diligence
Period”), to perform its due diligence review of the Property and all matters related thereto
which Purchaser deems advisable, including any engineering, environmental, title, survey,
financial, operational and legal compliance matters relating to the Property. If Purchaser, in its
sole discretion, is not satisfied with the results of its due diligence review of the Property for
any reason, Purchaser shall have the right to terminate this Agreement by failing to deliver to the
Escrow Agent the Second Deposit by the time and in the manner required pursuant to Section 3.2.1,
time being of the essence with respect to such deposit (the “Due Diligence Contingency”).
If Purchaser terminates this Agreement pursuant to the Due Diligence Contingency in accordance with
this Section 4.1, then the Earnest Money shall be refunded to Purchaser in accordance with Section
3.2.4, and the Parties shall have no further rights or obligations under this Agreement, except
those which expressly survive such termination. If Purchaser does not terminate this Agreement
pursuant to the Due Diligence Contingency in accordance with this Section 4.1, Purchaser shall be
deemed to have waived its rights to terminate this Agreement pursuant to the Due Diligence
Contingency.

     4.2 Due Diligence Inspections. Purchaser shall have the right to perform such
examinations, tests, investigations and studies of the Property (the “Inspections”) as
Purchaser reasonably deems advisable, in accordance with this Section 4.2 prior to the end of the
Due Diligence Period (it being agreed that Inspections after the Due Diligence Period shall be
governed by the provisions of Section 8.12). Purchaser may conduct the Inspections with its legal,
accounting and other advisors, through each of their respective officers, employees, contractors,
consultants, agents or representatives (“Purchaser’s Inspectors”); provided, however, that
Purchaser shall cause the Purchaser’s Inspectors to comply with the provisions regarding
Confidential Information set forth in Section 8.1. Seller shall

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provide reasonable access to the Property for Purchaser’s Inspectors to perform the
Inspections; provided, however, that (i) Purchaser shall provide Seller with at least twenty four
(24) hours prior notice (which may be telephonic or by email) of each of the Inspections; (ii)
Purchaser’s Inspectors shall, if required by Seller, be accompanied by an employee, agent or
representative of Seller or Manager; (iii) Purchaser’s Inspectors shall use commercially reasonable
efforts to conduct the Inspections on a Business Day between 10:00 a.m. and 5:00 p.m. (local time)
unless otherwise approved by Seller; (iv) Purchaser’s Inspectors shall not perform any drilling,
coring or other invasive testing, without Seller’s prior written consent, which consent may be
withheld in Seller’s sole discretion prior to the end of the Due Diligence Period; (v) Purchaser’s
right to perform the Inspections shall be subject to the rights of tenants, guests and customers at
the Hotel; and (vi) the Inspections shall not unreasonably interfere with the Business, and
Purchaser’s Inspectors shall comply with Seller’s reasonable requests with respect to the
Inspections to minimize such interference.

     4.3 Seller’s Due Diligence Materials.

          4.3.1 Purchaser acknowledges its receipt of the due diligence materials set forth on
Schedule 4.3.1 and posted on the secure web site located at
www.mkhotels.com/forsale/yourlist.asp established by Broker on or prior to the date this Agreement
is executed by Purchaser (which may be prior to the Effective Date) (the “Data Room Web
Site”). Seller shall provide to Purchaser promptly upon request by Purchaser, or make
available to Purchaser at the Hotel for review and copying by Purchaser, such additional due
diligence materials in Seller’s Possession relating to the Property which are reasonably requested
by Purchaser, and Purchaser agrees to acknowledge in writing, upon Seller’s request, the receipt of
any due diligence documents or materials delivered to Purchaser. (All documents and materials
identified on Schedule 4.3.1, posted on the Data Room Web Site on or prior to the date this
Agreement is executed by Purchaser (which may be prior to the Effective Date) or otherwise provided
by Seller to Purchaser with receipt acknowledged by Purchaser, together with any copies or
reproductions of such documents or materials, or any summaries, abstracts, compilations or other
analyses made by or for Purchaser based on the information in such documents or materials, are
referred to collectively herein as the “Seller Due Diligence Materials”.)

          4.3.2 If this Agreement is terminated pursuant to the Due Diligence Contingency, Purchaser
promptly shall (a) return all original Seller Due Diligence Materials provided to Purchaser
(excluding any summaries, abstracts, compilations or other analyses made by or for Purchaser) that
are specifically requested by Seller, and destroy all other Seller Due Diligence Materials, (b)
cause all Persons to whom Purchaser has provided any Seller Due Diligence Materials to return any
original Seller Due Diligence Materials to Purchaser that are specifically requested by Seller, and
destroy all other Seller Due Diligence Materials, and (c) certify to Seller that all original
Seller Due Diligence Materials that are specifically requested by Seller have been returned to
Seller and all other Seller Due Diligence Materials have been destroyed.

     4.4 Purchaser’s Due Diligence Reports. Upon written request from Seller following any
termination of this Agreement pursuant to the Due Diligence Contingency, Purchaser shall, so long
as Seller has complied with its obligations under Section 3.2.4, provide a copy to Seller of all
third party environmental, engineering and appraisal reports prepared for or on behalf of Purchaser
in connection with the Inspections (the “Purchaser Due Diligence Reports”). If also
requested by Seller in writing, Purchaser shall use commercially reasonable efforts to obtain an
original of any such Purchaser Due Diligence Reports for Seller, together with a reliance letter in
favor of Seller from the Person who prepared such Purchaser Due Diligence Reports; provided,
however, that Seller shall pay for any fees, costs or expenses charged by such Person for such
original Purchaser Due Diligence Report and/or reliance letter.

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     4.5 Release and Indemnification. At Seller’s request, Purchaser shall, at its sole
cost and expense, repair any damage to the Property, the Excluded Property or any other property
owned by a Person other than Purchaser or Purchaser’s Inspectors to the extent such damage is
caused by the Inspections, Purchaser, or Purchaser’s Inspectors (but specifically excluding any
damages related solely to the discovery pursuant to the Inspections of any pre-existing condition
at the Hotel or any such third party property) and in connection with any such damage restore the
affected Property, the Excluded Property or third-party property to the same or better condition
than as existed prior to such Inspections, or replace any such damaged property with property of
the same or better quality. Purchaser (for itself and all Purchaser Indemnitees) hereby releases
the Seller Indemnitees for any Indemnification Loss incurred by any Purchaser Indemnitee caused by
the Inspections, except to the extent resulting from Seller’s gross negligence or willful
misconduct. Purchaser shall defend, indemnify and hold harmless the Seller Indemnitees in
accordance with Article 15 from and against any Indemnification Loss incurred by any Seller
Indemnitee arising from or in connection with the Inspections (but specifically excluding any
damages related solely to the discovery pursuant to the Inspections of any pre-existing condition
at the Hotel or any such third party property), except to the extent resulting from Seller’s gross
negligence or willful misconduct.

     4.6 Insurance. Purchaser has provided to Seller a certificate of insurance, in form
and substance satisfactory to Seller, evidencing that Purchaser maintains (i) commercial general
liability insurance in an amount no less than Five Million and no/100 Dollars ($5,000,000.00), with
an insurance company with a Best’s rating of no less than A/VIII, insuring Purchaser against its
indemnification obligations under Section 4.5, and naming Seller, Manager and such other Persons
designated by Seller as an additional insured thereunder, and (ii) worker’s compensation insurance
in amount, form and substance required under Applicable Law. Purchaser’s maintenance of such
insurance policies shall not release or limit Purchaser’s indemnification obligations under Section
4.5.

ARTICLE 5

TITLE TO THE PROPERTY

     5.1 Title Commitment. Purchaser has received as of the Effective Date a commitment
for an ALTA owner’s title insurance policy from Chicago Title Insurance Company for the Real
Property (dated July 28, 2006 (commitment no. 1401 008352408)) (the “Title Commitment”),
together with a copy of all documents referenced therein as obtained from the Title Company.

     5.2 Survey. Purchaser acknowledges its receipt of the Existing Survey. During the
Due Diligence Period, Purchaser shall have the right to obtain, at Purchaser’s costs and expense,
an updated survey of the Real Property (the “Survey”). Notwithstanding anything to the
contrary contained in this Agreement, Purchaser agrees to keep the Property and the Excluded
Property free from all liens from the Purchaser’s Inspectors or the surveyor and to indemnify
Seller in accordance with Section 4.5 and Article 15 in the event any such lien should be attached
against the Property or the Excluded Property from the Effective Date through the Closing.

     5.3 Exceptions to Title.

          5.3.1 Identification of Unpermitted Exceptions. (i) The rights and interests of
customers and guests at the Hotel to occupy rooms on a transient license basis, (ii) the rights of
tenants under the Tenant Leases, as tenants only, pursuant to the Tenant Leases set forth on
Schedule 7.1.12, or entered into after the date hereof in accordance with Section 8.2 of
this Agreement, (iii) all liens and encumbrances caused or created by any Purchaser Indemnitee,
(iv) any matter shown on the Existing Survey, (v) Title Exceptions set forth on Schedule
B-1 of the Title Commitment (other than any Required Removal Exceptions, including those
pertaining to the existing mortgage by Existing Lender) and (iv) any

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Title Exception or Survey Defects permitted pursuant to Sections 5.3.2 and 5.3.3 shall be
referred to collectively herein as the “Permitted Exceptions”. All Required Removal
Exceptions and Title Exceptions or Survey Defects not permitted pursuant to Sections 5.3.2 and
5.3.3, shall be referred to as “Unpermitted Exceptions”.

          5.3.2 Updated Title Commitment or Survey. If any update to the Title Commitment
discloses any liens, encumbrances or other exceptions to title not shown on the Title Commitment
(“Title Exceptions”) or any Survey discloses any encroachments on to or from adjoining
properties, encroachments on to easements from Improvements, set back line violations or other
survey defects not shown on the Existing Survey (“Survey Defects”), and (i) such Title
Exception or Survey Defect would have, upon Closing, a materially adverse effect on the Business or
the ownership of the Real Property, or on the value of the Business or the value or financeability
of the Real Property, and (ii) such Title Exception or Survey Defect was not caused or created by
any Purchaser Indemnitee or any Person acting on behalf of any Purchaser Indemnitee, then Purchaser
shall have the right to request that Seller remove or cure such Title Exception or Survey Defect at
or prior to Closing, by providing written notice to Seller not later than the later to occur of (A)
five (5) Business Days after receipt of the update or new title commitment or the Survey and (B)
the expiration of the Due Diligence Period (the “Title and Survey Objection Notice”). If
Purchaser timely provides a Title and Survey Objection Notice to Seller, Seller may elect, by
providing written notice (the “Title and Survey Election Notice”) to Purchaser within the
earlier of: (X) ten (10) Business Days after Seller’s receipt of such Title and Survey Objection
Notice, or (Y) three (3) Business Days prior to the Closing Date, (1) to accept such Title
Exception or Survey Defect as an additional Unpermitted Exception to be removed or cured at or
prior to Closing, or (2) not to remove or cure such Title Exception or Survey Defect; provided,
however, that if such Title Exception or Survey Defect is a Required Removal Exception (whether or
not set forth in a Title and Survey Objection Notice), then such Title Exception or Survey Defect
shall constitute an “Unpermitted Exception” and Seller shall remove or cure such Title Exception or
Survey Defect at or prior to Closing. Except with respect to any Required Removal Exception which
Seller shall be required to remove on or prior to Closing, if Seller does not provide a Title and
Survey Election Notice to Purchaser within such time period, then Seller shall be deemed to have
elected not to remove or cure such Title Exception or Survey Defect as an Unpermitted Exception
pursuant to clause (2) of the preceding sentence. If Seller elects or is deemed to have elected
not to remove or cure a Title Exception or Survey Defect, then Purchaser shall have the right to
elect, as its sole and exclusive right with respect thereto, by providing written notice to Seller
(the “Title and Survey Response Notice”) within the earlier of ten (10) Business Days after
Purchaser’s receipt of the Title and Survey Election Notice or the Closing Date to (I) terminate
this Agreement, in which case the Earnest Money shall be refunded to Purchaser in accordance with
Section 3.2.4, and the Parties shall have no further rights or obligations under this
Agreement, except those which expressly survive such termination, or (II) proceed to Closing
pursuant to this Agreement and accept title to the Real Property subject to such Title Exception or
Survey Defect which thereafter shall be deemed to constitute a Permitted Exception, without any
credit against the Purchase Price for such Title Exception or Survey Defect. If Purchaser does not
provide a Title and Survey Response Notice to Seller within such time period, Purchaser shall be
deemed to have elected to proceed to Closing pursuant to clause (II) of the preceding sentence.

          5.3.3 Removal of Unpermitted Exceptions. Seller shall have no obligation to cure any
Title Exceptions or Survey Defects other than the Unpermitted Exceptions. Seller may, at its
option, cure any Unpermitted Exception by (i) causing such Unpermitted Exception to be removed from
the Title Policy, prior to Closing or (ii) causing the Title Company to commit to remove or insure
over such Unpermitted Exception at any time prior to or at Closing, in each case with no right of
the Title Company to seek recourse to Purchaser or the Property, in which case the same shall be
deemed to constitute a Permitted Exception, without any credit against the Purchase Price for such
Title Exception or Survey Defect. Seller shall pay and discharge all Required Removal Exceptions
on or before Closing. If the

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Title Company does not agree to remove or insure over any Unpermitted Exception, but another
nationally recognized title insurance company reasonably acceptable to Purchaser is willing to
issue the Title Policy without such Unpermitted Exception and at the same premium cost as has been
quoted by the Title Company, then Seller shall have the right to obtain, and Purchaser shall
accept, a title policy from such other title insurance company which otherwise shall satisfy the
requirements set forth in this Agreement, in which case the term “Title Company” shall be deemed to
refer to such other title insurance company for all purposes in this Agreement.

          5.3.4 Extension of Closing Date. If Seller determines that it will be unable to
remove or cure any Unpermitted Exception prior to Closing, Seller shall have the right, but not the
obligation, to postpone the Closing one time for up to sixty (60) days by providing written notice
to Purchaser no later than three (3) Business Days prior to the then Scheduled Closing Date;
provided, however, that any such postponement that exceeds ten (10) days in the aggregate shall be
conditioned upon Seller’s agreement (which shall be subject to disclosure by Purchaser of the
amount of all costs) to reimburse Purchaser for any out-of-pocket cost payable by Purchaser to
Purchaser’s Lender to extend any loan commitment including the cost of any rate lock or spread lock
extension.

     5.4 Title Policy. At Closing, Purchaser may cause the Title Company to issue an
owner’s title insurance policy to Purchaser (which may be in the form of a mark up of the Title
Commitment) showing the Real Property vested in Purchaser as of the Closing Date, in the amount of
the Purchase Price, in the form of the Title Commitment, subject to the Permitted Exceptions, with
an extended coverage endorsement over the general title exceptions (the “Title Policy”).

ARTICLE 6

CONDITION OF THE PROPERTY

     6.1 PROPERTY SOLD “AS IS”. PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY SELLER DOCUMENT, (A) THE PURCHASE OF THE
PROPERTY SHALL BE ON AN “AS IS”, “WHERE IS”, “WITH ALL FAULTS” BASIS, AND (B) EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT OR ANY SELLER DOCUMENT, SELLER HAS NO OBLIGATION TO REPAIR ANY DAMAGE
TO OR DEFECT IN THE PROPERTY, REPLACE ANY OF THE PROPERTY OR OTHERWISE REMEDY ANY MATTER AFFECTING
THE CONDITION OF THE PROPERTY.

     6.2 LIMITATION ON REPRESENTATIONS AND WARRANTIES. PURCHASER ACKNOWLEDGES AND AGREES
THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, ANY SELLER DOCUMENT OR, IN THE
CASE OF MANAGER, ANY MANAGEMENT AGREEMENT ESTOPPEL, NEITHER SELLER, ANY STARWOOD ENTITY, MANAGER,
OR ANY OF THEIR AFFILIATES, NOR ANY OF THEIR RESPECTIVE SHAREHOLDERS, MEMBERS, PARTNERS, TRUSTEES,
BENEFICIARIES, DIRECTORS, OFFICERS, MANAGERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS, CONTRACTORS,
CONSULTANTS, AGENTS OR REPRESENTATIVES, NOR ANY PERSON PURPORTING TO REPRESENT ANY OF THE
FOREGOING, HAVE MADE ANY REPRESENTATION, WARRANTY, GUARANTY, PROMISE, PROJECTION OR PREDICTION
WHATSOEVER WITH RESPECT TO THE PROPERTY OR THE BUSINESS, WRITTEN OR ORAL, EXPRESS OR IMPLIED,
ARISING BY OPERATION OF LAW OR OTHERWISE, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, OR ANY REPRESENTATION OR WARRANTY AS TO (A) THE CONDITION, SAFETY, QUANTITY,
QUALITY, USE, OCCUPANCY OR OPERATION OF THE PROPERTY, (B) THE PAST, PRESENT OR FUTURE REVENUES OR
EXPENSES WITH RESPECT TO THE PROPERTY OR THE BUSINESS, (C) THE COMPLIANCE OF THE PROPERTY OR THE
BUSINESS WITH ANY

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ZONING REQUIREMENTS, BUILDING CODES OR OTHER APPLICABLE LAW, INCLUDING THE AMERICANS WITH
DISABILITIES ACT OF 1990, (D) THE ACCURACY OF ANY ENVIRONMENTAL REPORTS OR OTHER DATA OR
INFORMATION SET FORTH IN THE SELLER DUE DILIGENCE MATERIALS PROVIDED TO PURCHASER WHICH WERE
PREPARED FOR OR ON BEHALF OF SELLER, OR (E) ANY OTHER MATTER RELATING TO SELLER, THE PROPERTY OR
THE BUSINESS.

     6.3 RELIANCE ON DUE DILIGENCE. PURCHASER ACKNOWLEDGES AND AGREES THAT:

          6.3.1 PURCHASER SHALL HAVE HAD THE OPPORTUNITY TO CONDUCT ALL DUE DILIGENCE INSPECTIONS OF THE
PROPERTY AND THE BUSINESS AS OF THE EXPIRATION OF THE DUE DILIGENCE PERIOD, INCLUDING REVIEWING ALL
SELLER DUE DILIGENCE MATERIALS AND OBTAINING ALL INFORMATION WHICH IT DEEMS NECESSARY TO MAKE AN
INFORMED DECISION AS TO WHETHER IT SHOULD PROCEED WITH THE PURCHASE OF THE PROPERTY AND THE
BUSINESS;

          6.3.2 PURCHASER SHALL BE DEEMED TO BE SATISFIED WITH THE RESULTS OF ITS DUE DILIGENCE REVIEW
OF THE PROPERTY AND THE BUSINESS, IF PURCHASER DOES NOT TERMINATE THIS AGREEMENT UPON THE
EXPIRATION OF THE DUE DILIGENCE PERIOD;

          6.3.3 PURCHASER WILL BE RELYING ONLY ON ITS DUE DILIGENCE INSPECTIONS OF THE PROPERTY AND THE
COVENANTS, REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE BY SELLER IN THIS AGREEMENT OR ANY SELLER
DOCUMENT OR, IN THE CASE OF MANAGER, ANY MANAGEMENT AGREEMENT ESTOPPEL, IN PURCHASING THE
PROPERTY;

          6.3.4 PURCHASER WILL NOT BE RELYING ON ANY STATEMENT MADE OR INFORMATION PROVIDED TO PURCHASER
BY SELLER, MANAGER, ANY STARWOOD ENTITY (EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY
MADE BY SELLER IN THIS AGREEMENT, ANY SELLER DOCUMENT OR, IN THE CASE OF MANAGER, ANY MANAGEMENT
AGREEMENT ESTOPPEL), OR ANY OF THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE SHAREHOLDERS, MEMBERS,
PARTNERS, TRUSTEES, BENEFICIARIES, DIRECTORS, MANAGERS, OFFICERS, EMPLOYEES, ATTORNEYS,
ACCOUNTANTS, CONTRACTORS, CONSULTANTS, AGENTS OR REPRESENTATIVES, OR ANY PERSON PURPORTING TO
REPRESENT ANY OF THE FOREGOING; AND

          6.3.5 EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT OR ANY SELLER DOCUMENT, (I) SELLER
MAKES NO REPRESENTATION OR WARRANTY AS TO THE TRUTH, ACCURACY OR COMPLETENESS OF THE SELLER DUE
DILIGENCE MATERIALS, (II) PURCHASER ACKNOWLEDGES AND AGREES THAT THE SELLER DUE DILIGENCE MATERIALS
ARE PROVIDED TO PURCHASER AS A CONVENIENCE ONLY AND THAT ANY RELIANCE ON OR USE OF THE SELLER DUE
DILIGENCE MATERIALS SHALL BE AT THE SOLE RISK OF PURCHASER, AND (III) NEITHER SELLER NOR ANY
RESPECTIVE AFFILIATE THEREOF, NOR THE PERSON OR ENTITY WHICH PREPARED ANY OF THE SELLER DUE
DILIGENCE MATERIALS DELIVERED OR MADE TO PURCHASER SHALL HAVE ANY LIABILITY TO PURCHASER FOR ANY
INACCURACY IN OR OMISSION FROM ANY SUCH SELLER DUE DILIGENCE MATERIALS.

