-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UXGeTr6erBJHWLFyK8L1a2BVi8f+/DFrTuk/pXpKAa1da9nM8sDI6HhuPwUVckZm fXlAzsydd3oxllpCiVQ7hQ== 0000950123-98-000545.txt : 19980129 0000950123-98-000545.hdr.sgml : 19980129 ACCESSION NUMBER: 0000950123-98-000545 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19980126 DATE AS OF CHANGE: 19980128 SROS: NONE GROUP MEMBERS: ASPEN ENTERPRISES INTERNATIONAL HOLDINGS LTD GROUP MEMBERS: MOONBEAM ENTERPRISES GROUP MEMBERS: POLESTAR LIMITED GROUP MEMBERS: SHEIKH ABDULAZIZ BIN IBRAHIM SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: STARWOOD LODGING TRUST CENTRAL INDEX KEY: 0000048595 STANDARD INDUSTRIAL CLASSIFICATION: 6798 IRS NUMBER: 520901263 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-08154 FILM NUMBER: 98513445 BUSINESS ADDRESS: STREET 1: 2231 E CAMELBACK RD STREET 2: STE 410 CITY: PHOENIX STATE: AZ ZIP: 80516 BUSINESS PHONE: 6028523900 MAIL ADDRESS: STREET 1: 2231 E CAMELBACK RD STREET 2: STE 410 CITY: PHOENIX STATE: AZ ZIP: 85016 FORMER COMPANY: FORMER CONFORMED NAME: HOTEL INVESTORS TRUST /MD/ DATE OF NAME CHANGE: 19930506 FORMER COMPANY: FORMER CONFORMED NAME: HOTEL INVESTORS TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: HOTEL INVESTORS DATE OF NAME CHANGE: 19800720 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ASPEN ENTERPRISES INTERNATIONAL HOLDINGS LTD CENTRAL INDEX KEY: 0001053713 STANDARD INDUSTRIAL CLASSIFICATION: IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O CALEDONIAN BANK 7 TR LT STREET 2: CALEDONIAN HOUSE, GRAND FLOOR, MARY STRE CITY: GEORGETOWN, GRAND CA BUSINESS PHONE: 3459490050 SC 13D 1 SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 SCHEDULE 13D (Rule 13d-101) Under the Securities Exchange Act of 1934 (Amendment No. ____________)* Starwood Hotels & Resorts Trust Starwood Hotels & Resorts Worldwide, Inc. (Name of Issuer) Shares of Beneficial Interest, Par Value $0.01 Per Share Shares of Common Stock, Par Value $0.01 Per Share (Title of Class of Securities) 855905 20 4 (CUSIP Number) Gordon K. Eng, Esq. 19191 South Vermont Avenue, Suite 420 Torrance, California 90502 (310) 207-1477 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 15, 1998 (Date of Event Which Requires Filing of This Statement) If the Filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1 (b)(3) or (4), check the following box *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 18 2 SCHEDULE 13D CUSIP No. 855905 20 4 Page 2 of 18 Pages - - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS Sheikh Abdulaziz bin Ibrahim Al Ibrahim - - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / - - -------------------------------------------------------------------------------- 3 SEC USE ONLY - - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / - - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Saudi Arabia - - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES -------------------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 3,717,603 OWNED BY -------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER EACH REPORTING -------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER PERSON 3,717,603 WITH - - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,717,603 - - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.2% - - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 3 SCHEDULE 13D CUSIP No. 855905 20 4 Page 3 of 18 Pages - - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS Aspen Enterprises International Holdings, Ltd. - - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / - - -------------------------------------------------------------------------------- 3 SEC USE ONLY - - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / - - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES -------------------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 3,088,372 OWNED BY -------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER EACH REPORTING -------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER PERSON 3,088,372 WITH - - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,088,372 - - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.0% - - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 4 SCHEDULE 13D CUSIP No. 855905 20 4 Page 4 of 18 Pages - - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS Polestar Limited - - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / - - -------------------------------------------------------------------------------- 3 SEC USE ONLY - - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / - - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES -------------------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 539,535 OWNED BY -------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER EACH REPORTING -------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER PERSON 539,535 WITH - - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 539,535 - - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.1% - - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 5 SCHEDULE 13D CUSIP No. 855905 20 4 Page 5 of 18 Pages - - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS Moonbeam Enterprises International, Ltd. - - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / - - -------------------------------------------------------------------------------- 3 SEC USE ONLY - - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / - - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES -------------------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 89,696 OWNED BY -------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER EACH REPORTING -------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER PERSON 89,696 WITH - - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 89,696 - - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2% - - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 6 SCHEDULE 13D ITEM 1. SECURITY AND ISSUER The titles of the classes of equity securities to which this statement relates are the Shares of Beneficial Interest, par value $.01 per share (the "Trust Shares"), of Starwood Hotels & Resorts Trust (formerly, Starwood Lodging Trust), a Maryland real estate investment trust ("Starwood Trust"), and the shares of Common Stock, par value $.01 per share (the "Corporation Shares"), of Starwood Hotels & Resorts Worldwide, Inc. (formerly, Starwood Lodging Corporation), a Maryland corporation ("Starwood Corporation" and, together with Starwood Trust, "Starwood"). Pursuant to a pairing agreement between Starwood Trust and Starwood Corporation, each stockholder of Starwood owns an equivalent number of Trust Shares and Corporation Shares, and the Trust Shares and the Corporation Shares may be held and traded only in units consisting of one Trust Share and one Corporation Share (the "Paired Shares"). The principal executive offices of Starwood Trust are located at 2231 E. Camelback Road, Suite 410, Phoenix, Arizona 85016, and the principal executive offices of Starwood Corporation are located at 2231 E. Camelback Road, Suite 400, Phoenix, Arizona 85016. ITEM 2. IDENTITY AND BACKGROUND This statement is being filed by (1) His Excellency the Sheikh Abdulaziz bin Ibrahim Al Ibrahim ("HES"), (2) Aspen Enterprises International Holdings, Ltd. ("AEIH"), (3) Polestar Limited ("PL") and (4) Moonbeam Enterprises International, Ltd. ("MEIL" and, together with HES, AEIH and PL, the "Reporting Persons"). HES. HES is the Principal of Al-Anwae, Establishment, which principally engages in the investment management business, and his business address is Al-Anwae, Establishment, Olaya Main Street, P.O. Box 1955, Riyadh 11441, Saudi Arabia. During the last five years, he has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding violations with respect to such laws. He is a citizen of Saudi Arabia. For purposes of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), HES is deemed to control AEIH, PL and MEIL. AEIH. AEIH, a Cayman Islands corporation, is the sole shareholder of Aspen Enterprises International, Inc. ("AEI"), a Colorado corporation. AEI is the general partner of Savanah Limited Partnership ("SLP"), a District of Columbia limited partnership. Colorado Mountain Investments, Inc. ("CMI"), a Colorado corporation, is a subsidiary of AEI. SLP is a party to the Purchase and Sale Agreement and Joint Escrow Instructions between SLP and Starwood, dated December 30, 1997 (the "Aspen Purchase Agreement"), pursuant to which SLP sold to Starwood the Aspen Luxury Collection Hotel and certain related 6 7 land and improvements, located in Aspen, Colorado (the "Aspen Property"). The purchase price for the Aspen Property consisted