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     6.4 RELEASE AND WAIVER OF SELLER FOR ENVIRONMENTAL LIABILITIES AND VIOLATIONS OF
APPLICABLE LAW. NOTWITHSTANDING ANY INDEMNIFICATION OBLIGATION OF SELLER UNDER THIS AGREEMENT,
PURCHASER (FOR ITSELF AND ALL PURCHASER INDEMNITEES) DOES HEREBY FOREVER WAIVE, RELEASE AND
DISCHARGE THE SELLER INDEMNITEES FROM ANY AND ALL ENVIRONMENTAL CLAIMS, ENVIRONMENTAL LIABILITIES,
AND ALL VIOLATIONS OF APPLICABLE LAW (INCLUDING VIOLATIONS OF THE AMERICANS WITH DISABILITIES ACT
OF 1990) THE PURCHASER INDEMNITEES MAY HAVE AGAINST THE SELLER INDEMNITEES, WHETHER NOW KNOWN OR
UNKNOWN TO PURCHASER; PROVIDED, HOWEVER, THAT SUCH WAIVER, RELEASE AND DISCHARGE SHALL NOT APPLY TO
ANY INDEMNIFICATION OBLIGATION OF SELLER TO THE EXTENT RESULTING FROM A BREACH OF SELLER’S
REPRESENTATION OR WARRANTY SET FORTH IN SECTION 7.1.6 AND SECTION 7.1.10.

ARTICLE 7

REPRESENTATIONS AND WARRANTIES

     7.1 Seller’s Representations and Warranties. To induce Purchaser to enter into this
Agreement and to consummate the transaction described in this Agreement, Seller hereby makes the
express representations and warranties in this Section 7.1, upon which Seller acknowledges and
agrees that Purchaser is entitled to rely.

          7.1.1 Organization and Power. Seller is duly formed, validly existing, and in good
standing in the State of Delaware, and in good standing in the State of Illinois. Seller has all
requisite power and authority to own the Property, and conduct the Business as currently owned and
conducted.

          7.1.2 Authority and Binding Obligation. (i) Seller has full power and authority to
execute and deliver this Agreement and all other documents to be executed and delivered by either
of them pursuant to this Agreement (the “Seller Documents”), and to perform all obligations
of Seller under each of the Seller Documents, (ii) the execution and delivery by the signer on
behalf of Seller of each of the Seller Documents, and the performance by Seller, as applicable, of
its obligations under each of the Seller Documents, has been, or will be when executed and
delivered, duly and validly authorized by all necessary action, (iii) each of the Seller Documents,
when executed and delivered, will constitute the legal, valid and binding obligations of Seller,
enforceable in accordance with its respective terms, subject to bankruptcy, insolvency and other
laws affecting creditor’s rights or equity principals generally, and (iv) Seller has full power and
authority to execute such documents and/or do such things as may be required to perform all of
Seller’s obligations under this Agreement.

          7.1.3 Consents and Approvals; No Conflicts. Subject to the recordation of any Seller
Documents as appropriate, and except as disclosed in Schedule 7.1.3, (i) no filing with,
and no permit, authorization, consent or approval of, any Governmental Authority or other Person is
necessary for execution or delivery by Seller of any of the Seller Documents, or the performance by
Seller of any of its obligations under any of the Seller Documents, except to the extent the
failure to obtain such permit, authorization, consent or approval would not have a material adverse
effect on the ownership or operation of the Business, and (ii) neither the execution and delivery
by Seller of any of the Seller Documents, nor the performance by Seller of any of its obligations
under any of the Seller Documents will: (A) violate any provision of Seller’s organizational or
governing documents; (B) violate any Applicable Law to which Seller is subject; (C) result in a
violation or breach of, or constitute a default under any of the Material Contracts, or (D) result
in the creation or imposition of any lien or encumbrance on the Property or any portion thereof.

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          7.1.4 Title to Personal Property. Except as set forth in Schedule 7.1.4,
Seller has not pledged, assigned, hypothecated or transferred any of its right, title or interest
in any Personal Property. Seller has good and valid title to all tangible Personal Property, which
shall be free and clear of all liens and encumbrances as of the Closing.

          7.1.5 Condemnation. Seller has not received any written notice of any pending
condemnation proceeding or other proceeding in eminent domain, and to Seller’s Knowledge, no such
condemnation proceeding or eminent domain proceeding is threatened against the Property or any
portion thereof.

          7.1.6 Compliance with Applicable Law. Except as set forth in Schedule 7.1.6,
Seller has not received any written notice from any Governmental Authority or the Manager informing
it of a violation of any Applicable Law with respect to the Property which has not been cured or
dismissed.

          7.1.7 Litigation. Except as set forth in Schedule 7.1.7, Seller has not (i)
been served with any court filing or received any written notice in any pending or threatened
litigation with respect to the Property or the Business in which Seller is named a party which has
not been resolved, settled or dismissed, or (ii) received written notice of any claim, charge or
complaint from any Governmental Authority or the Manager or other Person pursuant to any
administrative, arbitration or similar adjudicatory proceeding with respect to the Property or the
Business to which Seller is a named party which has not been resolved, settled or dismissed.

          7.1.8 Employees.

                  (a) Union Contracts. Except for the Union Contract, Seller is not a party to any
collective bargaining agreement with any labor union with respect to the Employees.

                  (b) Employment Agreements. Seller is not a party to any individual employment or
compensation agreements with any of the Employees, and Seller has no Employees.

          7.1.9 Taxes. (i) all Taxes which are currently due and payable will be paid in full or
prorated at Closing as part of the Prorations pursuant to Section 11.2; provided, however, that if
any Taxes are payable in installments, such representation and warranty shall apply only to such
installments which are currently due and payable at Closing, (ii) Seller has not received any
written notice for an audit of any Taxes which has not been resolved or completed, and (iii) Seller
is not currently contesting any Taxes.

          7.1.10 Environmental Matters. To Seller’s Knowledge, Schedule 7.1.10 sets
forth a correct and complete list of all environmental assessments, reports and studies relating to
the Property in Seller’s Possession (the “Environmental Reports”), and Seller has made
available to Purchaser a true and complete copy of the Environmental Reports. Seller has not
received any written notice from any Governmental Authority or the Manager or any other Person of
any Environmental Claims, Environmental Liabilities or violation of any Environmental Laws with
respect to the Property.

          7.1.11 Licenses and Permits. Except as set forth in Schedule 7.1.11, Seller
has received no written notice from any Governmental Authority or the Manager of (i) any violation,
suspension, revocation or non renewal of any Licenses and Permits that has not been cured or
dismissed, or (ii) any failure by Seller to obtain any Licenses and Permits that has not been cured
or dismissed.

          7.1.12 Tenant Leases. Schedule 7.1.12 sets forth a correct and complete list
of the Tenant Leases, and Seller has made available to Purchaser a true and complete copy of the
Tenant Leases.

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Except as set forth in Schedule 7.1.12, Seller has neither given nor received any
written notice of any breach or default under any of the Tenant Leases which has not been cured,
and to Seller’s Knowledge, there are no material defaults under the Tenant Leases by any of the
parties thereto which have not been cured, (ii) to Seller’s Knowledge, fixed rent and additional
rent are currently being collected under such Tenant Leases without offset, counterclaim or
deduction, (iii) all work required to be performed by Seller pursuant to the Tenant Leases has been
performed in full, (iv) Schedule 7.1.12 sets forth a true and complete list of security
deposits currently held by Seller with respect to the Tenant Leases, and (v) except as set forth on
Schedule 7.1.12, there are no brokerage commissions or finders fees payable by Seller with
respect to any current or renewal term of the Tenant Leases or the negotiation of any new Tenant
Lease.

          7.1.13 Material Contracts. Schedule 7.1.13 sets forth a correct and complete
list of the Material Contracts, and Seller has made available to Purchaser a true and complete copy
of the Material Contracts. Except as set forth on Schedule 7.1.13, Seller has neither given
nor received any written notice of any breach or default under any of the Material Contracts which
has not been cured, and to Seller’s Knowledge, there are no material defaults under any of the
Material Contracts by any of the parties thereto which have not been cured.

          7.1.14 Management Agreements. Except for the Management Agreement or as otherwise
disclosed in this Agreement, Seller is not a party to any management, franchise, license,
concession or other agreements with respect to the management of the Hotel.

          7.1.15 ERISA. Seller is not a Plan, and the Property and Business do not constitute a
Plan under the Department of Labor Regulations codified at Section 2510.3-101, subject to Title I
of ERISA or Section 4975 of the Code.

          7.1.16 Finders and Investment Brokers. Except for the Broker, Seller has not dealt
with any Person who has acted, directly or indirectly, as a broker, finder, financial adviser or in
such other similar capacity for or on behalf of Seller in connection with the transaction described
by this Agreement in a manner which would entitle such Person to any fee or commission in
connection with this Agreement or the transaction described in this Agreement.

          7.1.17 Foreign Person. Seller is a “United States person” (as defined in Section
7701(a)(30)(B) or (C) of the Code) for the purposes of the provisions of Section 1445(a) of the
Code.

          7.1.18 Bankruptcy. No insolvency proceeding of any character (including bankruptcy,
receivership, reorganization, composition or arrangement with creditors (including any assignment
for the benefit of creditors)), whether voluntary or involuntary, relating to Seller is pending, or
to Seller’s Knowledge is being threatened against Seller by any Person.

          7.1.19 Financial Information. Attached as Schedule 7.1.21 are the audited
financial statements for the Hotel received from the Manager for the year ended December 31, 2005
and unaudited financial statements for the Hotel received from the Manager for the six months ended
June 30, 2006 and for the month ended July 31, 2006. To Seller’s knowledge, these financial
statements present fairly, in all material respects, the results of operations for the Hotel for
the period covered by such statements, subject to standard year-end adjustments for any
year-to-date statements.

     Notwithstanding anything contained in this Agreement to the contrary, if Purchaser has
Knowledge of a breach of any representation or warranty made by Seller in this Agreement prior to
Closing, and Purchaser nevertheless proceeds to close the transaction described in this Agreement,
such

24

 

representation or warranty by Seller shall be deemed to be qualified or modified to reflect
Purchaser’s Knowledge of such breach.

     7.2 Purchaser’s Representations and Warranties. To induce Seller to enter into this
Agreement and to consummate the transaction described in this Agreement, Purchaser hereby makes the
representations and warranties in this Section 7.2, upon which Purchaser acknowledges and agrees
that Seller is entitled to rely.

          7.2.1 Organization and Power. Purchaser is duly formed, validly existing and in good
standing under the laws of the State of Delaware, is (or will be prior to Closing) qualified to do
business in the State of Illinois, and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as currently being conducted.

          7.2.2 Authority and Binding Obligation. (i) Purchaser has full power and authority to
execute and deliver this Agreement and all other documents to be executed and delivered by
Purchaser pursuant to this Agreement (the “Purchaser Documents”), and to perform all
obligations of Purchaser arising under each of the Purchaser Documents, (ii) the execution and
delivery by the signer on behalf of Purchaser of each of the Purchaser Documents, and the
performance by Purchaser of its obligations under each of the Purchaser Documents, has been, or
will be when executed and delivered, duly and validly authorized by all necessary action by
Purchaser, and (iii) each of the Purchaser Documents, when executed and delivered, will constitute
the legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance
with its terms, subject to bankruptcy, insolvency and other laws affecting creditor’s rights or
equity principals generally.

          7.2.3 Consents and Approvals; No Conflicts. (i) No filing with, and no permit,
authorization, consent or approval of, any Governmental Authority or other Person is necessary for
the execution or delivery by Purchaser of any of the Purchaser Documents, the performance by
Purchaser of any of its obligations under any of the Purchaser Documents, or the consummation by
Purchaser of the transaction described in this Agreement, and (ii) neither the execution and
delivery by Purchaser of any of the Purchaser Documents, nor the performance by Purchaser of any of
its obligations under any of the Purchaser Documents, nor the consummation by Purchaser of the
transaction described in this Agreement, will: (A) violate any provision of the organizational or
governing documents of Purchaser; (B) violate any Applicable Law to which Purchaser is subject
(including any rules or regulations of the United States Treasury’s Office, Office of Foreign
Assets Control); or (C) result in a violation or breach of or constitute a default under any
contract, agreement or other instrument or obligation to which Purchaser is a party or by which any
of Purchaser’s properties are subject.

          7.2.4 Finders and Investment Brokers. Except for Broker, Purchaser has not dealt with
any Person who has acted, directly or indirectly, as a broker, finder, financial adviser or in such
other capacity for or on behalf of Purchaser in connection with the transaction described by this
Agreement in any manner which would entitle such Person to any fee or commission in connection with
this Agreement or the transaction described in this Agreement.

          7.2.5 ERISA. The funds to be used by Purchaser with respect to the transactions
contemplated by this Agreement do not constitute the assets of a Plan under Department of Labor
Regulation Section 2510.3-101, subject to Title I of ERISA or Section 4975 of the Code.

          7.2.6 No Violation of Anti-Terrorism Laws. None of Purchaser’s property or interests
is subject to being “blocked” under any Anti-Terrorism Laws, and neither Purchaser nor to
Purchaser’s Knowledge any Person holding any direct or indirect interest in Purchaser is in
violation of any Anti-Terrorism Laws.

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     Notwithstanding the foregoing, if Seller has Knowledge prior to Closing of a breach of any
representation or warranty made by Purchaser in this Agreement and Seller nevertheless elects to
close this transaction, such representation or warranty by Purchaser with respect to such matter
shall be deemed to be modified to reflect such Knowledge.

ARTICLE 8

COVENANTS

     8.1 Confidentiality.

          8.1.1 Disclosure of Confidential Information. Seller and Purchaser shall keep
confidential and not make any public announcement or disclose to any Person the existence or any
terms of this Agreement or any information disclosed by the Inspections or in the Seller Due
Diligence Materials, the Purchaser Due Diligence Reports or any other documents, materials, data or
other information with respect to the Property or the Business which is not generally known to the
public (other than a disclosure arising from a breach or default of the confidentiality provisions
of this Agreement) (the “Confidential Information”). Notwithstanding the foregoing, Seller
and Purchaser shall be permitted to (i) disclose any Confidential Information required under
Applicable Law, or (ii) disclose any Confidential Information to any Person on a “need to know”
basis, such as their respective shareholders, principals, partners, members, trustees,
beneficiaries, directors, officers, employees, attorneys, consultants, advisors, agents,
representatives, engineers, surveyors, lenders, investors, managers, franchisers and such other
Persons whose assistance is required to consummate the transactions described in this Agreement;
provided, however, that Purchaser (A) in the case of clause (i) shall advise Seller immediately
upon receiving any demand for disclosure of any Confidential Information pursuant to Applicable
Law, and Seller shall have the right to obtain a protective order or agree to an arrangement with
the Person demanding such Confidential Information to prevent or limit the extent of such
disclosure prior to Purchaser’s disclosure of such Confidential Information (unless on the advice
of counsel such information is required to be disclosed by Purchaser prior to obtaining such
protective order or agreement), and (B) in the case of clause (ii) shall advise such Person of the
confidential nature of such Confidential Information, and cause such Person to maintain the
confidentiality of such Confidential Information.

          8.1.2 Public Announcements. Seller and Purchaser shall each have the right to make
public announcements regarding the transaction described in this Agreement, provided that the other
Party shall reasonably approve the form and substance of any such public announcement. Further,
each Party and its Affiliates will not require the other Party’s prior approval (a) to make any
disclosure or filing required by Applicable Law, (b) to make any disclosure required to perform its
obligations under this Agreement, or (c) to make any disclosure it deems necessary or appropriate
in order to obtain the Manager’s approval to the sale under the Management Agreement to the sale
contemplated by this Agreement.

          8.1.3 Communication with Governmental Authorities. Without limiting the generality of
the provisions in Section 8.1, Purchaser shall not, through its officers, employees, managers,
contractors, consultants, agents, representatives or any other Person (including Purchaser’s
Inspectors), directly or indirectly, communicate with any Governmental Authority or any official,
employee or representative thereof, involving any matter with respect to the Property or the
Business prior to the expiration of the Due Diligence Period, except as contemplated in Section 8.3
hereof or except with respect to a zoning letter or PZR report. Notwithstanding the foregoing,
without Seller’s consent, Purchaser may communicate on a “no names basis” with any applicable state
or federal (but not municipal or local) governmental authority regarding the processes and costs
associated with transferring the Licenses and Permits or the Property.

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          8.1.4 Communication with Employees. Without limiting the generality of the provisions
in Section 8.1.1, Purchaser shall not, through its officers, employees, managers, contractors,
consultants, agents, representatives or any other Person (including Purchaser’s Inspectors),
directly or indirectly, communicate with any Employees or any Person representing any Employees
involving any matter with respect to the Property, the Business, the Employees or this Agreement,
without Seller’s prior written consent, which consent may be withheld in Seller’s reasonable
discretion, unless such communication is arranged by Seller. If Purchaser knowingly breaches its
covenants in this Section 8.1.4, then (without limiting Seller’s other rights and remedies by
reason thereof), Seller shall have the right to terminate this Agreement in accordance with Section
13.1. Notwithstanding the foregoing, Purchaser may upon advance notice to Seller communicate with
the Manager (accompanied by telephone or in person by a representative of Seller if required by
Seller) for the purpose of negotiating a management agreement amendment, estoppel and/or assignment
and assumption agreement.

     8.2 Conduct of the Business.

          8.2.1 Operation in Ordinary Course of Business. From the Effective date until the
Closing or earlier termination of this Agreement, Seller shall direct the Manager to, and shall
itself (to the extent it has approval rights or other rights to direct or approve the actions of
the Manager), conduct the Business in the Ordinary Course of Business, including (i) maintaining
the inventories of FF&E, Supplies, F&B and Retail Merchandise at levels maintained in the Ordinary
Course of Business, (ii) performing maintenance and repairs for the Real Property and tangible
Personal Property in the Ordinary Course of Business; (iii) maintaining insurance coverages
consistent at such point in time in accordance with Starwood’s risk management policies for its
managed hotels substantially similar to the Hotel and consistent with the Hotel’s location; and
(iv) renewing of Licenses and Permits. Seller agrees to provide Purchaser with copies of all
material written notices received by Seller or the Manager relating to the ownership or operation
of the Hotel, including those received by Seller under the Management Agreement. Seller agrees to
provide Purchaser with monthly reports relating to the ownership and operation of the Hotel to the
extent and in the manner done in the Ordinary Course of Business. Seller also agrees (and agrees
to cause Manager, subject to the terms of the Management Agreement) to arrange meetings
(telephonically or in person as reasonably and mutually agreed by Purchaser and Seller) with
Purchaser to provide Purchaser with updates regarding the ownership and operation of the Hotel and
the Business. Purchaser shall have the right from the Effective Date through the Closing Date, at
Purchaser’s option, to solicit estoppel certificates in form and substance reasonably acceptable to
Purchaser for the tenants under the Tenant Leases or under any instruments constituting Title
Exceptions; provided that (x) Purchaser shall provide prior written notice thereof to Seller, and
Seller shall have the right (but not the obligation) to itself solicit (rather than Purchaser) such
estoppel certificates from said tenants or under such instruments, (y) whether Purchaser obtains or
does not obtain any such estoppel certificates shall not be a condition to Purchaser’s obligations
hereunder, and (z) Purchaser shall not solicit (or request that Seller solicit) any such estoppel
certificate from any single tenant under a Tenant Lease on more than one (1) occasion from the
Effective Date through the Closing Date. In the event that Purchaser solicits said estoppel
certificates from the tenants or under such instruments, Seller agrees to use commercially
reasonable efforts to cooperate with Purchaser for the purposes of obtaining such estoppel
certificates, as requested by Purchaser. In the event that Seller elects to solicit said estoppel
certificates from the tenants or under such instruments, Seller shall use commercially reasonable
efforts to obtain and deliver to Purchaser any such requested estoppel certificates within ten (10)
Business Days after delivery of any such estoppel certificates by Purchaser to Seller.

          8.2.2 Contracts. Except as set forth in Schedule 8.2.2, from the Effective
Date until the Closing or earlier termination of this Agreement, Seller shall not, without
Purchaser’s prior written consent which shall not be unreasonably withheld, conditioned or delayed
until after the expiration of the Due Diligence Period, at which time Purchaser’s consent may be
withheld in its sole discretion, (i)

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terminate or materially amend any Licenses and Permits or Warranties, or except in the
Ordinary Course of Business extend or renew any existing Licenses and Permits, (ii) amend, enter
into, terminate, extend or renew any new or existing Tenant Leases (other than the continuation of
month-to-month Tenant Leases with existing tenants), or (iii) materially amend, enter into,
terminate, extend or renew any Material Contracts, unless such Material Contracts are to be
performed and then terminated prior to Closing, paid for entirely by Seller or are entered into in
the Ordinary Course of Business and are terminable by Purchaser without any termination fee upon
not more than ninety (90) days notice.

     8.3 Licenses and Permits. Notwithstanding anything to the contrary contained herein,
Purchaser shall be responsible for obtaining, to the extent required for continuation of the
Business, the transfer of all Licenses and Permits (to the extent transferable) or the issuance of
new licenses and permits, including the licenses and permits required for the sale and service of
alcoholic beverages at the Hotel (the “Liquor Licenses”). Purchaser, at its cost and
expense, shall, to the extent required for the continuation of the Business, submit all necessary
applications and other materials to the appropriate Governmental Authority and take such other
actions to effect the transfer of Licenses and Permits or issuance of new licenses and permits,
including the Liquor Licenses, as of the Closing, and Seller shall use commercially reasonable
efforts (at no cost or expense to Seller other than any de minimis cost or expense or any cost or
expense which Purchaser agrees in writing to reimburse) to cooperate with Purchaser to cause the
Licenses and Permits to be transferred or new licenses and permits to be issued to Purchaser.
Notwithstanding anything to the contrary in this Section 8.3, Purchaser shall not, except as
expressly permitted under Section 8.1.3, communicate, file any application or otherwise commence
any procedure or proceeding with any Governmental Authority for the transfer of any Licenses or
Permits or issuance or new licenses and permits, or post any notices at the Hotel or publish any
notices required for the transfer of the Licenses or Permits or issuance of new licenses and
permits, including the Liquor Licenses, prior to the expiration of the Due Diligence Period. If
this Agreement is terminated and Purchaser has filed an application or otherwise commenced the
processing of obtaining new licenses and permits, Purchaser shall withdraw all such applications
and cease all other activities with respect to such new licenses and permits, and provided that
Purchaser does not terminate this Agreement pursuant to the Due Diligence Contingency, Purchaser
may communicate, file applications or otherwise commence procedures or proceedings with
Governmental Authorities for the transfer of Licenses or Permits or issuance or new licenses and
permits, and post notices at the Hotel or publish any notices required for the transfer of the
Licenses or Permits or issuance of new licenses and permits, subject to the reasonable approval of
Seller. Further, Purchaser hereby agrees to pay for any costs and expenses relating to such new
licenses and permits. Notwithstanding anything to the contrary contained herein, (a) any transfer
of the Licenses and Permits or issuance of new licenses and permits in the name of Purchaser shall
not be effective until Closing and (b) any costs and expenses attributable to Licenses and Permits
that relate to the hiring or transfer of Employees shall be governed by the provisions of Section
8.4.

     8.4 WARN Act. Purchaser hereby covenants and agrees to (i) not terminate or disturb,
nor permit Manager to terminate or disturb (to the extent Purchaser has such right under the
Management Agreement), any contracts and agreements with any Hotel employee regarding employment at
or in connection with the operation of the Hotel in effect as of the date of Closing; and (ii)
assume, or direct Manager to assume, the Union Contract without modification or amendment.
Purchaser also covenants and agrees not to terminate or disturb, nor permit Manager to terminate or
disturb (to the extent Purchaser has such right under the Management Agreement), the Hotel
employees employed by Manager immediately prior to Closing (including, without limitation, those
employees who are actively employed, part-time employees as defined under the WARN Act, on leave,
or on other permitted absence from employment), nor substantially change or permit to be changed
any of the material terms and conditions of their employment immediately prior to Closing, if the
same could result in any obligations, liability for, or claims against either, or all, of
Purchaser, Seller and Manager under the WARN Act. Purchaser shall (or shall cause the Manager or
any replacement manager) to be responsible for compliance with the notice

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and continuation coverage requirements of Section 4980B of the Code (COBRA) that arise with
respect to the Hotel employees on account of the transactions contemplated by this Agreement, if
any. Purchaser acknowledges that it is a successor employer for purposes of Section 4980B of the
Code. Purchaser agrees to indemnify, defend and hold harmless Seller, Manager and each of their
respective partners, employees and affiliates from and against any and all losses, liabilities,
claims and damages arising out of or otherwise in respect of either or both of (a) Purchaser’s (or
any replacement manager’s) failure to comply with any of the covenants in this Section 8.4,
including, without limitation, any liability arising due to the failure to assume the Union
Contract, and (b) any liability or obligations under the WARN Act or otherwise with respect to the
termination or disturbance of Hotel employees, or any change in their employment terms and
conditions, in connection with the purchase and sale of the Hotel or its effect on the employees.
The provisions of this Section 8.4 shall survive Closing.

     8.5 Bookings. Purchaser shall honor all Bookings made prior to the Closing Date for
any period on or after the Closing Date, including any Bookings by any Person in redemption of any
benefits accrued under the Starwood Preferred Guest or Hot Rates programs.

     8.6 Tax Contests.

          8.6.1 Taxable Period Terminating Prior to Closing Date. Seller shall retain the right
to commence, continue and settle any proceeding to contest any Taxes for any taxable period which
terminates prior to the Closing Date, and shall be entitled to any refunds or abatements of Taxes
awarded in such proceedings; provided, however, that Seller shall not settle any Tax protest in a
manner that will: (i) increase the assessment of the Real Property over the original assessed
valuation established by the Cook County Assessor for the taxable period which includes the Closing
Date or any subsequent taxable periods (each a “Subsequent Taxable Period”) or (ii)
decrease the amount of any reduction or refund that would otherwise be payable for any Subsequent
Taxable Periods.

          8.6.2 Taxable Period Including the Closing Date. Subject to the consent of Purchaser,
which consent shall not be unreasonably withheld, delayed or conditioned, Seller shall have the
right to commence, continue and settle any proceeding to contest any Taxes for any taxable period
which includes the Closing Date; provided, however, that Seller shall not settle any Tax protest in
an manner that will: (i) increase the assessment of the Real Property over the assessed valuation
established by the Cook County Assessor relating to Taxes for any Subsequent Taxable Period or (ii)
decrease the amount of any reduction or refund that would otherwise be payable for any Subsequent
Taxable Periods. Notwithstanding the foregoing, if Purchaser desires to contest any Taxes for such
taxable period and Seller has not commenced any proceeding to contest any such Taxes for such
taxable period, Purchaser shall provide written notice requesting that Seller contest such Taxes.
If Seller desires to contest such Taxes, Seller shall provide written notice to Purchaser within
thirty (30) days after receipt of Purchaser’s request confirming that Seller will contest such
Taxes, in which case Seller shall proceed to contest such Taxes, and Purchaser shall not have the
right to contest such Taxes. If Seller fails to provide such written notice confirming that Seller
will contest such Taxes within such thirty (30) day period, Purchaser shall have the right to
contest such Taxes. Any refunds or abatements awarded in such proceedings shall be used first to
reimburse the Party contesting such Taxes for the reasonable costs and expenses incurred by such
Party in contesting such Taxes, including reasonable attorneys’ fees, and the remainder of such
refunds or abatements shall be prorated between Seller and Purchaser as of the Cut-Off Time, and
the Party receiving such refunds or abatements promptly shall pay such prorated amount due to the
other Party.

          8.6.3 Taxable Period Commencing After Closing Date. Purchaser shall have the right to
commence, continue and settle any proceedings to contest Taxes for any taxable period which

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commences after the Closing Date, and shall be entitled to any refunds or abatements of Taxes
awarded in such proceedings.

          8.6.4 Cooperation. Seller and Purchaser shall use commercially reasonable efforts to
cooperate with the Party contesting the Taxes (at no cost or expense to the Party not contesting
the Taxes other than any de minimis cost or expense or any cost or expense which the requesting
Party agrees in writing to reimburse) and to execute and deliver any documents and instruments
reasonably requested by the Party contesting the Taxes in furtherance of the contest of such Taxes.

     8.7 Notices and Filings. Seller shall send an announcement to all tenants under any
Tenant Leases as of the Closing Date in form and substance reasonably acceptable to Purchaser,
informing such tenants of the change of ownership and operation of the Hotel to Purchaser. Seller
and Purchaser shall use commercially reasonable efforts to cooperate with each other (at no cost or
expense to the Party whose cooperation is requested, other than any de minimis cost or expense or
any cost or expense which the requesting Party agrees in writing to reimburse) to provide written
notice to any Person under any Contracts, Warranties, Licenses and Permits, and to effect any
registrations or filings with any Governmental Authority or other Person, regarding the change in
ownership of the Property or the Business.

     8.8 Access to Information. After the Closing, to the extent permitted under the
Management Agreement, Purchaser shall provide to the officers, employees, agents and
representatives of any Seller Indemnitees reasonable access to the books and records with respect
to the Hotel and the Business (and Seller shall have the right to make copies (at Seller’s expense)
of such books and records) and the Property in connection with an audit, compliance with any
Applicable Law, the filing of tax returns or the defense of any claim in connection with this
Agreement, provided (a) such Seller Indemnitees shall provide reasonable prior written notice
(which may be by email) to Purchaser; (b) Purchaser shall not be required to provide such access
during non business hours; (c) Purchaser shall have the right to accompany the officer, employees,
agents or representatives of such Seller Indemnitees in providing access to the books and records,
as provided in this Section 8.8, and (d) Seller shall defend, indemnify and hold harmless the
Purchaser Indemnitees in accordance with Article 15 from and against any Indemnification Loss
incurred by any Purchaser Indemnitees arising from any examinations conducted by Seller, its
employees, agents or representatives pursuant to this Section 8.8, except to the extent such
Indemnification Loss results from Purchaser’s or Purchaser Indemnitee’s gross negligence or
intentional misconduct. Seller shall, at its cost and expense, repair any damage to the Property
or any other property owned by any Person other than Seller in connection with the exercise of
Seller’s rights pursuant to this Section 8.8 and restore the Property or such third party property
to the same condition as existed prior to the exercise of Seller’s rights under this Section 8.8.
Seller (on behalf of itself and any Seller Indemnitees) hereby releases the Purchaser Indemnitees
from any Indemnification Loss incurred by Seller (or any Seller Indemnitee) pursuant to the
provisions of this Section 8.8, except for Purchaser’s gross negligence and willful misconduct.
Purchaser, at its cost and expense, shall retain all books and records with respect to the Hotel
for a period of seven (7) years after the Closing. As used in this Section 8.8, “books and
records” shall refer to all books and records located at the Hotel which relate exclusively to the
Hotel or the Business, but expressly excluding all documents and other materials which (i) are
legally privileged or constitute attorney work product, (ii) are subject to an Applicable Law
prohibiting their disclosure or a confidentiality agreement between Purchaser or Manager and
Persons other than their respective Affiliates prohibiting their disclosure, or (iii) constitute
confidential internal assessments, reports, studies, memoranda, notes or other correspondence
prepared by, for or on behalf of any officer or employee of Purchaser, any Starwood Entity or any
of their respective Affiliates, including all (A) internal financial analyses, appraisals, tax
returns, financial statements, (B) corporate or other entity governance records, (C) Employee
personnel files, or (D) any work papers, memoranda, analysis, correspondence and similar

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documents and materials prepared by or for Purchaser, any Starwood Entity or any of their
respective Affiliates in connection with the transaction described in this Agreement.

     8.9 Privacy Laws. To the extent Purchaser obtains any customer or guest information
or data as part of the purchase of the Property and the Business, Purchaser shall at all times
comply with all Applicable Law concerning (i) the privacy of such customer and guest information
and data and the sharing of such information and data with third parties (including any
restrictions with respect to Purchaser’s or any third party’s ability to use, transfer, store,
sell, or share such information and data), and (ii) the establishment of adequate security measures
to protect such customer and guest information and data.

     8.10 Further Assurances. Purchaser and/or Seller shall execute, acknowledge and
deliver to the other party, at the reasonable request of the other party or the Title Company, such
instruments and take such other actions, in addition to the instruments and actions specifically
provided herein at any time and from time to time after the execution of this Agreement whether
before or after the Closing, in order to effectuate the provisions of this Agreement or the
transaction contemplated herein or to confirm or perfect any right to be created or transferred
hereunder or pursuant to this transaction; provided, that, the Party being requested to deliver
such instruments or take such other actions shall not be required to incur any cost or expense,
other than any de minimis cost or expense or any cost or expense which the requesting Party agrees
in writing to reimburse.

     8.11 Non-Solicitation. Seller shall refrain from offering the Property or any portion
thereof for sale (other than the sale of Personal Property in the Ordinary Course of Business) to
any other party and terminate any pending negotiations for any such sale with any party other than
Purchaser, and refrain from entering into such negotiations, until the Closing Date or such time as
this Agreement is otherwise terminated.

     8.12 Pre-Closing Access. Seller agrees that Seller will permit Purchaser to gain
reasonable access to the Hotel from the expiration of the Due Diligence Period until the Closing
(“Pre-Closing Access”); provided, that : (A) Purchaser shall provide Seller with reasonable
prior written notice (which may be telephonic or by email) of any such proposed Pre-Closing Access;
(B) any persons who desire to enter the Hotel in connection with any such Pre-Closing Access shall,
if requested by Seller, be accompanied by an employee, agent or representative of Seller or
Manager; (C) any such Pre-Closing Access shall occur on Business Days between 9:00 a.m. and 5:00
p.m. (local time), unless otherwise approved in writing by Seller; (D) no such Pre-Closing Access
shall involve any drilling, coring or other invasive testing, without Seller’s prior written
consent, which consent shall not be unreasonably withheld; (E) any such Pre-Closing Access shall be
subject to the rights of tenants, guests and customers at the Hotel; and (F) no such Pre-Closing
Access shall unreasonably interfere with the operations of the Hotel, and each person entering the
Hotel pursuant to any such Pre-Closing Access shall comply with Seller’s reasonable requests with
respect to such access to minimize such interference.

     8.13 Release and Indemnification. Purchaser (for itself and all Purchaser
Indemnitees) hereby releases and waives any claims against the Seller Indemnitees for any
Indemnification Loss incurred by any Purchaser Indemnitee to the extent such Indemnification Loss
is caused by the Inspections or any Pre-Closing Access (but specifically excluding any
Indemnification Loss related solely to the discovery pursuant to the Inspections of any
pre-existing condition at the Hotel or any third party property), except to the extent resulting
from Seller’s or Seller Parties’ gross negligence or intentional misconduct. Purchaser shall
defend, indemnify and hold harmless the Seller Indemnitees (with counsel reasonably acceptable to
the applicable Seller Indemnitees) in accordance with Article 15 from and against any
Indemnification Loss incurred by any Seller Indemnitee that is caused by the Inspections or
Pre-Closing Access (but specifically excluding any Indemnification Loss related solely to the
discovery pursuant to

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the Inspections of any pre-existing condition at the Hotel or any third party property),
except to the extent such Indemnification Loss results from Seller’s or Seller Parties’ gross
negligence or intentional misconduct. At Seller’s request, Purchaser, at its cost and expense,
shall repair any such damage to the affected Property or any other property owned by a Person other
than Purchaser to the extent such damage is caused by the Inspections or Pre-Closing Access (except
to the extent such damage resulted from Seller’s gross negligence or willful misconduct), and
restore the affected Property or such other affected third-party property to the same condition as
existed prior to such Inspections or Pre-Closing Access, or replace the affected Property or such
affected third-party property with property of the same or better quality.

     8.14 Bulk Sales Notice.

          8.14.1 Within ten (10) days after the Effective Date, Seller shall give written notice to
Illinois Department of Revenue (“IDR”) of the intended sale of the Property setting forth
all of the information required pursuant to Section 5/902(d) of the Illinois Income Tax Act
(“Illinois Act”) and Section 120/5j of the Illinois Retailer’s Occupation Tax
(“Retailer’s Act”). At Closing, Seller shall furnish to Purchaser, with respect to the
Illinois Act and the Retailer’s Act, either (I) a copy of a notice from the IDR setting forth the
amount, if any, required to be withheld (“IDR Notice”) or (II) a statement that the IDR
Notice has not been received. Seller agrees that, if the IDR Notice has been received, Purchaser
may, at Closing, deduct and withhold from the proceeds that are due Seller the amount necessary to
comply with the withholding requirements imposed by the Illinois Act and the Retailer’s Act, as
applicable. At Closing, Purchaser shall deposit the amount so withheld in escrow with the Escrow
Agent pursuant to terms and conditions reasonably acceptable to Seller and Purchaser, but in any
event, complying with the Illinois Act and the Retailer’s Act, as applicable. If any such amount
has been deposited by Purchaser in escrow pursuant to the Illinois Act and/or Retailer’s Act, then
such amount shall be immediately paid to Seller upon Seller’s delivery to Purchaser and the Escrow
Agent of a letter, certificate or receipts from the IDR showing (X) all taxes, penalties and
interest have been paid by Seller to (or as directed by) IDR or (Y) no such taxes, penalties and
interest are due from Seller.

          8.14.2 Notwithstanding the foregoing, the issuance of an IDR Notice from the IDR shall not be
a condition precedent to Closing. To the extent the Seller does not provide an IDR Notice at
Closing, Seller agrees to indemnify and hold Purchaser harmless from and against any and all
losses, costs, claims, causes of action, damages, and expenses including court costs and reasonable
attorneys’ fees, which directly arise out of (i) Seller’s failure to give the notice of sale as
required in this Section 8.14 to the IDR, informing them of the transactions contemplated
herein within the time period required under the Illinois Act or Retailer’s Act, as applicable or
(ii) the failure to withhold any amounts that would have been required to be withheld pursuant to
an IDR Notice issued after Closing. The indemnification provision of this Section 8.14
shall survive the Closing until the earlier of (a) receipt of the last of the IDR Notice to the
extent not furnished at Closing and a deposit by Seller of the amount, if any, required to be
withheld pursuant to both such notices with the Escrow Agent, (b) the time period for the IDR to
provide the IDR Notice has passed, or (c) Seller furnishes evidence from the IDR of payment of the
liabilities required to be paid by Seller pursuant to the Illinois Act and the Retailer’s Act, as
applicable.

          8.14.3 Purchaser agrees that it will reasonably cooperate with Seller in Seller’s efforts to
obtain the IDR Notice, which may include providing such non-confidential information as Seller may
reasonably require in order to complete any filings necessary therefor, and/or executing any
documents as may be required therefor.

     8.15 Independent Audit. Promptly following the Effective Date, Seller shall provide
and shall use commercially reasonable efforts to cause Manager to provide to Purchaser’s
representatives and

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independent accounting firm access to financial and other information relating to the Property
in the possession of or otherwise available to Seller or its Affiliates to enable Purchaser’s
representatives and independent accounting firm to prepare audited financial statements for the
period of Seller’s ownership and during the year in which the Closing occurs in conformity with
generally accepted accounting principles and to enable them to prepare such statements, reports or
disclosures as Purchaser may reasonably deem necessary or advisable. Seller shall also provide
and/or shall use commercially reasonable efforts to cause Manager provide to Purchaser’s
independent accounting firm a signed representation letter substantially in the form of Exhibit
I attached hereto, to enable an independent public accountant to render an opinion on the
financial statements related to the Property. Seller shall authorize, and use commercially
reasonable efforts to have Manager authorize, any attorneys who have represented Seller or Manager
in material litigation pertaining to or affecting the Property to respond, at Purchaser’s expense,
to inquiries from Purchaser’s representatives and independent accounting firm. If and to the
extent Seller’s financial statements pertaining to the Property for any periods during the period
of Seller’s ownership and during the year in which the Closing occurs have been audited, promptly
after the execution of this Agreement, Seller shall provide Purchaser with copies of such audited
financial statements and shall reasonably cooperate with Purchaser’s representatives and
independent public accountants to enable them to contact the auditors who prepared such audited
financial statements and to obtain, at Purchaser’s expense, a reissuance of such audited financial
statements. Purchaser acknowledges that Seller purchased the Property on October 18, 2005 and that
Seller’s obligations under this Section shall be limited to the extent of information in the
possession of Seller and its accountants and, to the extent Seller has the ability to obtain such
information from the Manager under the Management Agreement, the Manager.

     8.16 Capital Work.

          8.16.1 Seller agrees that it will cause the work described on Schedule 8.16 hereof
(the “2006 Capital Work”) to be performed with respect to the Hotel in the Ordinary Course
of Business consistent with Seller’s schedule therefor; provided, however, that in the event that
the 2006 Capital Work is not completed prior to Closing, then Purchaser and Seller shall, prior to
Closing, reasonably cooperate with each other in furtherance of transitioning responsibility for
the portion of the 2006 Capital Work that will not be completed as of Closing from Seller to
Purchaser in a manner mutually acceptable to Purchaser and Seller, which includes arrangements
pursuant to which (i) Seller shall pay for all 2006 Capital Work completed prior to Closing, (ii)
the construction contracts pertaining to the 2006 Capital Work will, as of the Closing Date, be
assigned by Seller to Purchaser and assumed by Purchaser from Seller and (iii) Purchaser shall pay
for all 2006 Capital Work performed after Closing, provided, however, that in the event that the
amounts set forth on Schedule 8.16 in the “committed unpaid” column exceed $550,000 on the
Closing Date, Purchaser shall receive a credit to the Purchase Price equal to the amount in excess
of $550,000. On the Closing Date, Seller shall assign to Purchaser all assignable warranties from
the contractors pertaining to the 2006 Capital Work. The provisions of this Section 8.16.1 shall
survive Closing.