of cash and Paired Shares. Upon the closing of the sale of the Aspen Property on January 15, 1998, SLP assigned all of the Paired Shares received by it as consideration for sale of the Aspen Property to AEI and CMI in partial satisfaction of certain indebtedness of SLP to these corporations. Concurrently, CMI assigned the Paired Shares it received from SLP to its parent AEI, and AEI thereupon distributed all of its Paired Shares to its parent, AEIH. As a result of these transactions, the Paired Shares issued initially to SLP were transferred directly into the name of AEIH. Each of AEIH, AEI, CMI and SLP is deemed, for purposes of the Exchange Act, to be controlled by HES. The address of the principal offices of AEIH is c/o Caledonian Bank & Trust Limited, Caledonian House, Grand Floor, Mary Street, Georgetown, Grand Cayman, Cayman Islands, British West Indies. AEIH is an investment holding company that held an indirect interest in the Aspen Property. PL. PL, a Cayman Islands corporation, is the sole shareholder of Remington Ventures, Inc. ("RV") and Remington Ventures II, Inc. ("RVII"), each of which is a Texas corporation. RV and RVII are the general partners of New Remington Partners ("NRP"), a Texas general partnership. NRP is a party to the Purchase and Sale Agreement and Joint Escrow Instructions between NRP and Starwood, dated December 30, 1997 (the "Houston Purchase Agreement"), pursuant to which NRP sold to Starwood the Houston Luxury Collection Hotel and certain related land and improvements, located in Houston, Texas (the "Houston Property"). The purchase price for the Houston Property consisted of cash and Paired Shares. Upon the closing of the sale of the Houston Property on January 15, 1998, NRP assigned all of the Paired Shares received by it as consideration for sale of the Houston Property to RV and RVII in partial satisfaction of certain indebtedness of NRP to these corporations. RV and RVII thereupon distributed all of their Paired Shares to their parent, PL. As a result of these transactions, the Paired Shares issued initially to NRP were transferred directly into the name of PL. Each of PL, RV, RVII and NRP is deemed, for purposes of the Exchange Act, to be controlled by HES. The address of the principal offices of PL is c/o Caledonian Bank & Trust Limited, Caledonian House, Grand Floor, Mary Street, Georgetown, Grand Cayman, Cayman Islands, British West Indies. PL is an investment holding company that held an indirect interest in the Houston Property. MEIL. MEIL, a Cayman Islands corporation, is the sole shareholder of each of N.Y. Overnight, Inc. ("NYO"), a New York corporation, N.Y. Overnight II, Inc. ("NYOII"), a New York corporation, D.C. Overnight, Inc. ("DCO"), a District of Columbia corporation, and D.C. Overnight II, Inc. ("DCOII"), a District of Columbia corporation. NYO is the general partner of N.Y. Overnight Partners, L.P. ("NYOP"), a New York limited partnership. DCO is the general partner of D.C. Overnight Partners, L.P. ("DCOP"), a District of Columbia limited partnership. NYOP is a party to the Purchase and Sale Agreement and Joint Escrow Instructions between NYOP and Starwood, dated December 30, 1997 (the "New York Purchase Agreement"), pursuant to which NYOP sold to Starwood its leasehold interest in the New York 7 8 Luxury Collection Hotel and certain related land and improvements, located in New York, New York (the "New York Property"). The purchase price for the New York Property consisted of cash and Paired Shares. Upon the closing of the sale of the New York Property on January 15, 1998, NYOP assigned all of the Paired Shares received by it as consideration for sale of the New York Property to NYO and NYOII in partial satisfaction of certain indebtedness of NYOP to these corporations. NYO and NYOII thereupon distributed all of their Paired Shares to their parent, MEIL. As a result of these transactions, the Paired Shares issued initially to NYOP were transferred directly into the name of MEIL. Each of MEIL, NYO, NYOII and NYOP is deemed, for purposes of the Exchange Act, to be controlled by HES. DCOP is a party to the Purchase and Sale Agreement and Joint Escrow Instructions between DCOP and Starwood, dated December 30, 1997 (the "Washington Purchase Agreement" and, together with the Aspen Purchase Agreement, the Houston Purchase