          8.16.2 Seller shall cause any 2006 Capital Work performed prior to Closing to be performed in
a good and workmanlike manner, in accordance with typical customs and practices applicable to work
of a similar nature in the hotel industry and in accordance with the standards and practices of
similar hotels managed by Manager and its Affiliates, in compliance, in all material respects, with
the applicable contracts for such work, all Applicable Laws and the Management Agreement. Nothing
contained in this Section 8.16 shall limit any obligation of Purchaser to establish and/or maintain
any reserves (including any capital reserves and/or replacement reserves) required under the
Management Agreement.

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ARTICLE 9

CLOSING CONDITIONS

     9.1 Mutual Closing Conditions.

          9.1.1 Satisfaction of Mutual Closing Conditions. The respective obligations of Seller
and Purchaser to close the transaction contemplated in this Agreement are subject to the
satisfaction at or prior to Closing of the conditions precedent set forth in this Section 9.1 (the
“Mutual Closing Conditions”):

          9.1.2 Adverse Proceedings. No judgment, order, decree, statute, law, ordinance, rule
or regulation, entered, enacted, promulgated, enforced or issued by any court or other Governmental
Authority of competent jurisdiction or arbitration or other legal restraint or prohibition shall be
in effect, and there shall not be pending or threatened any suit, action or proceeding by any
Governmental Authority, preventing or seeking to prevent the transaction described in this
Agreement (an “Adverse Proceeding”), unless (in any of the foregoing cases) the same shall
have been dismissed, released or otherwise cured prior to Closing; provided, further, that
if Seller determines that it will be unable to cause any such Adverse Proceeding to be dismissed,
released or otherwise cured prior to the then scheduled Closing Date, Seller shall have the right,
but not the obligation, to postpone the Closing for up to sixty (60) days in order to enable Seller
to pursue such dismissal, release or other cure.

          9.1.3 Adverse Law. No Applicable Law shall have been enacted that would make illegal
or invalid or otherwise prevent the consummation of the transaction described in this Agreement.

     9.2 Purchaser Closing Conditions.

          9.2.1 Satisfaction of Purchaser Closing Conditions. In addition to the satisfaction
of Mutual Closing Conditions, Purchaser’s obligations to close the transactions described in this
Agreement are subject to the satisfaction at or prior to Closing of the following conditions
precedent (the “Purchaser Closing Conditions”):

               (a) Seller’s Deliveries. All of the Seller Closing Deliveries shall have been
delivered to Purchaser or deposited with Escrow Agent in the Closing Escrow to be delivered to
Purchaser at Closing.

               (b) Representations and Warranties. The representations or warranties of Seller in
this Agreement (as qualified by any schedules to this Agreement and any amendments or supplements
to such schedules made in accordance with Section 16.13 of this Agreement) shall be true and
correct as of the Closing (or as of such other date to which such representation or warranty
expressly is made) in all material respects.

               (c) Covenants and Obligations. The covenants and obligations of Seller in this
Agreement shall have been performed in all material respects.

               (d) Title Commitment. The Title Company shall have committed to issue an owner’s
title insurance policy to Purchaser (which may be in the form of a mark-up of the Title
Commitment), insuring Purchaser’s fee simple interest in the Property on the Closing Date, with gap
coverage from the Closing Date through the date of recording, subject only to the Permitted
Exceptions, with extended coverage.

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               (e) Management Agreement Estoppel. The assumption and amendment of the Management
Agreement by Purchaser shall have been approved by Manager pursuant to documentation satisfactory
to Purchaser and Manager prior to the end of the Due Diligence Period or, if no such agreement has
been reached prior to the end of the Due Diligence Period, the Management Agreement Estoppel shall
have been duly executed by Manager in the form required by Section 6.4 of the Management Agreement
(as applicable, the “Management Agreement Estoppel”).

          9.2.2 Failure of Purchaser Closing Condition. The Purchaser Closing Conditions are
for the benefit of Purchaser, and Purchaser shall have the right to waive any of the Purchaser
Closing Conditions at or prior to Closing; provided, however, that any such waiver shall be made in
writing executed by Purchaser. Notwithstanding the foregoing, in the event a Purchaser Closing
Condition is not satisfied at or prior to Closing and Purchaser nevertheless closes the
transactions described in this Agreement, then Purchaser shall be deemed to have waived such
Purchaser Closing Condition.

     9.3 Seller Closing Conditions.

          9.3.1 Satisfaction of Seller Closing Conditions. In addition to the satisfaction of
Mutual Closing Conditions, Seller’s obligations to close the transactions contemplated in this
Agreement are subject to the satisfaction at or prior to Closing of the following conditions
precedent (the “Seller Closing Conditions”):

               (a) Receipt of the Purchase Price. Purchaser shall have (A) paid to Seller or
deposited with Escrow Agent, together with an unconditional and irrevocable written direction to
disburse the Purchase Price (as adjusted pursuant to Section 3.1) to Seller, and (B) delivered
written direction to Escrow Agent to disburse the Earnest Money to Seller.

               (b) Purchaser’s Deliveries. All of the Purchaser Closing Deliveries shall have been
delivered to Seller or deposited with Escrow Agent in the Closing Escrow to be delivered to Seller
at Closing.

               (c) Representations and Warranties. The representations and warranties of Purchaser in
this Agreement shall be true and correct in all material respects as of the Closing (or as of such
other date to which such representation or warranty expressly is made).

               (d) Covenants and Obligations. The covenants and obligations of Purchaser in this
Agreement shall have been performed in all material respects.

          9.3.2 Failure of Seller Closing Condition. The Seller Closing Conditions are for the
benefit of Seller, and Seller shall the right to waive any of the Seller Closing Conditions at or
prior to Closing; provided, however, that any such waiver shall be made in writing
executed by Seller. Notwithstanding the foregoing, in the event a Seller Closing Condition is not
satisfied at or prior to Closing and Seller nevertheless closes the transactions described in this
Agreement, then Seller shall be deemed to have waived such Seller Closing Condition.

     9.4 Frustration of Closing Conditions. Seller and Purchaser may not rely on the
failure of the Mutual Closing Conditions, respectively, the Seller Closing Conditions or the
Purchaser Closing Conditions, if such failure was caused by such Party’s failure to act in good
faith or to use its commercially reasonable efforts to cause the Closing to occur. Notwithstanding
the foregoing, in the event that a Mutual Closing Condition is not satisfied at or prior to Closing
and Seller and/or Purchaser nevertheless close the transactions described in this Agreement, then
Seller and/or Purchaser shall be deemed to have waived such Mutual Closing Condition.

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ARTICLE 10

CLOSING

     10.1 Closing Date. The closing of the transaction described in this Agreement (the
“Closing”) shall occur (i) on November 9, 2006 or (ii) on such other date (which may be
earlier than November 9, 2006) as agreed to in writing between Seller and Purchaser (the date on
which the Closing occurs is referred to herein as the “Closing Date”). The Closing shall
occur pursuant to the Closing Escrow described in Section 10.2 or in such other manner and such
other place as agreed to in writing between Seller and Purchaser.

     10.2 Closing Escrow. The Closing shall take place by means of a so called “New York
style” escrow (the “Closing Escrow”), in which case at or prior to the Closing, the Parties
shall enter into a closing escrow agreement with the Escrow Agent with respect to the Closing
Escrow in form and substance reasonably acceptable to Seller, Purchaser and the Escrow Agent (the
“Closing Escrow Agreement”) pursuant to which (i) the Purchase Price to be paid by
Purchaser pursuant to Section 3.3 shall be deposited with Escrow Agent, (ii) all of the documents
required to be delivered by Seller and Purchaser at Closing pursuant to this Agreement shall be
deposited with Escrow Agent, and (iii) at Closing, the Purchase Price (as adjusted pursuant to
Section 3.1) and the Earnest Money shall be disbursed to Seller and the documents deposited into
the Closing Escrow shall be delivered to Seller and Purchaser (as the case may be) pursuant to the
Closing Escrow Agreement and otherwise in accordance with the terms of this Agreement.

     10.3 Closing Deliveries.

          10.3.1 Seller’s Deliveries. At the Closing, Seller shall deliver or cause to be
delivered to Purchaser or deposited with Escrow Agent in the Closing Escrow to be delivered to
Purchaser at Closing, all of the (i) documents set forth in this Section 10.3.1, each of which
shall have been duly executed by Seller and acknowledged (if required), and (ii) other items set
forth in this Section 10.3.1 (the “Seller Closing Deliveries”), as follows:

               (a) A closing certificate substantially in the form of Exhibit C, together with all
exhibits thereto;

               (b) A special warranty deed in the form of Exhibit B (the “Deed”) conveying
fee simple title in the Real Property to Purchaser subject only to the Permitted Exceptions and
sufficient to permit the Title Company to issue the Title Policy;

               (c) A Bill of Sale in the form of Exhibit D, transferring the FF&E, Supplies, IT
Systems, F&B, Retail Merchandise, Books and Records, Plans and Specifications, Bookings and Current
Accounts Receivable to Purchaser on the terms set forth therein;

               (d) A General Assignment and Assumption in the form of Exhibit E, assigning the Tenant
Leases, Equipment Leases, Operating Agreements, Warranties, Licenses and Permits, Intellectual
Property and Bookings to Purchaser on the terms set forth therein;

               (e) A certificate or registration of title for any owned or leased vehicle or other Personal
Property included in the Property which requires such certification or registration, duly executed
by Seller, conveying such interest in such vehicle or such other Personal Property to Purchaser;

               (f) An Assignment and Assumption of Union Contract substantially in the form of Exhibit
F, assigning the Union Contract to Purchaser on the terms set forth therein;

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               (g) An Assignment and Assumption of Hotel Management Agreement in the form of Exhibit
G, assigning the Management Agreement to Purchaser on the terms set forth therein;

               (h) A Plat Act Affidavit substantially in the form of Exhibit J;

               (i) Such agreements, affidavits or other documents as may be reasonably required by the Title
Company;

               (j) Any real estate transfer tax declaration or similar documents required under Applicable
Law in connection with the conveyance of the Real Property;

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

               (l) Reasonable evidence that Seller has filed a notice of bulk sales with the IDR in
compliance with Section 8.14 of this Agreement;

               (m) The Closing Statement prepared pursuant to Section 11.1;

               (n) All documentation required to transfer the vehicles owned or leased by Seller as set forth
on Section 2.1.18 in accordance with the laws of Illinois;

               (o) The Closing Escrow Agreement; and

               (p) Such other documents and instruments as may be reasonably requested by Purchaser in order
to consummate the transaction described in this Agreement.

          10.3.2 Purchaser’s Deliveries. At the Closing, Purchaser shall deliver or cause to be
delivered to Seller or deposited with Escrow Agent in the Closing Escrow to be delivered to Seller
all of the (i) documents set forth in this Section 10.3.2, each of which shall have been duly
executed by Purchaser and acknowledged (if required), and (ii) other items set forth in this
Section 10.3.2 (the “Purchaser Closing Deliveries”), as follows:

               (a) The Purchase Price (as adjusted pursuant to Section 3.1) to be paid by Purchaser;

               (b) An unconditional and irrevocable letter of direction to Escrow Agent directing Escrow
Agent to disburse the Earnest Money to Seller at Closing;

               (c) A Bill of Sale in the form of Exhibit D;

               (d) A General Assignment and Assumption in the form of Exhibit E;

               (e) An Assignment and Assumption of Hotel Management Agreement in the form of Exhibit
F;

               (f) A closing certificate in the form of Exhibit H, together with all exhibits
thereto;

               (g) The Closing Statement prepared pursuant to Section 11.1;

               (h) The Closing Escrow Agreement; and

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               (i) Such other documents and instruments as may be reasonably requested by Seller or the Title
Company in order to consummate the transaction described in this Agreement.

     10.4 Deliveries Outside of the Closing Escrow. At Closing, Seller shall deliver to
Purchaser all of the following outside of the Closing Escrow:

          10.4.1    To the extent not previously delivered to Purchaser, all originals (or copies if originals are
not available) of the Tenant Leases, Contracts, Licenses and Permits, Books and Records, keys and lock
combinations in Seller’s Possession, which shall be located at the Hotel on the Closing Date and deemed
to be delivered to Purchaser upon delivery of possession of the Hotel; provided, however, that Seller or
Manager, as the case may be, shall have the right to (i) redact and reformat any Books and Records which
include data or other information pertaining to any other hotels owned, managed or franchised by Seller,
Starwood, Manager or their Affiliates, and (ii) retain copies of any Books and Records delivered to Purchaser; and

          10.4.2    Keys to the Property.

     10.5 Possession. Seller shall have delivered to Purchaser possession of (i) the Real
Property, subject to the Tenant Leases, the Permitted Exceptions, and the rights of the Manager and
(ii) the tangible Personal Property.

ARTICLE 11

PRORATIONS AND EXPENSES

     11.1 Closing Statement. No later than 11:59 p.m. (Central Time) on the day prior to
the Closing Date (the “Cut-Off Time”), Seller and Purchaser, through their respective
employees, agents or representatives, jointly shall make such examinations, audits and inventories
of the Hotel as may be necessary to make the adjustments and prorations to the Purchase Price as
set forth in Sections 11.2 and 11.3 or any other provisions of this Agreement. Based upon such
examinations, audits and inventories, the Parties jointly shall prepare prior to Closing a closing
statement (the “Closing Statement”), which shall set forth their best estimate of the
amounts of the items to be adjusted and prorated under this Agreement. The Closing Statement shall
be approved and executed by the Parties at Closing, and such adjustments and prorations shall be
final with respect to the items set forth in the Closing Statement, except to the extent of any
errors, omissions or any such items shall be reprorated after the Closing as expressly set forth in
Section 11.2.

     11.2 Prorations. The items of revenue and expense set forth in this Section 11.2
shall be prorated between the Parties (the “Prorations”) as of the Cut-Off Time, or such
other time expressly provided in this Section 11.2, so that the Closing Date is a day of income and
expense for Purchaser.

          11.2.1 Taxes. All Taxes that accrue during the taxable period during which the Closing
Date occurs shall be prorated as of the Cut-Off Time between Seller and Purchaser. If the amount of
any such Taxes is not ascertainable on the Closing Date, the proration for such Taxes shall be
based on the most recent available tax bill; provided, however, that after the Closing, Seller and
Purchaser shall reprorate the Taxes and pay any deficiency in the original proration to the other
Party promptly upon receipt of the actual tax bill for the relevant taxable period. The
obligations of Seller and Purchaser to reprorate Taxes shall survive the Closing for the Survival
Period; provided, that the obligation to reprorate real property Taxes that accrue during the
taxable period during which the Closing Date occurs shall survive the Closing for a period of sixty
(60) days after the date which the tax bills for the final installment(s) of real property Taxes
which are subject to reproration as provided herein are received by the applicable Party.

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          11.2.2 Tenant Leases. Any rents and other amounts prepaid, accrued or due and payable
under the Tenant Leases shall be prorated as of the Cut-Off Time between Seller and Purchaser.
Purchaser shall receive a credit for all assignable security deposits held by Seller under the
Tenant Leases which are not transferred to Purchaser, and Purchaser thereafter shall be obligated
to refund or apply such deposits in accordance with the terms of such Tenant Leases. Purchaser
shall not receive a credit for any expressly non assignable security deposits held by Seller which
Seller shall return to the tenant under such Tenant Lease, and Purchaser shall obtain any
replacement security deposit from such tenant.

          11.2.3 Contracts. Any amounts prepaid, accrued or due and payable under the Contracts
(other than for the Management Agreement which is addressed separately in Section 11.2.6 and other
than for utilities which are addressed separately in Section 11.2.5 and including Contracts for IT
Systems assumed by Purchaser pursuant to Section 12.3) shall be prorated as of the Cut-Off Time
between Seller and Purchaser. Purchaser shall receive a credit for all deposits held by Seller
under the Contracts (together with any interest thereon) which are not transferred to Purchaser,
and Purchaser thereafter shall be obligated to refund or apply such deposits in accordance with the
terms of such Contracts. Seller shall receive a credit for all deposits made by Seller under the
Contracts (together with any interest thereon) which are transferred to Purchaser or remain on
deposit for the benefit of Purchaser.

          11.2.4 Licenses and Permits. All amounts prepaid, accrued or due and payable under any
Licenses and Permits transferred to Purchaser shall be prorated as of the Cut-Off Time between
Seller and Purchaser. Seller shall receive a credit for all deposits made by Seller under the
Licenses and Permits (together with any interest thereon) which are transferred to Purchaser or
which remain on deposit for the benefit of Purchaser.

          11.2.5 Utilities. All utility services shall be prorated as of the Cut-Off Time
between Seller and Purchaser. The Parties shall use commercially reasonable efforts to obtain
readings for all utilities as of the Cut-Off Time. If readings cannot be obtained as of the Cut-Off
Time, the cost of such utilities shall be prorated between Seller and Purchaser by estimating such
cost on the basis of the most recent bill for such service; provided, however, that after the
Closing, the Parties shall reprorate the amount for such utilities and pay any deficiency in the
original proration to the other Party promptly upon receipt of the actual bill for the relevant
billing period. Seller shall receive a credit for all fuel stored at the Hotel, if any, based on
Seller’s actual cost for such fuel. Seller shall receive a credit for all deposits transferred to
Purchaser or which remain on deposit for the benefit of Purchaser with respect to such utility
contracts.

          11.2.6 Management Fees. All fees and expenses due under the Management Agreement
shall be prorated in accordance with the provisions of Schedule 11.2.6.

          11.2.7 Bookings. Purchaser shall receive a credit for all prepaid deposits for
Bookings scheduled to occur on or after the Closing Date, except to the extent such deposits are
transferred to Purchaser.

          11.2.8 Retail Merchandise, Supplies and F&B. Seller shall receive a credit for all
Retail Merchandise and unopened items of Supplies and F&B (including all F&B in any “mini bars” in
the guest rooms) based on Seller’s cost for such items.

          11.2.9 Restaurants and Bars. Seller shall close out the transactions in the
restaurants and bars operated by, for or on behalf of Seller in the Hotel as of the regular closing
time for such restaurants and bars during the night in which the Cut-Off Time occurs and retain all
monies collected as of such closing, and Purchaser shall be entitled to any monies collected from
the restaurants and bars thereafter.

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          11.2.10 Vending Machines. Seller shall remove all monies from all vending machines,
laundry machines, pay telephones and other coin operated equipment operated by, for or on behalf
Seller as of the Cut-Off Time and shall retain all monies collected therefrom as of the Cut-Off
Time, and Purchaser shall be entitled to any monies collected therefrom after the Cut-Off Time.

          11.2.11 Trade Payables. Except to the extent an adjustment or proration is made under
another subsection of this Section 11.2, (i) Seller shall pay in full prior to the Closing all
amounts payable to vendors or other suppliers of goods or services for the Business (the “Trade
Payables”) which are due and payable as of the Closing Date for which goods or services have
been delivered to the Hotel prior to Closing, and (ii) Purchaser shall receive a credit for the
amount of such Trade Payables which have accrued, but are not yet due and payable as of the Closing
Date, and Purchaser shall pay all such Trade Payables accrued as of the Closing Date when such
Trade Payables become due and payable; provided, however, Seller and Purchaser shall reprorate the
amount of credit for any Trade Payables and pay any deficiency in the original proration to the
other Party promptly upon receipt of the actual bill for such goods or services. Seller shall
receive a credit for all advance payments or deposits made with respect to FF&E, Supplies, F&B and
Retail Merchandise ordered in accordance with this Agreement, but not delivered to the Hotel prior
to the Closing Date, and Purchaser shall pay the amounts which become due and payable for such
FF&E, Supplies, F&B and Retail Merchandise which were ordered in accordance with this Agreement
prior to Closing.

          11.2.12 Cash. Excluding those deposits transferred to Purchaser pursuant to Sections
11.2.2, 11.2.3, 11.2.4, 11.2.5, and 11.2.7 hereof, Seller shall receive a credit for all cash on
hand or on deposit in any house bank at the Hotel, to the extent that Seller shall elect that the
same remain on deposit for the benefit of Purchaser as of the Closing.

          11.2.13 Other Adjustments and Prorations. Seller and Purchaser shall cooperate after
Closing to make a final determination of the prorations and adjustments required hereunder, and all
other items of income and expense as are customarily prorated or adjusted upon the sale and
purchase of a hotel property similar to the Property, as soon as reasonably practicable, but in no
event later than one (1) year after the Closing Date (except with respect to any item which is not
determinable within such time frame, as to which the time period shall be extended until promptly
after such item is determinable). Upon the final reconciliation of the prorations and adjustments
under this Section 11.2, the party which owes the other party any sums hereunder shall pay such
party such sums within ten (10) days after the reconciliation thereof. It is the intent of the
parties, subject to the provisions of Section 15.4.2 below, that all items herein which are subject
to apportionment shall result in Seller receiving all of the economic benefits and burdens of the
Hotel with respect to the period prior to the Closing Date, and Purchaser receiving all of the
economic benefits and burdens of the Hotel with respect to the period from and after the Closing
Date.

          11.2.14 Survival. The provisions of this Section 11.2 shall survive the Closing for a
period of one (1) year.

     11.3 Accounts Receivable.

          11.3.1 Guest Ledger. At Closing, Seller shall receive a credit in an amount equal to:
(i) all amounts charged to the Guest Ledger for all room nights up to (but not including) the night
during which the Cut-Off Time occurs, and (ii) one half (1/2) of all amounts charged to the Guest
Ledger for the room night which includes the Cut-Off Time (other than any restaurant or bar charges
on the Guest Ledger which shall be prorated in accordance with Section 11.2.9), and Purchaser shall
be entitled to retain all deposits made and amounts collected with respect to such Guest Ledger.

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          11.3.2 Accounts Receivable (Other than Guest Ledger). At Closing, Seller shall receive
a credit for all Accounts Receivable (other than the Guest Ledger which is addressed in Section
11.3.1) in an amount equal to the Accounts Receivable which are unpaid for not more than thirty
(30) days (the “Current Accounts Receivable”), and Purchaser shall be entitled to all
amounts collected for such Current Accounts Receivable. Seller shall retain the right to collect
all Accounts Receivable that are unpaid for more than thirty (30) days (the “Aging
Receivables”). Purchaser shall not receive a credit at Closing for the Aging Receivables or
items otherwise prorated between the Parties pursuant to this Article 11. Purchaser shall
cooperate with (and direct Manager to cooperate with) Seller in collecting the Aging Receivables,
at no cost or expense to Purchaser (or Manager) other than any de minimis cost and expense or any
cost or expense which Seller agrees in writing to reimburse, it being understood and agreed that
(a) Purchaser has no obligation to file a lawsuit or to litigate any such claim with, or on behalf
of, Seller, but agrees to cooperate with the reasonable requests of Seller in the event that Seller
commences any litigation or collection proceeding and (b) Purchaser shall have no right to
terminate any contract in connection with its collection of Aging Receivables after the Closing
Date. If any Aging Receivables are paid to Purchaser after the Closing, Purchaser shall pay to
Seller the amounts received by Purchaser within ten (10) days after receipt of such amounts,
without any commission or deduction for Purchaser; provided that if the payor of Aging Receivables
has any Current Accounts Receivable, any funds received from such payor shall be applied, first, to
any Current Accounts Receivable and, then, to any Aging Receivables.

     11.4 Transaction Costs.

          11.4.1 Seller’s Transaction Costs. In addition to the other costs and expenses to be
paid by Seller set forth elsewhere in this Agreement, Seller shall pay for the following items in
connection with this transaction: (i) the fees and expenses of removing or curing any Unpermitted
Exceptions as required under Section 5.3; (ii) the commission due to Broker; (iii) one half (1/2) of
the closing and escrow fees and expenses for the Escrow Agent (including any fees and costs for a
“New York-style” escrow); (iv) Cook County and State of Illinois real property transfer taxes; (v)
any fees or expenses payable for the assignment of the Tenant Leases (other than the cost of
assigning or transferring any security deposits thereunder); and (vi) the fees and expenses of its
own attorneys, accountants and consultants.

          11.4.2 Purchaser’s Transaction Costs. In addition to the other costs and expenses to
be paid by Purchaser as set forth elsewhere in this Agreement, Purchaser shall pay for the
following items in connection with this transaction: (i) the fees and expenses incurred by
Purchaser for Purchaser’s Inspectors or otherwise in connection with the Inspections; (ii) the fees
and expenses for any updated Title Commitment and for obtaining the Survey; (iii) any sales or
similar tax and recording charges payable in connection with the conveyance of the Property; (iv)
any fees or expenses payable for the assignment, transfer or conveyance of the Equipment Leases,
Operating Agreements, Warranties, Licenses and Permits and Intellectual Property (including the
transfer of any security deposits under any of the foregoing); (v) any mortgage tax, title
insurance fees and expenses for any loan title insurance policies, recording charges or other
amounts payable in connection with any financing obtained by Purchaser; (vi) Village of Rosemont
real property transfer taxes, if any; (vii) one half (1/2) of the closing and escrow fees and
expenses for the Escrow Agent (including and fees and costs for a “New York-style” escrow); (viii)
the costs of the Title Commitment, including the cost of the premium in connection with converting
the Title Commitment into the Title Policy, and any endorsements associated therewith (except for
those owner’s title endorsements obtained for the purpose of curing an Unpermitted Exception); (ix)
any fees or expenses payable for the assignment, transfer or conveyance of any National/Regional
Operating Agreements, including fees or expenses required to replace the goods or services provided
under the National/Regional Operating Agreements, except to the extent such National/Regional
Operating Agreements are continued by Manager after the Closing pursuant to and

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subject to the terms and provisions of the Management Agreement; and (x) the fees and expenses
of its own attorneys, accountants and consultants.

          11.4.3 Other Transaction Costs. All other fees, costs and expenses not expressly
addressed in this Section 11.4 or elsewhere in this Agreement shall be allocated between Seller and
Purchaser in accordance with applicable local custom for similar transactions.

ARTICLE 12

TRANSITION PROCEDURES

     12.1 Safe Deposit Boxes. On the Closing Date, Seller shall notify all guests or
customers who are then using a safe deposit box at the Hotel advising them of the pending change in
management of the Hotel and requesting them to conduct an inventory and verify the contents of such
safe deposit box. All inventories by such guests or customers shall be conducted under the joint
supervision of employees, agents or representatives of the Parties. Upon such inventory and
verification, Seller shall deliver to Purchaser all keys, receipts and agreements for such safe
deposit box (and thereafter such safe deposit box shall be deemed an “Inventoried Safe Deposit
Box”). If this Agreement is terminated after such inventory, Purchaser shall return all keys,
receipts and agreements to Seller for such Inventoried Safe Deposit Boxes immediately upon such
termination. Upon Closing, Seller shall deliver to Purchaser all keys in Seller’s Possession for
all safe deposit boxes not then in use, and a list of all safe deposit boxes which are then in use,
but not yet inventoried by the depositor, with the name and room number of such depositor. After
the Closing, the Parties shall make appropriate arrangements for guests and customers at the Hotel
to inventory and verify the contents of the non Inventoried Safe Deposit Boxes, and upon such
inventory and verification, Seller shall deliver to Purchaser all keys, receipt and agreements for
such safe deposit box (and such safe deposit box thereafter shall constitute an Inventoried Safe
Deposit Box). Purchaser shall be responsible for, and shall indemnify and hold harmless the Seller
Indemnitees in accordance with Article 15 from and against, any Indemnification Loss incurred by
any Seller Indemnitees with respect to, any theft, loss or damage to the contents of any safe
deposit box listed on the inventory from and after the time such safe deposit box is deemed an
Inventoried Safe Deposit Box pursuant to this Section 12.1. Seller shall be responsible for, and
shall indemnify and hold harmless the Purchaser Indemnitees in accordance with Article 15 from and
against, any Indemnification Loss incurred by any Purchaser Indemnitees with respect to, any theft,
loss or damage to the contents of any safe deposit box prior to the time such safe deposit box is
deemed an Inventoried Safe Deposit Box and not listed on the inventory.

     12.2 Baggage. On the Closing Date, employees, agents or representatives of the
Parties jointly shall make a written inventory of all baggage, boxes and similar items checked in
or left in the care of Seller at the Hotel, and Seller shall deliver to Purchaser the keys to any
secured area which such baggage and other items are stored (and thereafter such baggage, boxes and
other items inventoried shall be deemed the “Inventoried Baggage”). Purchaser shall be
responsible for, and shall indemnify and hold harmless the Seller Indemnitees in accordance with
Article 15 from and against, any Indemnification Loss incurred by any Seller Indemnitees with
respect to any theft, loss or damage to any Inventoried Baggage from and after the time of such
inventory, and any other baggage, boxes or similar items left in the care of Purchaser which was
not inventoried by the Parties. Seller shall be responsible for, and shall indemnify and hold
harmless the Purchaser Indemnitees in accordance with Article 15 from and against, any
Indemnification Loss incurred by any Purchaser Indemnitees with respect to any theft, loss or
damage to any Inventoried Baggage prior to the time of such inventory, and any other baggage, boxes
or similar items left in the care of Seller which was not inventoried by the Parties.

     12.3 IT Systems. Schedule 12.3 sets forth a list of the IT Systems which are
leased or licensed by Seller. With respect to any IT Systems which are leased or licensed by
Seller, Seller shall provide

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Purchaser with a contact name and telephone number of the applicable licensor, vendor or
supplier, and Purchaser shall (i) be responsible for obtaining any consents or approvals necessary
for the assignment or transfer of such lease or license of such IT Systems from Seller to
Purchaser, or a new lease or license for such IT Systems (as the case may be), and (ii) pay any
fees or expenses charged by the lessor, licensor, vendor or supplier of such IT Systems in respect
of such assignment or transfer or new license (as the case may be). Purchaser shall not use any
such IT System until it has obtained all such consents, approvals and new licenses as are necessary
for it to use such IT System in full compliance with all licenses and other agreements relating
thereto. Seller covenants and agrees to reasonably cooperate with Purchaser in connection with
obtaining all such consents, approvals and new leases or licenses. With respect to the Excluded IT
Systems set forth in Schedule 2.2.5, Seller shall not remove any such Excluded IT Systems
from the Hotel at Closing (unless otherwise permitted under this Agreement), it being understood
and agreed that such Excluded IT Systems are intended to be used by Manager in the continued
operation of the Hotel after the Closing Date in accordance with the provisions of the Management
Agreement.

ARTICLE 13

DEFAULT AND REMEDIES

     13.1 Seller’s Right of Termination. This Agreement may be terminated by Seller (in
which event Purchaser shall be entitled to a return of the Earnest Money deposited with the Escrow
Agent) (i) if any of the Mutual Closing Conditions set forth in Section 9.1 has not been satisfied
by the Closing Date, (ii) if any of the Seller Closing Conditions set forth in Section 9.3 has not
been satisfied by the Closing Date, or (iii) upon a Purchaser Default.

     13.2 Purchaser’s Right of Termination. This Agreement may be terminated by Purchaser
(i) in accordance with the terms and conditions of Sections 4.1, 5.3.2, 13.7, 14.1.1, 14.1.2 or
16.13 of this Agreement, (ii) if any of the Mutual Closing Conditions in Section 9.1 has not been
satisfied by the Closing Date, (iii) if any of the Purchaser Closing Conditions in Section 9.2 has
not been satisfied on or before the Closing Date, or (iv) upon a Seller Default.

     13.3 Effect of Termination. In the event of the termination of this Agreement
pursuant to Section 13.1 or Section 13.2, this Agreement shall thereafter become void and have no
effect, without any liability on the part of any Party other than the provisions of this Article 13
and such provisions in this Agreement which expressly survive termination of this Agreement.

     13.4 Purchaser Default. Upon termination of this Agreement by Seller upon a Purchaser
Default, the Earnest Money shall be disbursed to Seller pursuant to Section 3.2.3, and upon such
disbursement, Seller and Purchaser shall have no further rights or obligations under this
Agreement, except those which expressly survive such termination. Purchaser’s obligation to cause
Escrow Agent to disburse the Earnest Money to Seller pursuant to this Section 13.4 shall survive
such termination.

     13.5 LIQUIDATED DAMAGES. THE PARTIES ACKNOWLEDGE AND AGREE THAT IF THIS AGREEMENT IS
TERMINATED PURSUANT TO SECTION 13.4 HEREOF, THE DAMAGES THAT SELLER WOULD SUSTAIN AS A RESULT OF
SUCH TERMINATION WOULD BE DIFFICULT IF NOT IMPOSSIBLE TO ASCERTAIN. ACCORDINGLY, THE PARTIES AGREE
THAT SELLER SHALL RETAIN THE EARNEST MONEY AS FULL AND COMPLETE LIQUIDATED DAMAGES (AND NOT AS A
PENALTY) AS SELLER’S SOLE AND EXCLUSIVE REMEDY FOR SUCH TERMINATION; PROVIDED, HOWEVER, THAT
PURCHASER SHALL REMAIN FULLY RESPONSIBLE AND LIABLE HEREUNDER FOR ALL OF PURCHASER’S DUTIES,
OBLIGATIONS AND LIABILITIES WHICH EXPRESSLY SURVIVE SUCH TERMINATION.

43

 

     13.6 Purchaser Termination. If this Agreement is terminated by Purchaser pursuant to
Sections 13.2(i), (ii) and (iii) (but not Section 13.2(iv) or, to the extent Section 13.2(iii)
relates to a Seller Default, Section 13.2(iii), which are covered by Section 13.7 below), Escrow
Agent shall refund the Earnest Money to Purchaser, and Seller and Purchaser shall have no further
rights or obligations under this Agreement, except those which expressly survive such termination.
Seller’s obligation to cause Escrow Agent to disburse the Earnest Money to Purchaser pursuant to
this Section 13.6 shall survive such termination.

     13.7 Seller Default. In the event of a Seller Default, (i) Purchaser shall have the
right to waive such Seller Default and proceed to Closing without any reduction in or setoff
against the Purchase Price; (ii) Purchaser may elect to terminate this Agreement, in which event
the Earnest Money shall be disbursed to Purchaser pursuant to Section 3.2.4, and upon such
disbursement, Seller and Purchaser shall have no further rights or obligations under this
Agreement, except those which expressly survive such termination, or (iii) Purchaser may seek
specific performance as Purchaser’s sole and exclusive remedy, Purchaser hereby expressly waiving
any right to bring suit for monetary damages.

     13.8 Seller’s Right to Cure. Notwithstanding anything to the contrary in this
Agreement, Purchaser shall not have the right to terminate this Agreement under Section 13.2 for
either a Seller Default or for a failure of a Purchaser Closing Condition (a “Seller Default or
Failure”), unless Purchaser has provided written notice to Seller specifying in reasonable
detail the nature of the Seller Default or Purchaser Closing Condition Failure (as the case may
be), and Seller has not cured such Seller Default or Purchaser Closing Condition Failure (as the
case may be) within ten (10) days after Seller’s receipt of such notice; provided, that if
Purchaser has already delivered the ten (10) Business Day notice of a Seller Default required by
the definition of “Seller Default” set forth in this Agreement and such ten (10) Business Day cure
period has expired, Purchaser shall not be required to give Seller any further cure period (the
“Seller Cure Period”). If the Closing is scheduled to occur within the Seller Cure Period,
the Closing Date shall be postponed until the date which is five (5) Business Days after the
expiration of the Seller Cure Period. Notwithstanding the foregoing, the terms of this Section
13.8 shall not apply in the event that the Seller Default or Failure applies to any failure by
Seller to satisfy Seller’s obligation to make the material deliveries required to be made by it on
the Closing Date pursuant to Section 10.3.1 hereof, in which case the Seller Cure Period shall be
two (2) business days.

     13.9 Purchaser’s Right to Cure. Notwithstanding anything to the contrary in this
Agreement, Seller shall not have the right to terminate this Agreement under Section 13.1 for
either a Purchaser Default or for a failure of a Seller Closing Condition (a “Purchaser Default
or Failure”), unless Seller has provided written notice to Purchaser specifying in reasonable
detail the nature of the Purchaser Default or Seller Closing Condition Failure (as the case may
be), and Purchaser has not cured such Purchaser Default or Seller Closing Condition Failure (as the
case may be) within ten (10) days after Seller’s receipt of such notice; provided, that if Seller
has already delivered the ten (10) Business Day notice of a Purchaser Default required by the
definition of “Purchaser Default” set forth in this Agreement and such ten (10) Business Day cure
period has expired, Seller shall not be required to give Purchaser any further cure period (the
“Purchaser Cure Period”). If the Closing is scheduled to occur within the Purchaser Cure
Period, the Closing Date shall be postponed until the date which is five (5) Business Days after
the expiration of the Purchaser Cure Period. Notwithstanding the foregoing, the terms of this
Section 13.9 shall not apply in the event that a Seller Default or Failure applies to: (a) any
failure by Purchaser to satisfy Purchaser’s obligation to make the material deliveries required to
be made by it on the Closing Date pursuant to Section 10.3.2 hereof (including the obligation to
pay the Purchase Price), or (b) a breach or default by Purchaser under Sections 3.2.1, 3.3 or 16.4,
then in each of which cases under (a) or (b), the Purchaser Cure Period shall be two (2) business
days.

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ARTICLE 14

RISK OF LOSS

     14.1 Casualty. If, at any time after the Effective Date and prior to Closing or
earlier termination of this Agreement, the Property or any portion thereof is damaged or destroyed
by fire or any other casualty (a “Casualty”), Seller shall give written notice of such
Casualty to Purchaser promptly after the occurrence of such Casualty.

          14.1.1 Material Casualty. If the amount of the repair restoration of the Property
required by a Casualty equals or exceeds Two Million and no/100 Dollars ($2,000,000.00), as
reasonably determined by Seller (a “Material Casualty”), and the Casualty was not caused by
Purchaser or Purchaser’s Inspectors, or their respective employees or agents, then Purchaser shall
have the right to elect, by providing written notice to Seller within ten (10) Business Days after
Purchaser’s receipt of Seller’s written notice of such Casualty, to (a) terminate this Agreement,
in which case the Earnest Money shall be refunded to Purchaser in accordance with Section 3.2.4,
and the Parties shall have no further rights or obligations under this Agreement, except those
which expressly survive such termination, or (b) proceed to Closing, without terminating this
Agreement, in which case Seller shall (i) provide Purchaser with a credit against the Purchase
Price in an amount equal to the lesser of: (A) the applicable insurance deductible and the amount
by which the Casualty is either uninsured or underinsured, and (B) the reasonable estimated costs
for the repair or restoration of the Property required by such Casualty, and (ii) transfer and
assign to Purchaser all of Seller’s right, title and interest in and to all proceeds from all
casualty and lost profits insurance policies maintained by Seller with respect to the Property or
the Business, except those proceeds allocable to lost profits and costs incurred by Seller for the
period prior to the Closing. If Purchaser fails to provide written notice of its election to Seller
within such time period, then Purchaser shall be deemed to have elected to proceed to Closing
pursuant to clause (b) of the preceding sentence. If the Closing is scheduled to occur within
Purchaser’s ten (10) Business Day election period, the Closing Date shall be postponed until the
date which is five (5) Business Days after the expiration of such ten (10) Business Day election
period.

          14.1.2 Non Material Casualty. In the event of any (i) Casualty which is not a Material
Casualty, or (ii) Material Casualty which is caused by Purchaser or Purchaser’s Inspectors, or
their respective employees or agents, then Purchaser shall not have the right to terminate this
Agreement, but shall proceed to Closing, in which case Seller shall (A) provide Purchaser with a
credit against the Purchase Price in an amount equal to the lesser of: (1) the applicable insurance
deductible and the amount by which the Casualty is either uninsured or underinsured, and (2) the
reasonable estimated costs for the repair or restoration required by such Casualty, and (B)
transfer and assign to Purchaser all of Seller’s right, title and interest in and to all proceeds
from all casualty and lost profits insurance policies maintained by Seller with respect to the
Hotel, except those proceeds allocable to any lost profits or costs incurred by Seller for the
period prior to the Closing. The foregoing provision shall not operate to reduce any insurance
proceeds payable to Seller under Section 8.13.

     14.2 Condemnation. If, at any time after the Effective Date and prior to Closing or
the earlier termination of this Agreement, any Governmental Authority commences or threatens in
writing any condemnation proceeding or other proceeding in eminent domain with respect to all or
any portion of the Real Property (a “Condemnation”), Seller shall give written notice of
such Condemnation to Purchaser promptly after Seller receives notice of such Condemnation.

          14.2.1 Material Condemnation. If the Condemnation would (i) result in the permanent
loss of more than five percent (5%) of the fair market value of the Land or Improvements as
reasonably determined by Seller, (ii) result in any permanent material reduction or restriction in
access to the Land or Improvements, or (iii) have a permanent materially adverse effect on the
Business as conducted prior to

45

 

such Condemnation (a “Material Condemnation”), then Purchaser shall have the right to
elect, by providing written notice to Seller within ten (10) Business Days after Purchaser’s
receipt of Seller’s written notice of such Condemnation, to (A) terminate this Agreement, in which
case the Earnest Money shall be refunded to Purchaser in accordance with Section 3.2.4, and the
Parties shall have no further rights or obligations under this Agreement, except those which
expressly survive such termination, or (B) proceed to Closing, without terminating this Agreement,
in which case Seller shall assign to Purchaser all of Seller’s right, title and interest in all
proceeds and awards from such Condemnation. If Purchaser fails to provide written notice of its
election to Seller within such time period, then Purchaser shall be deemed to have elected to
proceed to Closing pursuant to clause (B) of the preceding sentence. If the Closing is scheduled to
occur within Purchaser’s ten (10) Business Day election period, the Closing shall be postponed
until the date which is five (5) Business Days after the expiration of such ten (10) Business Day
election period.

          14.2.2 Non-Material Condemnation. In the event of any Condemnation other than a
Material Condemnation, Purchaser shall not have the right to terminate this Agreement, but shall
proceed to Closing, in which case Seller shall assign to Purchaser all of Seller’s right, title and
interest in all proceeds and awards from such Condemnation.