Agreement and the New York Purchase Agreement, the "Hotel Purchase Agreements"), pursuant to which DCOP sold to Starwood the Washington Luxury Collection Hotel and certain related land and improvements, located in Washington, District of Columbia (the "Washington Property"). The purchase price for the Washington Property consisted of cash and Paired Shares. Upon the closing of the sale of the Washington Property on January 15, 1998, DCOP assigned all of the Paired Shares received by it as consideration for sale of the Washington Property to DCO and DCOII in partial satisfaction of certain indebtedness of DCOP to these corporations. DCO and DCOII thereupon distributed all of their Paired Shares to their parent, MEIL. As a result of these transactions, the Paired Shares issued initially to DCOP were transferred directly into the name of MEIL. Each of MEIL, DCO, DCOII and DCOP is deemed, for purposes of the Exchange Act, to be controlled by HES. The address of the principal offices of MEIL is c/o Caledonian Bank & Trust Limited, Caledonian House, Grand Floor, Mary Street, Georgetown, Grand Cayman, Cayman Islands, British West Indies. MEIL is an investment holding company that held an indirect interest in the New York Property and the Washington Property. The sole officer of each of AEIH, PL and MEIL is Caledonian Bank & Trust Limited ("CBTL"), a Cayman Islands corporation, which serves as the Secretary with respect to each of AEIH, PL and MEIL. CBTL is a bank and trust company and its business address is Caledonian House, Grand Floor, Mary Street, Georgetown, Grand Cayman, Cayman Islands, British West Indies. The sole director of each of AEIH, PL and MEIL is His Excellency the Sheikh Abdulaziz bin Ibrahim Al Ibrahim (defined as "HES" above). HES is the Principal of Al-Anwae, Establishment, which principally engages in the investment management business, and his business address is Al-Anwae, Establishment, Olaya Main Street, P.O. Box 1955, Riyadh 11441, Saudi Arabia. He is a citizen of Saudi Arabia. The address of the principal offices of each of AEI, CMI, RV, RVII, NYO, NYOII, DCO, DCOII, SLP, NRP, NYOP and DCOP is 1925 Century Park East, Suite 1900, Los Angeles, California 90067. The principal business of SLP, NRP, NYOP and DCOP was the ownership of the Aspen Property, the Houston Property, the New York Property and the 8 9 Washington Property, respectively. The principal business of AEI, CMI, RV, RVII, NYO, NYOII, DCO and DCOII is the management of various investments of HES in the United States. Mansor A.S. Dalaan ("Dalaan") is the sole director and the President, Secretary and Chief Financial Officer of each of AEI, CMI, RV and RVII. Tarek Ayoubi ("Ayoubi") is the sole director and the President of each of NYO, NYOII, DCO and DCOII, and Dalaan is the Secretary and Chief Financial Officer of each such corporation. The principal occupation of each of Dalaan and Ayoubi is an executive with such corporations and related entities controlled by HES. The business address of Dalaan and Ayoubi is 1925 Century Park East, Suite 1900, Los Angeles, California 90067. Dalaan and Ayoubi are citizens of the United States. None of AEIH, PL, MEIL, AEI, CMI, RV, RVII, NYO, NYOII, DCO, DCOII, SLP, NRP, NYOP, DCOP or the officers and directors of any of them has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he/she/it was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding violations with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The aggregate of 3,717,603 Paired Shares that are the subject of this Statement were issued by Starwood as partial consideration for Starwood's purchase of the following assets: (1) the Aspen Property from SLP: 3,088,372 Paired Shares valued at $165,999,995; (2) the Houston Property from NRP: 539,535 Paired Shares valued at $29,000,006; (3) the New York Property from NYOP: 57,405 Paired Shares valued at $3,200,329; and (4) the Washington Property from DCOP: 32,291 Paired Shares valued at $1,800,223. The above values of the Paired Shares were determined based upon dollar amounts ascribed in the Hotel Purchase Agreements, and do not necessarily reflect the fair market value of the Paired Shares. The right of SLP to receive the 3,088,372 Paired Shares issued in respect of the Aspen Property was assigned to AEI and CMI in partial satisfaction of certain