ARTICLE 15

SURVIVAL, INDEMNIFICATION AND RELEASE

     15.1 Survival. Except as expressly set forth in this Agreement, all representations,
warranties, covenants, liabilities and obligations shall be deemed (i) if the Closing occurs, to
merge in the Deed and not survive the Closing, or (ii) if this Agreement is terminated, not to
survive such termination.

          15.1.1 Survival of Representations, Warranties, Covenants and Obligations. Except as
provided in Section 11.2.13, if the Closing occurs, the representations, warranties, covenants and
obligations of Seller and the representations of Purchaser in this Agreement shall survive the
Closing for a period commencing on the Closing Date and expiring at 5:00 p.m. (Eastern Time) on the
date which is one hundred eighty (180) days after the Closing Date; provided, the obligation of
Seller contained in Section 15.2(iii) shall survive Closing for a period of two (2) years.

          15.1.2 Survival of Indemnification. For purposes hereof, the term “Survival Period”
means the period that any representation, warranty or covenant survives the termination or the
Closing as set forth in this Agreement. This Article 15 and all other rights and obligations of
defense and indemnification as expressly set forth in this Agreement shall survive the Closing or
termination of this Agreement for the relevant Survival Period (as provided herein).

     15.2 Indemnification by Seller. Subject to the limitations set forth in Article 5 and
this Article 15, and any other express provision of this Agreement either limiting or granting
indemnification, Seller shall indemnify and hold harmless the Purchaser Indemnitees from and
against any Indemnification Loss incurred by any Purchaser Indemnitee to the extent resulting from
(i) the breach of any express representations or warranties of Seller in this Agreement which
expressly survives the Closing or termination of this Agreement (as the case may be), (ii) the
breach by Seller of any of its covenants or obligations under this Agreement which expressly
survive the Closing or termination of this Agreement (as the case may be), and (iii) the Retained
Liabilities.

     15.3 Indemnification by Purchaser. Subject to the limitations set forth in this
Article 15, Purchaser shall indemnify and hold harmless the Seller Indemnitees from and against any
Indemnification Loss incurred by any Seller Indemnitee to the extent resulting from (i) any breach
of any representations or warranties of Purchaser in this Agreement which expressly survives the
Closing or termination of this

46

 

Agreement (as the case may be), and (ii) any breach by Purchaser of any of its covenants or
obligations under this Agreement which expressly survives the Closing or termination of this
Agreement (as the case may be).

     15.4 Limitations on Indemnification Obligations.

          15.4.1 Failure to Provide Notice within Survival Period. Notwithstanding anything to
the contrary in this Agreement, an Indemnitee which is seeking defense or indemnification for any
Indemnification Loss shall be entitled to indemnification for such breach only if the Indemnitee
has given written notice to the Indemnitor in accordance with Section 15.5.1 prior to the
expiration of the applicable Survival Period, if any.

          15.4.2 Indemnification Deductible and Cap. Notwithstanding anything to the contrary in
this Agreement, Seller shall be not be required to provide indemnification to the Purchaser
Indemnitees pursuant to Sections 15.2(i) or (ii) to the extent that the aggregate amount of all
Indemnification Losses incurred by the Purchaser Indemnitees for which Purchaser otherwise would be
entitled to indemnification does not exceed Two Hundred Fifty Thousand and no/100 Dollars
($250,000.00) (the “Indemnification Deductible”). Further, if such Indemnification Losses
exceed the Indemnification Deductible, Purchaser (i) shall be entitled to payment of the entire
amount of the Indemnification Losses without regard to the Indemnification Deductible but (ii)
shall not be entitled to defense or indemnification in the event and to the extent that the
aggregate amount of all Indemnification Losses for which Purchaser would otherwise be entitled to
indemnification exceeds Three Million and no/100 Dollars ($3,000,000) (the “Indemnification
Cap”). Notwithstanding the foregoing, the Indemnification Deductible and the Indemnification
Cap shall not apply to Seller’s indemnification obligations set forth in Sections 8.8, 8.14 or
15.2(iii) hereof, or to a breach of covenants and obligations of Seller set forth in Article 11
hereof.

          15.4.3 Failure to Provide Timely Notice of Indemnification Claim. Notwithstanding
anything to the contrary in this Agreement, an Indemnitee shall not be entitled to defense or
indemnification to the extent the Indemnitee’s failure to promptly notify the Indemnitor in
accordance with Section 15.4.1, (i) materially prejudices the Indemnitor’s ability to defend
against any Third-Party Claim on which such Indemnification Claim is based, or (ii) materially
increases the amount of Indemnification Loss incurred in respect of such indemnification obligation
of the Indemnitor.

          15.4.4 Effect of Taxes, Insurance or Other Reimbursement. Notwithstanding anything to
the contrary in this Agreement, the amount of any Indemnification Loss for which indemnification is
provided to an Indemnitee under this Article 15 shall be net of any tax benefits realized or
insurance proceeds actually received by such Indemnitee in connection with the Indemnification
Claim, or any other third party reimbursement. The Indemnitee shall use commercially reasonable
efforts to realize any tax benefit, collect any insurance proceeds or obtain any third party
reimbursement with respect to such Indemnification Claim, and if such tax benefits, insurance
proceeds or reimbursement are realized or obtained by the Indemnitee after the Indemnitor has paid
any amount in respect of an Indemnification Loss to the Indemnitee, the Indemnitee shall reimburse
the amount realized or collected by the Indemnitee up to the amount received from the Indemnitor
for such Indemnification Loss, less the reasonable costs of collection, including reasonable
attorneys’ fees.

     15.5 Indemnification Procedure.

          15.5.1 Notice of Indemnification Claim. If any of the Seller Indemnitees or Purchaser
Indemnitees (as the case may be) (each, an “Indemnitee”) is entitled to defense or
indemnification under Sections 8.13, 15.2 or 15.3, or any other express provision in this Agreement
(each, an “Indemnification 

47

 

Claim”), the Party required to provide defense or indemnification to such Indemnitee
(the “Indemnitor”) shall not be obligated to defend, indemnify and hold harmless such
Indemnitee unless and until such Indemnitee provides written notice to such Indemnitor promptly
after such Indemnitee has actual knowledge of any facts or circumstances on which such
Indemnification Claim is based or a Third-Party Claim is made on which such Indemnification Claim
is based, describing in reasonable detail such facts and circumstances or Third-Party Claim with
respect to such Indemnification Claim.

          15.5.2 Resolution of Indemnification Claim Not Involving Third-Party Claim. If the
Indemnification Claim does not involve a Third-Party Claim and is disputed by the Indemnitor, the
dispute shall be resolved by litigation or other means of alternative dispute resolution as the
Parties may agree in writing.

          15.5.3 Resolution of Indemnification Claim Involving Third-Party Claim. If the
Indemnification Claim involves a Third-Party Claim, the Indemnitor shall have the right (but not
the obligation) to assume the defense of such Third-Party Claim, at its cost and expense, and shall
use good faith efforts consistent with prudent business judgment to defend such Third-Party Claim
in a cost efficient manner, provided that (i) the counsel for the Indemnitor who shall conduct the
defense of the Third-Party Claim shall be reasonably satisfactory to the Indemnitee (unless
selected by Indemnitor’s insurance company), (ii) the Indemnitee, at its cost and expense, may
participate in, but shall not control, the defense of such Third-Party Claim, and (iii) the
Indemnitor shall not enter into any writing stating any admission of liability or culpability of
Indemnitee or any settlement or other agreement which requires any performance by the Indemnitee,
other than the payment of money which shall be paid by the Indemnitor. Indemnitor will not be
obligated hereunder for indemnifying the Indemnitee with respect to any settlement agreement for
any Indemnification Claim which Indemnitee enters into without the Indemnitor’s prior written
consent, which consent may be withheld in Indemnitor’s sole discretion. If the Indemnitor elects
not to assume the defense of such Third-Party Claim, the Indemnitee shall have the right to retain
the defense of such Third-Party Claim and shall use good faith efforts consistent with prudent
business judgment to defend such Third-Party Claim in a cost efficient manner.

          15.5.4 Accrual of Indemnification Obligation. Notwithstanding anything to the contrary
in this Agreement, (a) the Indemnitee shall have no right to indemnification against the Indemnitor
for any Indemnification Claim which (i) does not involve a Third-Party Claim but is disputed by
Indemnitor until such time as such dispute is resolved by court order or order by an applicable
authority with competent jurisdiction, written agreement or other means as the Parties otherwise
may agree in writing, or (ii) involves a Third-Party Claim until such time as such Third-Party
Claim is concluded, including any appeals with respect thereto other than costs of defense of the
Indemnitee and (b) if the written notice of an Indemnification Claim required pursuant to Section
15.4.1 is received prior to the end of the Survival Period, the subject matter of the
Indemnification Claim shall be covered by the indemnification set forth in this Agreement
notwithstanding either (i) the fact that the resolution of the Indemnification Claim extends beyond
the Survival Period or (ii) any delay caused by the Indemnitee’s performance of its obligations
under Section 15.4.4.

          15.6 Exclusive Remedy for Indemnification Loss. Except as otherwise provided in
Article 13 and except for claims based on fraud, the indemnification provisions in this Article 15
shall be the sole and exclusive remedy of any Indemnitee with respect to any claim for
Indemnification Loss arising from or in connection with this Agreement.

48

 

ARTICLE 16

MISCELLANEOUS PROVISIONS

     16.1 Notices.

          16.1.1 Method of Delivery. All notices, requests, demands and other communications
required to be provided by any Party under this Agreement (each, a “Notice”) shall be in
writing and delivered, at the sending Party’s cost and expense, by (i) personal delivery, (ii)
Federal Express or other reputable overnight courier service, or (iii) facsimile transmission, with
a verification copy sent on the same day by any of the methods set forth in clauses (i), or (ii),
to the recipient Party at the following address or facsimile number:

	 	 	 
	If to Seller:

	 	JER O’Hare Hotel, LLC
	 

	 	c/o JER Partners
	 

	 	1650 Tysons Blvd.
	 

	 	Suite 1600
	 

	 	McLean, VA 22102
	 

	 	Attention: Gerald R. Best and Alex P. Gilbert
	 

	 	Telecopy No. (703) 714-8100
	 
	 	 
	with a copy to:

	 	Allen & Overy LLP
	 

	 	1221 Avenue of the Americas
	 

	 	New York, NY 10020
	 

	 	Attention: Kevin J. O’Shea
	 

	 	Telecopy No. (212) 610-6399
	 
	 	 
	If to Purchaser:

	 	Ashford Hospitality Limited Partnership
	 

	 	11485 Dallas Parkway, Suite 1100
	 

	 	Dallas, TX 75254
	 

	 	Attention: David A. Brooks
	 

	 	Telecopy No. (972) 490-9605
	 
	 	 
	with a copy to:

	 	Akin Gump Strauss Hauer & Feld LLP
	 

	 	1700 Pacific Avenue, Suite 4100
	 

	 	Dallas, TX 75201
	 

	 	Attention: Carl B. Lee, P.C.
	 

	 	Telecopy No. (214) 969-4343

          16.1.2 Receipt of Notices. All Notices sent by a Party (or its counsel pursuant to
Section 16.1.4) under this Agreement shall be effective upon (i) delivery, personally or by
facsimile, as the case may be, to the address or facsimile number of the recipient Party, provided
that such delivery is made prior to 5:00 p.m. (local time for the recipient Party) on a Business
Day, otherwise the following Business Day, or (ii) the attempted delivery, personally or by
facsimile, as the case may be, of such Notice if (A) such recipient Party refuses delivery of such
Notice, or (B) such recipient Party is no longer at such address or facsimile number, and such
recipient Party failed to provide the sending Party with its current address or facsimile number
pursuant to Section 16.1.3 or (iii) one (1) Business Day after such Notice is deposited with an
overnight delivery service for overnight delivery.

          16.1.3 Change of Address. The Parties and their respective counsel shall have the
right to change their respective address and/or facsimile number for the purposes of this Section
16.1 by providing a Notice of such change in address and/or facsimile number as required under this
Section 16.1.

          16.1.4 Delivery by Party’s Counsel. The Parties agree that the attorneys for such
Party shall have the authority to deliver Notices on such Party’s behalf to the other Party hereto.

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     16.2 No Recordation. Neither Purchaser nor any Affiliate of Purchaser, nor any Person
acting by or on behalf of Purchaser shall record this Agreement, or any memorandum or other notice
of this Agreement, in any public records. Purchaser hereby grants a power of attorney to Seller
(which power is coupled with an interest and shall be irrevocable) to execute and record on behalf
of Purchaser a memorandum or other notice removing this Agreement or any memorandum or other notice
of this Agreement from the public records, or evidencing the termination of this Agreement.

     16.3 Time is of the Essence. Time is of the essence of this Agreement; provided,
however, that (a) notwithstanding anything to the contrary in this Agreement, if the time period
for the performance of any covenant or obligation, satisfaction of any condition or delivery of any
Notice or item required under this Agreement shall expire on a day other than a Business Day, such
time period shall be extended automatically to the next Business Day and (b) nothing set forth in
this Section 16.3 shall limit the cure periods agreed to by the Parties in this Agreement.

     16.4 Assignment. Purchaser shall not assign this Agreement or any interest therein to
any Person, without the prior written consent of Seller, which consent may be withheld in Seller’s
sole discretion. Notwithstanding the foregoing, Purchaser shall have the right to designate any
Affiliate of Purchaser (provided such Affiliate remains an Affiliate of Purchaser) as its nominee
to receive title to the Property, or assign all (and not less than all) of its right, title,
interest and obligations in, to and under this Agreement to any Affiliate of Purchaser by providing
written notice to Seller no later than ten (10) days prior to the Closing; provided, however, that
(a) such Affiliate remains an Affiliate of Purchaser, (b) Purchaser shall not be released from any
of its liabilities and obligations under this Agreement by reason of such designation or assignment
unless and until Closing occurs, (c) Purchaser and its designee or assignee shall be responsible
for any incremental additional transfer tax as a result of such designation or assignment, and (d)
such designation or assignment shall not be effective until Purchaser has provided Seller with a
fully executed copy of such designation or assignment and assumption instrument, which shall (i)
provide that Purchaser and such designee or assignee shall be jointly and severally liable for all
liabilities and obligations of Purchaser under this Agreement up until (but in no event after)
Closing, (ii) include a representation and warranty in favor of Seller that all representations and
warranties made by Purchaser in this Agreement are true and correct with respect to such designee
or assignee as of the date of such designation or assignment, and will be true and correct as of
the Closing, and (iii) otherwise be in form and substance reasonably satisfactory to Seller.
Notwithstanding the foregoing, Purchaser shall have the right to assign certain portions of the
Property to the Operating Lessee upon prior written notice to Seller, so long as such assignment is
in accordance with the terms and conditions of the Management Agreement.

     16.5 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the Parties, and their respective successors and permitted assigns.

     16.6 Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies on any Person other than (i) the Parties and their respective successors and permitted
assigns, and (ii) any Indemnitee to the extent such Indemnitee is expressly provided any right of
defense or indemnification in this Agreement.

     16.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS, WITHOUT GIVING EFFECT TO ANY PRINCIPLES REGARDING CONFLICT OF LAWS.

     16.8 Severability. If any term or provision of this Agreement is held to be or
rendered invalid or unenforceable at any time in any jurisdiction, such term or provision shall not
affect the validity or

50

 

enforceability of any other terms or provisions of this Agreement, or the validity or
enforceability of such affected term or provision at any other time or in any other jurisdiction.

     16.9 JURISDICTION AND VENUE. ANY LITIGATION OR OTHER COURT PROCEEDING WITH RESPECT TO
ANY MATTER ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT SHALL BE CONDUCTED IN THE NEW YORK
STATE SUPREME COURT IN NEW YORK COUNTY OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN THE STATE OF NEW YORK, AND SELLER (FOR ITSELF AND ALL SELLER INDEMNITEES)
AND PURCHASER (FOR ITSELF AND ALL PURCHASER INDEMNITEES) HEREBY SUBMIT TO JURISDICTION AND CONSENT
TO VENUE IN SUCH COURTS, AND WAIVE ANY DEFENSE BASED ON FORUM NON CONVENIENS.

     16.10 WAIVER OF TRIAL BY JURY. EACH PARTY HEREBY WAIVE ITS RIGHT TO A TRIAL BY JURY
IN ANY LITIGATION OR OTHER COURT PROCEEDING WITH RESPECT TO ANY MATTER ARISING FROM OR IN
CONNECTION WITH THIS AGREEMENT.

     16.11 Prevailing Party. If any litigation or other court action, arbitration or
similar adjudicatory proceeding is commenced by any Party to enforce its rights under this
Agreement against any other Party, all fees, costs and expenses, including reasonable attorneys’
fees and court costs, incurred by the prevailing Party in such litigation, action, arbitration or
proceeding shall be reimbursed by the losing Party; provided, that if a Party to such litigation,
action, arbitration or proceeding prevails in part, and loses in part, the court, arbitrator or
other adjudicator presiding over such litigation, action, arbitration or proceeding shall award a
reimbursement of the fees, costs and expenses incurred by such Party on an equitable basis.

     16.12 Incorporation of Recitals, Exhibits and Schedules. The recitals to this
Agreement, and all exhibits and schedules (as amended, modified and supplemented from time to time
pursuant to Section 3) referred to in this Agreement are incorporated herein by such reference and
made a part of this Agreement. Any matter disclosed in any schedule to this Agreement shall be
deemed to be incorporated in all other schedules to this Agreement.

     16.13 Updates of Schedules. Notwithstanding anything to the contrary in this
Agreement, Seller shall have the right to amend and supplement any schedule to this Agreement
(other than Schedule 3.4) from time to time by providing a written copy of such amendment
or supplement to Purchaser without Purchaser’s consent to the extent that (i) such schedule needs
to be amended or supplemented to maintain the truth or accuracy of the applicable representation or
warranty or the information disclosed therein, (ii) Seller did not have Knowledge as of the time
the original schedule was delivered to Purchaser of the matter being disclosed in such amendment or
supplement by providing a written copy of such amendment or supplement to Purchaser, and (iii) the
event or circumstances that results in the amendment or supplement to such schedule did not occur
prior to the Effective Date (or, in the case of any representation or warranty which is qualified
to the Seller’s Knowledge, Seller did not have Knowledge of such event or circumstance prior to the
execution of this Agreement). If Seller makes any amendment or supplement to the schedules other
than to reflect matters permitted under this Agreement or for matters otherwise consented to by
Purchaser (a “Post Execution Disclosure”), then within ten (10) Business Days of Purchaser’
receipt of Seller’s written notice hereof, Purchaser shall elect (as its sole right and remedy) by
providing written notice to Seller to either (A) terminate this Agreement pursuant to Section
13.2(iii) as a result of such Post-Execution Disclosure, if, and only if, the corresponding
representation or warranty or other information (when taken individually or in the aggregate with
all other Post-Execution Disclosures) would be untrue or incorrect in any material respect in the
absence of such Post Execution Disclosure which is amended or supplemented by such Post Execution
Disclosure and would result, after Closing, in a material adverse effect on Purchaser or to
Purchaser’s ownership of the Property or the

51

 

conduct of the Business or to the value of the Property or the Business or (B) proceed to
Closing (without any reduction, credit or offset to the Purchase Price) notwithstanding such Post
Execution Disclosure, the corresponding representation, warranty or other information shall be
deemed qualified by such Post Execution Disclosure for the purposes of limiting the defense and
indemnification obligations of Seller under this Agreement. If Purchaser does not provide Seller
with Purchaser’s written election within such time period, Purchaser shall be deemed to have
elected to proceed to Closing pursuant to clause (B) of the preceding sentence.

     16.14 Days. If any action is required to be performed, or if any notice, consent or
other communication is given, on a day that is not a Business Day, including the Closing Date, such
performance shall be deemed to be required, and such notice, consent or other communication shall
be deemed to be given on the first Business Day following such non-Business Day. Unless otherwise
specified herein, all references herein to “day” or “days” shall refer to calendar days and not
Business Days.

     16.15 Entire Agreement. This Agreement sets forth the entire understanding and
agreement of the Parties hereto, and shall supersede any other agreements and understandings
(written or oral) between the Parties on or prior to the Effective Date with respect to the
transaction described in this Agreement.

     16.16 Amendments, Waivers and Termination of Agreement. Except as set forth in
Section 16.13, no amendment or modification to any terms or provisions of this Agreement, waiver of
any covenant, obligation, breach or default under this Agreement or termination of this Agreement
(other than as expressly provided in this Agreement), shall be valid unless in writing and executed
and delivered by each of the Parties.

     16.17 Not an Offer. The delivery by Seller of this Agreement executed by Seller shall
not constitute an offer to sell the Property, and Seller shall have no obligation to sell the
Property to Purchaser, unless and until all Parties have executed and delivered this Agreement to
all other Parties.

     16.18 Execution of Agreement. A Party may deliver executed signature pages to this
Agreement by facsimile transmission to any other Party, which facsimile copy shall be deemed to be
an original executed signature page. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which counterparts together shall constitute
one agreement with the same effect as if the Parties had signed the same signature page.

     16.19 ACTUAL DAMAGES. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY OR THEIR RESPECTIVE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS, OR ANY OF THEM, BE LIABLE TO THE OTHER
PARTY, WHETHER IN TORT, CONTRACT OR OTHERWISE FOR ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS. THE PARTIES’ LIABILITY HEREUNDER SHALL BE LIMITED
TO DIRECT ACTUAL DAMAGES, AND ALL OTHER DAMAGES AT LAW OR IN EQUITY ARE WAIVED. THE LIMITATIONS ON
DAMAGES SPECIFIED IN THIS SECTION 16.19 ARE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED
THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, OR ACTIVE OR PASSIVE. THE PROVISIONS OF THIS SECTION 16.19 SHALL SURVIVE THE
CLOSING OR EARLIER TERMINATION OF THIS AGREEMENT.

[Remainder of page intentionally left blank;

Signatures on following pages]

52

 

     IN WITNESS WHEREOF, each Party has caused this Agreement to be executed and delivered in its
name by a duly authorized officer or representative.

	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 	 	JER O’HARE HOTEL, LLC, a Delaware
limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/S/ GERALD R. BEST	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Gerald R. Best	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	PURCHASER:

ASHFORD HOSPITALITY LIMITED
PARTNERSHIP, a 

Delaware limited
partnership	 	 
	 
	 	 	 	 	 	 
	 	 	By: Ashford OP General Partner LLC, a Delaware limited
liability company, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/S/ DAVID A. BROOKS	 	 
	 	 	 	 	 	 	 
	 	 	Name: David A. Brooks	 	 
	 	 	Its: Vice Presidentexv4w2

 

Exhibit 4.2

Hastings Entertainment, Inc.

2006 Incentive Stock Plan

	1.	 	Purposes of the Plan

This 2006 Incentive Stock Plan (the “Plan”) is intended to attract, retain and provide incentives
to Employees, officers, Directors and consultants of the Company, and to thereby increase overall
shareholders’ value. The Plan generally provides for the granting of stock options, stock
appreciation rights, restricted shares, Restricted Stock Units, performance shares, other
stock-based awards or any combination of the foregoing.

	2.	 	Definitions and Rules of Construction

For purposes of the Plan, the following capitalized words shall have the meanings set forth below:

“Award” means an Option, Stock Appreciation Right, Restricted Share, Restricted Stock Unit,
Performance Award, or Other Award granted by the Committee pursuant to the terms of the
Plan.

“Award Agreement” means an agreement, certificate or other type or form of document or
documentation approved by the Committee that sets forth the terms and conditions of an
Award. An Award Agreement may be written or electronic and, unless the Committee requires
otherwise, need not be signed by a representative of the Company or a Participant.

“Beneficial Owner” and “Beneficially Owned” have the meaning set forth in Rule 13d-3 under
the Exchange Act.

“Board” means the Board of Directors of the Company, as constituted from time to time.

“Cause” means termination of Participant’s employment for “cause” as defined in any
employment or severance agreement the Participant may have with the Company or a Subsidiary
or, if no such agreement exists, “cause” means a violation of the Company’s policies or
procedures, unless otherwise provided in an Award Agreement.

“Change of Control” means:

(i) An acquisition by any person (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the “Exchange Act”)) who is not as of the effective date of
the Plan the beneficial holder of at least 10 % of the Company’s then outstanding common
stock, of beneficial ownership (within the meaning of Rule 13d 3 promulgated under the
Exchange Act) of 30 % or more of either (x) the then outstanding common stock (the
“Outstanding Company Common Stock”) or (y) the combined voting power of the then outstanding
common stock entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); excluding, however, the following: (1) any acquisition of
Outstanding Company Common Stock by the Company, (2) any acquisition of Outstanding Company
Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (3) any acquisition of Outstanding
Company Common Stock by any person pursuant to a transaction which complies with clauses
(1), (2) and (3) of subsection (iii) of this definition; or

(ii) A change in the composition of the Board such that the individuals who, as of the
effective date of the Plan, constitute the Board (such Board shall be hereinafter referred
to as the “Incumbent Board”) ceased for any reason to constitute at least a majority of the
Board; provided, however, for purposes of this definition, that any individual who becomes a
Director subsequent to such effective date; whose election, or nomination for election by
the Company’s stockholders, was approved by a vote of at least a majority of

 

 

those individuals who are Directors and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be considered as though such individual
were a member of the Incumbent Board; but, provided further, that any such individual whose
initial assumption of office occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a 11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents by or on
behalf of a person or legal entity other than the Board shall not be so considered as a
member of the Incumbent Board; or

(iii) The consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (“Corporate
Transaction”); excluding, however, such a Corporate Transaction pursuant to which (1) all or
substantially all of the individuals and entities who are the Beneficial Owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 50% of, respectively, the outstanding common stock, and the
combined voting power of the then outstanding common stock entitled to vote generally in the
election of directors, as the case may be, of the company resulting from such Corporate
Transaction (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (2) no person (other then the Company, any employee benefit
plan (or related trust) sponsored or maintained by the Company or any corporation controlled
by the Company or such corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, 30% or more of, respectively, the outstanding
shares of common stock of the corporation resulting form such Corporate Transaction or the
combined voting power of the outstanding voting securities of such corporation entitled to
vote generally in the election of directors except to the extent that such ownership existed
with respect to the Company prior to the Corporate Transaction and (3) individuals who were
members of the Incumbent Board will constitute at least a majority of the board of directors
of the corporation resulting from such Corporate Transaction; or

(iv) The approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

Notwithstanding the foregoing, with respect to an Award that is subject to Section 409A of
the Code and the payment or settlement of the Award will accelerate upon a Change of
Control, no event set forth herein will constitute a Change of Control for purposes of the
Plan or any Award Agreement unless such event also constitutes a “change in ownership,”
“change in effective control,” or “change in the ownership of a substantial portion of the
Company’s assets” as defined under Section 409A of the Code.

“Code” means the Internal Revenue Code of 1986, as amended, and the applicable rulings and
regulations promulgated thereunder.

“Committee” means the Compensation Committee of the Board, any successor committee thereto
or any other committee appointed from time to time by the Board to administer the Plan,
which committee shall meet the requirements of Section 162(m) of the Code, Section 16(b) of
the Exchange Act and the applicable rules of the NASDAQ National Market System or by the
principal exchange on which the Stock is traded; provided, however, that, if any Committee
member is found not to have met the qualification requirements of Section 162(m) of the Code
and Section 16(b) of the Exchange Act, any actions taken or Awards granted by the Committee
shall not be invalidated by such failure to so qualify.

“Common Stock” means the common stock of the Company, par value $.01 per share, or such
other class of share or other securities as may be applicable under Section 13 of the Plan.

“Company” means Hastings Entertainment, Inc., a Texas corporation.

 

 

“Disability” means a Participant being considered “disabled” within the meaning of Section
409A of the Code, unless otherwise provided in an Award Agreement.

“Effective Date” means the date on which the Plan is adopted by the Board.

“Eligible Individuals” means the individuals described in Section 4(a) of the Plan who are
eligible for Awards under the Plan.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

“Fair Market Value” means, with respect to a share of Common Stock, the fair market value
thereof as of the relevant date of determination, as determined in accordance with the
valuation methodology approved by the Committee. In the absence of any alternative
valuation methodology approved by the Committee, the Fair Market Value of a share of Common
Stock shall equal the average of the high and low sales price as reported on the date of
grant by the NASDAQ National Market System or by the principal exchange on which the Common
Stock is traded or, in the event that the Common Stock is not listed for trading on the NYSE
or such other national securities exchange as may be designated by the Committee but is
quoted on an automated system, in any such case on the valuation date (or, if there were no
sales on the valuation date, the average of the highest and lowest quoted selling prices as
reported on said composite tape or automated system for the most recent day during which a
sale occurred).

“Incentive Stock Option” means an Option that is intended to comply with the requirements of
Section 422 of the Code or any successor provision thereto.

“Non-Employee Director” means any member of the Board who is not an officer or employee of
the Company or any Subsidiary.

“Nonqualified Stock Option” means an Option that is not intended to comply with the
requirements of Section 422 of the Code or any successor provision thereto.

“Option” means an Incentive Stock Option or Nonqualified Stock Option granted pursuant to
Section 7 of the Plan.

“Other Award” means an Award granted pursuant to Section 11 of the Plan.

“Participant” means an Eligible Individual who has been granted an Award under the Plan.

“Performance Period” means the period established by the Committee and set forth in the
applicable Award Agreement over which Performance Targets are measured.

“Performance Award” means a Performance Share or Performance Unit granted pursuant to
Section 10 of the Plan.

“Performance Goals” means the performance goals established by the Committee, from among the
performance criteria provided in Section 6(g), and set forth in the applicable Award
Agreement.

“Performance Share” means a Performance Award denominated in Shares granted pursuant to
Section 10 of the Plan.

“Performance Unit” means a Performance Award denominated in cash granted pursuant to Section
10 of the Plan.

 

 

“Permitted Transferees” means (i) a Participant’s family member, (ii) one or more trusts
established in whole or in part for the benefit of one or more of such family members, (iii)
one or more entities which are beneficially owned in whole or in part by one or more such
family members, [or (iv) a charitable or not-for-profit organization].

“Plan” means this Hastings Entertainment, Inc. 2006 Incentive Stock Plan, as amended or
restated from time to time.

“Plan Limit” means the maximum aggregate number of Shares that may be issued for all
purposes under the Plan as set forth in Section 5(a) of the Plan.

“Prior Plans” means the Hastings Entertainment, Inc. 1996 and 2002 Incentive Stock Plans, as
amended from time to time, and any other prior equity stock plans of the Company.

“Restricted Share” means a Share granted pursuant to Section 8(a) of the Plan.

“Restricted Stock Unit” means a right to receive one or more Shares (or cash, if applicable)
in the future granted pursuant to Section 8(b) of the Plan.

“Retirement” means termination of Participant’s employment by reason of “retirement” as
defined in any employment or severance agreement the Participant may have with the Company
or a Subsidiary or, if no such agreement exists, “retirement” means [to come] unless
otherwise provided in an Award Agreement.

“Shares” means shares of Common Stock, as may be adjusted pursuant to Section 13(b).

“Stock Appreciation Right” means a right to receive all or some portion of the appreciation
on Shares granted pursuant to Section 9 of the Plan.

“Subsidiary” means (i) a corporation or other entity with respect to which the Company,
directly or indirectly, has the power, whether through the ownership of voting securities,
by contract or otherwise, to elect at least a majority of the members of such corporation’s
board of directors or analogous governing body, or (ii) any other corporation or other
entity in which the Company, directly or indirectly, has an equity or similar interest and
which the Committee designates as a Subsidiary for purposes of the Plan. For purposes of
determining eligibility for the grant of Incentive Stock Options under the Plan, the term
“Subsidiary” shall be defined in the manner required by Section 424(f) of the Code.

“Substitute Award” means any Award granted upon assumption of, or in substitution or
exchange for, outstanding employee equity awards previously granted by a company or other
entity acquired by the Company or with which the Company combines pursuant to the terms of
an equity compensation plan that was approved by the stockholders of such company or other
entity.

“Target Number” means the target number of Shares or dollar-denominated units of a
Performance Award established by the Committee and set forth in the applicable Award
Agreement.

	3.	 	Administration

(a) Committee. The Plan shall be administered by the Committee, which shall
have full power and authority, subject to the express provisions hereof, to:

(i) select the Participants from the Eligible Individuals;

(ii) grant Awards in accordance with the Plan;

(iii) determine the number of Shares subject to each Award or the cash amount payable in
connection with

 

 

an Award;

(iv) determine the terms and conditions of each Award, including, without limitation, those
related to term, permissible methods of exercise, vesting, cancellation, payment,
settlement, exercisability, Performance Periods, Performance Goals, and the effect, if any,
of a Participant’s termination of employment with the Company or any of its Subsidiaries or,
subject to Section 6(d), a Change of Control of the Company;

(v) subject to Sections 16 and 17(e) of the Plan, amend the terms and conditions of an Award
after the granting thereof;

(vi) specify and approve the provisions of the Award Agreements delivered to Participants in
connection with their Awards;

(vii) construe and interpret any Award Agreement delivered under the Plan;

(viii) make factual determinations in connection with the administration or interpretation
of the Plan;

(ix) adopt, prescribe, amend, waive and rescind administrative regulations, rules and
procedures relating to the Plan;

(x) employ such legal counsel, independent auditors and consultants as it deems desirable
for the administration of the Plan and to rely upon any advice, opinion or computation
received therefrom;

(xi) vary the terms of Awards to take account of tax and securities law and other regulatory
requirements or to procure favorable tax treatment for Participants;

(xii) correct any defects, supply any omission or reconcile any inconsistency in any Award
Agreement or the Plan; and

(xiii) make all other determinations and take any other action desirable or necessary to
interpret, construe or implement properly the provisions of the Plan or any Award Agreement.

(b) Plan Construction and Interpretation. The Committee shall have full power
and authority, subject to the express provisions hereof, to construe and interpret the Plan.

(c) Determinations of Committee Final and Binding. All determinations by the
Committee in carrying out and administering the Plan and in construing and interpreting the
Plan shall be made in the Committee’s sole discretion and shall be final, binding and
conclusive for all purposes and upon all persons interested herein.

(d) Delegation of Authority. To the extent not prohibited by applicable laws,
rules and regulations, the Committee may, from time to time, delegate some or all of its
authority under the Plan to a subcommittee or subcommittees thereof or other persons or
groups of persons as it deems necessary, appropriate or advisable under such conditions or
limitations as it may set at the time of such delegation or thereafter; provided, however,
that the Committee may not delegate its authority (i) to make Awards to employees (A) who
are subject on the date of the Award to the reporting rules under Section 16(a) of the
Exchange Act, (B) whose compensation for such fiscal year may be subject to the limit on
deductible compensation pursuant to Section 162(m) of the Code or (C) who are officers of
the Company who are delegated authority by the Committee hereunder, or (ii) pursuant to
Section 16 of the Plan. For purposes of the Plan,
reference to the Committee shall be deemed to refer to any subcommittee, subcommittees,
or other persons or groups of persons to whom the Committee delegates authority pursuant to
this Section 3(d).

(e) Liability of Committee. Subject to applicable laws, rules and regulations:
(i) no member of the Board or Committee (or its delegates) shall be liable for any good
faith action or determination made in connection with the operation, administration or
interpretation of the Plan and (ii) the members of the Board or the Committee (and its
delegates) shall be entitled to indemnification and reimbursement in the manner provided in
the Company’s Certificate of Incorporation as it may be amended from time to time. In

 

 

the
performance of its responsibilities with respect to the Plan, the Committee shall be
entitled to rely upon information and/or advice furnished by the Company’s officers or
employees, the Company’s accountants, the Company’s counsel and any other party the
Committee deems necessary, and no member of the Committee shall be liable for any action
taken or not taken in reliance upon any such information and/or advice.

(f) Action by the Board. Anything in the Plan to the contrary notwithstanding,
subject to applicable laws, rules and regulations, any authority or responsibility that,
under the terms of the Plan, may be exercised by the Committee may alternatively be
exercised by the Board.

	4.	 	Eligibility

(a) Eligible Individuals. Awards may be granted to officers, employees,
directors, Non-Employee Directors, consultants, advisors and independent contractors of the
Company or any of its Subsidiaries; provided, however, that only employees of the Company or
a Subsidiary may be granted Incentive Stock Options. The Committee shall have the authority
to select the persons to whom Awards may be granted and to determine the type, number and
terms of Awards to be granted to each such Participant. Under the Plan, references to
“employment” or “employed” include the engagement of Participants who are consultants,
advisors and independent contractors of the Company or its Subsidiaries and the service of
Participants who are Non-Employee Directors, except for purposes of determining eligibility
to be granted Incentive Stock Options.

(b) Grants to Participants. The Committee shall have no obligation to grant
any Eligible Individual an Award or to designate an Eligible Individual as a Participant
solely by reason of such Eligible Individual having received a prior Award or having been
previously designated as a Participant. The Committee may grant more than one Award to a
Participant and may designate an Eligible Individual as a Participant for overlapping
periods of time.

	5.	 	Shares Subject to the Plan

(a) Plan Limit. Subject to adjustment in accordance with Section 13 of the
Plan, the maximum aggregate number of Shares that may be issued for all purposes under the
Plan shall be 500,000 plus any Shares that are available for issuance under the Prior Plans.
Shares to be issued under the Plan may be authorized and unissued shares, issued shares
that have been reacquired by the Company (in the open-market or in private transactions) and
that are being held in treasury, or a combination thereof. All of the Shares subject to the
Plan Limit may be issued pursuant to Incentive Stock Options.

(b) Rules Applicable to Determining Shares Available for Issuance. The number
of Shares remaining available for issuance will be reduced by the maximum number of Shares
subject to outstanding Awards. Notwithstanding the foregoing, the number of Shares
corresponding to Awards under the Plan and the Prior Plans that are forfeited or cancelled
or otherwise expire for any reason without having been exercised or settled, or are settled
in cash or withheld
to pay the exercise price or taxes associated with any Award shall be added back to the
Plan Limit and again be available for the grant of Awards; provided, however, that this
provision shall not be applicable with respect to (i) the cancellation of a Stock
Appreciation Right granted in tandem with an Option upon the exercise of the Option or (ii)
the cancellation of an Option granted in tandem with a Stock Appreciation Right upon the
exercise of the Stock Appreciation.

(c) Individual Limits. Anything to the contrary in Section 5(a) above
notwithstanding, but subject to adjustment under Section 13 of the Plan, the maximum number
of Shares that may be issued pursuant to Awards granted to any Eligible Individual in any
calendar year shall equal 50,000 Shares and the maximum value of any Performance Unit
granted to any Eligible Individual in any calendar year shall equal $100,000.

(d) Substitute Awards. Any Shares underlying Substitute Awards shall not be
counted against the number of Shares remaining for issuance and shall not be subject to
Section 5(c).

 

 

	6.	 	Awards in General

(a) Types of Awards. Awards under the Plan may consist of Options, Stock
Appreciation Rights, Restricted Shares, Restricted Stock Units, Performance Awards and Other
Awards. Any Award described in Sections 7 through 11 of the Plan may be granted singly or
in combination or tandem with any other Award, as the Committee may determine. Awards under
the Plan may be made in combination with, in replacement of, or as alternatives to awards or
rights under any other compensation or benefit plan of the Company, including the plan of
any acquired entity.

(b) Terms Set Forth in Award Agreement. The terms and conditions of each Award
shall be set forth in an Award Agreement in a form approved by the Committee for such Award,
which Award Agreement shall contain terms and conditions not inconsistent with the Plan.
Notwithstanding the foregoing, and subject to applicable laws, the Committee may accelerate
(i) the vesting or payment of any Award, (ii) the lapse of restrictions on any Award or
(iii) the date on which any Award first becomes exercisable. The terms of Awards may vary
among Participants, and the Plan does not impose upon the Committee any requirement to make
Awards subject to uniform terms.

(c) Termination of Employment. The Committee shall specify at the time of
grant of an Award the provisions governing the disposition of an Award in the event of a
Participant’s termination of employment with the Company or any of its Subsidiaries.
Subject to applicable laws, rules and regulations, in connection with a Participant’s
termination of employment, the Committee shall have the discretion to accelerate the
vesting, exercisability or settlement of, eliminate the restrictions and conditions
applicable to, or extend the post-termination exercise period of an outstanding Award. Such
provisions may be specified in the applicable Award Agreement or determined at a subsequent
time.

(d) Change of Control.

(i) The Committee shall have full authority to determine the effect, if any, of a Change of
Control of the Company or any Subsidiary on the vesting, exercisability, settlement, payment
or lapse of restrictions applicable to an Award, which effect may be specified in the
applicable Award Agreement. Subject to applicable laws, rules and regulations, the Board or
the Committee shall, at any time prior to, coincident with or after the effective time of a
Change of Control, take such actions as it may consider appropriate, including, without
limitation: (A) providing for the acceleration of any vesting conditions relating to the
exercise or settlement of an Award or that an Award shall terminate or expire unless
exercised or settled in full on or before a date fixed by the Committee; (B) making such
adjustments to the Awards then outstanding as the Committee deems appropriate to reflect
such Change of Control; (C) causing the Awards then outstanding to be assumed, or new rights
substituted therefor, by the surviving corporation in such Change of Control; or (D) permit
or require Participants to surrender outstanding Options in exchange for a cash payment
equal to the difference between the highest price paid for a Share in the Change of Control
transaction and the Exercise Price of the Options.

(ii) Subject to applicable laws, rules and regulations, the Committee may provide, in an
Award Agreement or subsequent to the grant of an Award for the accelerated vesting,
exercisability and/or the deemed attainment of a performance goal with respect to an Award
upon specified events similar to a Change of Control.

(iii) Notwithstanding any other provision of the Plan or any Award Agreement, the provisions
of this Section 6(d) may not be terminated, amended, or modified upon or after a Change of
Control in a manner that would adversely affect a Participant’s rights with respect to an
outstanding Award without the prior written consent of the Participant. Subject to Section
16, the Board, upon recommendation of the Committee, may terminate, amend or modify this
Section 6(d) at any time and from time to time prior to a Change of Control.

(e) Dividends and Dividend Equivalents. The Committee may provide Participants
with the right to receive dividends or payments equivalent to dividends or interest with
respect to an outstanding Award, which payments can either be paid currently or deemed to
have been reinvested in Shares, and can be made in

 

 

Shares, cash or a combination thereof, as
the Committee shall determine. Notwithstanding the foregoing, no dividends or dividend
equivalents shall be paid with respect to Options or Stock Appreciation Rights.

(f) Rights of a Stockholder. A Participant shall have no rights as a
stockholder with respect to Shares covered by an Award (including voting rights) until the
date the Participant or his nominee becomes the holder of record of such Shares.

(g) Performance-Based Awards.

     (i) The Committee may determine whether any Award under the Plan is intended to be
“performance-based compensation” as that term is used in Section 162(m) of the Code. Awards
designated to be “performance-based compensation” shall be conditioned on the achievement of
one or more Performance Goals. The Performance Goals will be comprised of specified levels
of achievement of one or more of the following performance criteria: [to come], in each
case determined in accordance with generally accepted accounting principles (subject to
modifications approved by the Committee) consistently applied on a business unit,
divisional, subsidiary or consolidated basis or any combination thereof. The Performance
Goals may be described in terms of objectives that are related to the individual Participant
or objectives that are Company-wide or related to a Subsidiary, division, department,
region, function or business unit and may be measured on an absolute or cumulative basis or
on the basis of percentage of improvement over time or measured relative to selected peer
companies or a market index. For Awards not intended to qualify as “performance-based
compensation” under Section 162(m), the Committee may use additional criteria as it deems
appropriate.

     (ii) The Participants will be designated, and the applicable Performance Goals and the
number of shares that can be earned upon achievement of the Performance Goals will be
established, by the Committee within ninety (90) days following the commencement of the
applicable Performance Period (or such earlier or later date permitted or required by
Section 162(m) of the Code). Any payment of an Award granted with Performance Goals shall
be conditioned on the written certification of the Committee in each case that the
Performance Goals and any other material conditions were satisfied. The Committee retains
the right to reduce any Award notwithstanding the attainment of the Performance Goals.

(h) Deferrals. In accordance with the procedures authorized by, and subject to
the approval of, the Committee, Participants may be given the opportunity to defer the
payment or settlement of an Award to one or more dates selected by the Participant;
provided, however, that the terms of any deferrals must comply with all applicable laws,
rules and regulations, including, without limitation, Section 409A of the Code. No deferral
opportunity shall exist with respect to an Award unless explicitly permitted by the
Committee on or after the time of grant.

(i) Repricing of Options and Stock Appreciation Rights. Notwithstanding
anything in the Plan to the contrary, an Option or Stock Appreciation Right shall not be
granted in substitution for a previously granted Option or Stock Appreciation Right being
canceled or surrendered as a condition of receiving a new Award, if the new Award would have
a lower exercise price than the Award it replaces, nor shall the exercise price of an Option
or Stock Appreciation Right be reduced once the Option or Stock Appreciation Right is
granted. The foregoing shall not (i) prevent adjustments pursuant to Section 13 or (ii)
apply to grants of Substitute Awards.

	7.	 	Terms and Conditions of Options

(a) General. The Committee, in its discretion, may grant Options to Eligible
Individuals and shall determine whether such Options shall be Incentive Stock Options or
Nonqualified Stock Options. Each Option shall be evidenced by an Award Agreement that shall
expressly identify the Option as an Incentive Stock Option or Nonqualified Stock Option, and
be in such form and contain such provisions as the Committee shall from time to time deem
appropriate.

(b) Exercise Price. The exercise price of an Option shall be fixed by the
Committee at the time of grant or

 

 

shall be determined by a method specified by the Committee
at the time of grant. Except with respect to Substitute Awards, in no event shall the
exercise price of an Option be less than one hundred percent (100%) of the Fair Market Value
of a Share on the date of grant.

(c) Term. An Option shall be effective for such term as shall be determined by
the Committee and as set forth in the Award Agreement relating to such Option; provided,
however, that the term of an Option may in no event extend beyond the tenth anniversary of
the date of grant of such Option.

(d) Exercise; Payment of Exercise Price. Except as may be provided with
respect to a termination of service, Options granted to employees shall not vest and become
exercisable over less than a three-year period. Options shall be exercised by delivery of a
notice of exercise in a form approved by the Company. Subject to the provisions of the
applicable Award Agreement, the exercise price of an Option may be paid (i) in cash or cash
equivalents, (ii) by actual delivery or attestation to ownership of freely transferable
Shares already owned by the person exercising the Option, (iii) by a combination of cash and
Shares equal in value to the exercise price, (iv) through net share settlement or similar
procedure involving the withholding of Shares subject to the Option with a value equal to
the exercise price or (v) by such other means as the Committee may authorize. In addition,
the Option may be exercised through a “cashless exercise” procedure to the extent, and in
accordance with any procedures, authorized by the Committee.

(e) Incentive Stock Options. No Incentive Stock Option may be issued pursuant
to the Plan to any individual who, at the time the Incentive Stock Option is granted, owns
stock possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries, unless (i) the exercise price
determined as of the date of grant is at least one hundred ten percent (110%) of the Fair
Market Value on the date of grant of the Shares subject to such Incentive Stock Option and
(ii) the Incentive Stock Option is not exercisable more than five (5) years from the date of
grant thereof. Any Incentive Stock Option granted which would result in such Participant
receiving a grant of Incentive Stock
Options that would have an aggregate Fair Market Value in excess of one hundred
thousand dollars ($100,000), determined as of the time of grant, that would be exercisable
for the first time by such Participant during any calendar year shall be automatically
converted into a Nonqualified Stock Option. The terms of any Incentive Stock Option granted
under the Plan shall comply in all respects with the provisions of Section 422 of the Code,
or any successor provision thereto, as amended from time to time.

	8.	 	Terms and Conditions of Restricted Shares and Restricted Stock Units

(a) Restricted Shares. The Committee, in its discretion, may grant Restricted
Shares to Eligible Individuals. An Award of Restricted Shares shall be subject to the
terms, conditions and restrictions set forth in the Plan and established by the Committee in
connection with the Award and specified in the applicable Award Agreement. Restricted
Shares may, among other things, be subject to restrictions on transferability, vesting
requirements or other specified circumstances under which it may be forfeited.

(b) Restricted Stock Units. The Committee, in its discretion, may grant
Restricted Stock Units to Eligible Individuals. A Restricted Stock Unit shall entitle a
Participant to receive, subject to the terms, conditions and restrictions set forth in the
Plan and the applicable Award Agreement, one or more Shares. Restricted Stock Units may,
among other things, be subject to restrictions on transferability, vesting requirements or
other specified circumstances under which they may be forfeited. If and when the forfeiture
provisions lapse, Restricted Stock Units shall be settled in Shares or, at the sole
discretion of the Committee, cash, or a combination of cash and Shares, with a value equal
to the Fair Market Value of the Shares at the time of payment.

(c) Vesting. Except as may be provided with respect to a termination of service,
Restricted Shares and Restricted Stock Units granted to employees shall not vest and become
exercisable over less than a three-year period.

 

 

	9.	 	Stock Appreciation Rights

(a) General. The Committee, in its discretion, may grant Stock Appreciation
Rights to Eligible Individuals. A Stock Appreciation Right shall entitle a Participant to
receive, upon satisfaction of the conditions to payment specified in the applicable Award
Agreement, an amount equal to the excess, if any, of the Fair Market Value on the exercise
date of the number of Shares for which the Stock Appreciation Right is exercised over the
grant price for such Stock Appreciation Right specified in the applicable Award Agreement.
The grant price per share of Shares covered by a Stock Appreciation Right shall be fixed by
the Committee at the time of grant or, alternatively, shall be determined by a method
specified by the Committee at the time of grant. Except with respect to Substitute Awards,
in no event shall the grant price of a Stock Appreciation Right be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant and, except as may
be provided with respect to a termination of service, Stock Appreciation Rights granted to
employees shall not vest and become exercisable over less than a three-year period.
Payments to a Participant upon exercise of a Stock Appreciation Right may be made in cash or
Shares, having an aggregate Fair Market Value as of the date of exercise equal to the
excess, if any, of the Fair Market Value on the exercise date of the number of Shares for
which the Stock Appreciation Right is exercised over the grant price for such Stock
Appreciation Right. The term of a Stock Appreciation Right settled in Shares shall not
exceed ten years.

(b) Stock Appreciation Rights in Tandem with Options. A Stock Appreciation
Right may be granted in tandem with an Option. If granted in tandem with an Option, a Stock
Appreciation Right shall cover the same number of Shares as covered by the Option (or such
lesser number of shares as the Committee may determine) and shall be exercisable only at
such time or times and to the extent the related Option shall be exercisable, and shall have
the same term as the related Option. The grant price of a Stock Appreciation Right granted
in tandem with an Option shall equal the per-share exercise price of the Option to which it
relates. Upon exercise of a Stock
Appreciation Right granted in tandem with an Option, the related Option shall be
canceled automatically to the extent of the number of Shares covered by such exercise;
conversely, if the related Option is exercised as to some or all of the shares covered by
the tandem grant, the tandem Stock Appreciation Right shall be canceled automatically to the
extent of the number of Shares covered by the Option exercise.

	10.	 	Terms and Conditions of Performance Awards

The Committee may grant Performance Awards to Eligible Individuals. An Award of Performance Shares
shall consist of a Target Number of Shares and an Award of Performance Units shall consist of a
Target Number of units granted to an Eligible Individual based on the achievement of Performance
Goals over the applicable Performance Period, and shall be subject to the terms, conditions and
restrictions set forth in the Plan and established by the Committee in connection with the Award
and specified in the applicable Award Agreement. The Committee may provide that if performance
relative to the Performance Goals exceeds targeted levels, then the number of Performance Awards
earned shall be a multiple of the Target Number; provided that, in the case of Performance Awards
intended to constitute “performance-based compensation” under Section 162(m) of the Code, the
number or value, as applicable of Shares or Units earned cannot exceed the limits set forth in
Section 5(c). Performance Awards may be settled in Shares or, at the sole discretion of the
Committee, cash, or a combination of cash and Shares, with a value equal to the Fair Market Value
of the Shares at the time of payment.

	11.	 	Other Awards

The Committee shall have the authority to specify the terms and provisions of other forms of
equity-based or equity-related Awards not described above that the Committee determines to be
consistent with the purpose of the Plan and the interests of the Company, which Awards may provide
for cash payments based in whole or in part on the value or future value of Shares, for the
acquisition or future acquisition of Shares, or any combination thereof.

	12.	 	Certain Restrictions

(a) Transfers. No Award shall be transferable other than pursuant to a
beneficiary designation under

 

 

Section 12(c), by last will and testament or by the laws of
descent and distribution or, except in the case of an Incentive Stock Option, pursuant to a
domestic relations order, as the case may be; provided, however, that the Committee may,
subject to applicable laws, rules and regulations and such terms and conditions as it shall
specify, permit the transfer of an Award, other than an Incentive Stock Option, for no
consideration to a Permitted Transferee. Any Award transferred to a Permitted Transferee
shall be further transferable only by last will and testament or the laws of descent and
distribution or, for no consideration, to another Permitted Transferee of the Participant.

(b) Award Exercisable Only by Participant. During the lifetime of a
Participant, an Award shall be exercisable only by the Participant or by a Permitted
Transferee to whom such Award has been transferred in accordance with Section 12(a) above.
The grant of an Award shall impose no obligation on a Participant to exercise or settle the
Award.

(c) Beneficiary Designation. A Participant may, from time to time, name any
beneficiary or beneficiaries to receive any benefit in case of death. Each such designation
shall revoke all prior designations by the same Participant and will be effective only when
filed by the Participant in writing (in such form or manner as may be prescribed by the
Committee) with the Company during the Participant’s lifetime. In the absence of a valid
designation, the Participant’s beneficiary shall be the Participant’s estate.

	13.	 	Recapitalization or Reorganization

(a) Authority of the Company and Stockholders. The existence of the Plan, the
Award Agreements and the Awards granted hereunder shall not affect or restrict in any way
the right or power of the Company or the stockholders of the Company to make or authorize
any adjustment, recapitalization, reorganization or other change in the Company’s capital
structure or business, any merger or consolidation of the Company, any issue of stock or of
options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior
preference stocks whose rights are superior to or affect the Shares or the rights thereof or
which are convertible into or exchangeable for Shares, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

(b) Change in Capitalization. Notwithstanding any provision of the Plan or any
Award Agreement, the number and kind of Shares authorized for issuance under Section 5 of
the Plan, including the maximum number of Shares available under the special limits provided
for in Section 5(c), may be equitably adjusted in the sole discretion of the Committee in
the event of a stock split, reverse stock spit, stock dividend, recapitalization,
reorganization, partial or complete liquidation, reclassification, merger, consolidation,
separation, extraordinary cash dividend, split-up, spin-off, combination, exchange of
Shares, warrants or rights offering to purchase Shares at a price substantially below Fair
Market Value, or any other corporate event or distribution of stock or property of the
Company affecting the Shares in order to preserve, but not increase, the benefits or
potential benefits intended to be made available under the Plan. In addition, upon the
occurrence of any of the foregoing events, the number and kind of Shares subject to any
outstanding Award and the exercise price per Share (or the grant price per Share, as the
case may be), if any, under any outstanding Award may be equitably adjusted (including by
payment of cash to a Participant) in the sole discretion of the Committee in order to
preserve the benefits or potential benefits intended to be made available to Participants.
Such adjustments shall be made by the Committee. Unless otherwise determined by the
Committee, such adjusted Awards shall be subject to the same restrictions and vesting or
settlement schedule to which the underlying Award is subject.

	14.	 	Term of the Plan

Unless earlier terminated pursuant to Section 16, the Plan shall terminate on the tenth anniversary
of the Effective Date, except with respect to Awards then outstanding. No Awards may be granted
under the Plan after the tenth anniversary of the Effective Date.

 

 

	15.	 	Effective Date

The Plan shall become effective on the Effective Date, subject to approval by the stockholders of
the Company.

	16.	 	Amendment and Termination

Subject to applicable laws, rules and regulations, the Board may at any time terminate or, from
time to time, amend, modify or suspend the Plan; provided, however, that no termination, amendment,
modification or suspension (i) will be effective without the approval of the stockholders of the
Company if such approval is required under applicable laws, rules and regulations, including the
rules of the NASDAQ National Market System or the principal exchange on which the Common Stock is
traded and (ii) shall materially and adversely alter or impair the rights of a Participant in any
Award previously made under the Plan without the consent of the holder thereof. Notwithstanding
the foregoing, the Board shall have broad authority to amend the Plan or any Award under the Plan
without the consent of a Participant to the extent it deems necessary or desirable (a) to comply
with, take into account changes in, or interpretations of, applicable tax laws, securities laws,
employment laws, accounting rules and other applicable laws, rules and regulations, (b) to take
into account unusual or nonrecurring events or market conditions (including, without limitation,
the events described in Section 13(b)), or (c) to take into account significant acquisitions or
dispositions of assets or other property by the Company.

	17.	 	Miscellaneous

(a) Tax Withholding. The Company or a Subsidiary, as appropriate, may require
any individual entitled to receive a payment of an Award to remit to the Company, prior to
payment, an amount sufficient to satisfy any applicable tax withholding requirements. In
the case of an Award payable in Shares, the Company or a Subsidiary, as appropriate, may
permit or require a Participant to satisfy, in whole or in part, such obligation to remit
taxes by directing the Company to withhold shares that would otherwise be received by such
individual or to repurchase shares that were issued to the Participant to satisfy the
minimum statutory withholding rates for any applicable tax withholding purposes, in
accordance with all applicable laws and pursuant to such rules as the Committee may
establish from time to time. The Company or a Subsidiary, as appropriate, shall also have
the right to deduct from all cash payments made to a Participant (whether or not such
payment is made in connection with an Award) any applicable taxes required to be withheld
with respect to such payments.

(b) No Right to Awards or Employment. No person shall have any claim or right
to receive Awards under the Plan. Neither the Plan, the grant of Awards under the Plan nor
any action taken or omitted to be taken under the Plan shall be deemed to create or confer
on any Eligible Individual any right to be retained in the employ of the Company or any
Subsidiary or other affiliate thereof, or to interfere with or to limit in any way the right
of the Company or any Subsidiary or other affiliate thereof to terminate the employment of
such Eligible Individual at any time. No Award shall constitute salary, recurrent
compensation or contractual compensation for the year of grant, any later year or any other
period of time. Payments received by a Participant under any Award made pursuant to the
Plan shall not be included in, nor have any effect on, the determination of
employment-related rights or benefits under any other employee benefit plan or similar
arrangement provided by the Company and the Subsidiaries, unless otherwise specifically
provided for under the terms of such plan or arrangement or by the Committee.

(c) Securities Law Restrictions. An Award may not be exercised or settled, and
no Shares may be issued in connection with an Award, unless the issuance of such shares (i)
has been registered under the Securities Act of 1933, as amended, (ii) has qualified under
applicable state “blue sky” laws (or the Company has determined that an exemption from
registration and from qualification under such state “blue sky” laws is available) and (iii)
complies with all applicable foreign securities laws. The Committee may require each
Participant purchasing or acquiring Shares pursuant to an Award under the Plan to represent
to and agree with the Company in writing that such Eligible Individual is acquiring the
Shares for investment purposes and not with a view to the distribution thereof. All
certificates for Shares delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission, any exchange
upon which the Shares are then listed, and any applicable securities law, and the Committee
may cause a legend

 

 

or legends to be put on any such certificates to make appropriate
reference to such restrictions.

(d) Section 162(m) of the Code. The Plan is intended to comply in all respects
with Section 162(m) of the Code; provided, however, that in the event the Committee
determines that compliance with Section 162(m) of the Code is not desired with respect to a
particular Award, compliance with Section 162(m) of the Code will not be required. In
addition, if any provision of this Plan would cause Awards that are intended to constitute
“qualified performance-based compensation” under Section 162(m) of the Code, to fail to so
qualify, that provision shall be severed from, and shall be deemed not to be a part of, the
Plan, but the other provisions hereof shall remain in full force and effect.

(e) Section 409A of the Code. Notwithstanding any contrary provision in the
Plan or an Award Agreement, if any provision of the Plan or an Award Agreement contravenes
any regulations or guidance promulgated under Section 409A of the Code or would cause an
Award to be subject to additional taxes, accelerated taxation, interest and/or penalties
under Section 409A of the Code, such provision of the Plan or Award Agreement
may be modified by the Committee without consent of the Participant in any manner the
Committee deems reasonable or necessary. In making such modifications the Committee shall
attempt, but shall not be obligated, to maintain, to the maximum extent practicable, the
original intent of the applicable provision without contravening the provisions of Section
409A of the Code. Moreover, any discretionary authority that the Committee may have
pursuant to the Plan shall not be applicable to an Award that is subject to Section 409A of
the Code to the extent such discretionary authority would contravene Section 409A of the
Code or the guidance promulgated thereunder.

(f) Satisfaction of Obligations. Subject to applicable law, the Company may
apply any cash, Shares, securities or other consideration received upon exercise or
settlement of an Award to any obligations a Participant owes to the Company and the
Subsidiaries in connection with the Plan or otherwise, including, without limitation, any
tax obligations or obligations under a currency facility established in connection with the
Plan.

(g) No Limitation on Corporate Actions. Nothing contained in the Plan shall be
construed to prevent the Company or any Subsidiary from taking any corporate action, whether
or not such action would have an adverse effect on any Awards made under the Plan. No
Participant, beneficiary or other person shall have any claim against the Company or any
Subsidiary as a result of any such action.

(h) Unfunded Plan. The Plan is intended to constitute an unfunded plan for
incentive compensation. Prior to the issuance of Shares, cash or other form of payment in
connection with an Award, nothing contained herein shall give any Participant any rights
that are greater than those of a general unsecured creditor of the Company. The Committee
may, but is not obligated, to authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver Shares with respect to awards hereunder.

(i) Successors. All obligations of the Company under the Plan with respect to
Awards granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or assets of
the Company.

(j) Application of Funds. The proceeds received by the Company from the sale
of Shares pursuant to Awards will be used for general corporate purposes.

(k) Award Agreement. In the event of any conflict or inconsistency between the
Plan and any Award Agreement, the Plan shall govern and the Award Agreement shall be
interpreted to minimize or eliminate any such conflict or inconsistency.

(l) Headings. The headings of Sections herein are included solely for
convenience of reference and shall not affect the meaning of any of the provisions of the
Plan.

(m) Severability. If any provision of this Plan is held unenforceable, the
remainder of the Plan shall

 

 

continue in full force and effect without regard to such
unenforceable provision and shall be applied as though the unenforceable provision were not
contained in the Plan.

(n) Expenses. The costs and expenses of administering the Plan shall be borne
by the Company.

(o) Governing Law. Except as to matters of federal law, the Plan and all
actions taken thereunder shall be governed by and construed in accordance with the laws of
the State of Texas.

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