indebtedness of SLP to these corporations. CMI thereupon assigned its Paired Shares to its parent, AEI, and AEI distributed all of its Paired Shares to its parent AEIH. The right of NRP to receive the 539,535 Paired Shares issued in respect of the Houston Property was assigned to RV and RVII in partial satisfaction of certain indebtedness of NRP to these corporations. Each of RV and RVII thereupon distributed its Paired Shares to its parent, PL. The right of NYOP to receive the 57,405 Paired Shares issued in respect of the New York Property was assigned to NYO and NYOII in partial satisfaction of certain indebtedness of NYOP to these corporations. Each of NYO and NYOII thereupon distributed its Paired Shares to its parent, MEIL. The right of DCOP to receive the 32,291 Paired Shares issued in respect of the Washington Property was assigned to DCO and DCOII in partial satisfaction of certain indebtedness of DCOP to these corporations. Each of DCO and DCOII thereupon distributed its Paired Shares to its parent, MEIL. 9 10 ITEM 4. PURPOSE OF TRANSACTION The Paired Shares were acquired as partial consideration for the sale to Starwood on January 15, 1998 of (1) the Aspen Property pursuant to the Aspen Purchase Agreement, (2) the Houston Property pursuant to the Houston Purchase Agreement, (3) the New York Property pursuant to the New York Purchase Agreement and (4) the Washington Property pursuant to the Washington Purchase Agreement. The Paired Shares were issued pursuant to the terms of Stock Agreements, dated January 15, 1998, among Starwood and each of SLP, NRP, NYOP and DCOP (the "Stock Agreements"). The transferability of the Paired Shares and certain other matters concerning the Paired Shares are governed by the Stock Agreements and by Registration Rights Agreements, dated January 15, 1998, among Starwood and each of SLP, NRP, NYOP and DCOP (the "Registration Rights Agreements"). The respective rights of each of SLP, NRP, NYOP and DCOP under the Stock Agreements and the Registration Rights Agreements were assigned to AEIH, PL, MEIL and MEIL, respectively, on January 15, 1998. Pursuant to the Registration Rights Agreements, Starwood is required to file and use its best efforts to cause the Securities and Exchange Commission (the "Commission") to declare effective a registration statement (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), enabling the Reporting Persons to resell the Paired Shares into the public market. In the event that the Registration Statement is not declared effective on or before seven business days after the "Required Effectiveness Date" (as specified in the respective Stock Agreements), or the market price of the Paired Shares around such time of effectiveness is less than the amounts specified in the respective Stock Agreements, Starwood will be obligated to make certain payments to the holders of the Paired Shares. If the effectiveness of the Registration Statement is delayed for 60 days beyond the Required Effectiveness Date, the holders of the Paired Shares would have the right to require Starwood to repurchase such shares under conditions specified in the respective Stock Agreements. If any Reporting Person (or group of Reporting Persons) seeks to sell into the open market more than 100,000 Paired Shares (subject to adjustment), the Stock Agreements provide Starwood with a right to purchase or place with a purchaser to be designated by Starwood such shares at a price based on market prices of the Paired Shares at such time. Starwood is required to keep the Registration Statement effective through January 14, 1999 (or earlier if all Paired Shares have been disposed of by the Reporting Persons and certain transferees). The Reporting Persons are holding the Paired Shares for investment purposes. Any Reporting Person may at any time dispose of some or all of the Paired Shares for which it holds power to dispose (or to direct the disposition) in private negotiated transactions, in open market sales pursuant to the Registration Statement, to Starwood pursuant to the arrangements described above, pursuant to Rule 144 under the Securities Act, or otherwise. Such sales may be made directly or indirectly through brokers or dealers or agents, at prevailing market prices, at negotiated prices, or otherwise. 10 11 Except as described above, none of the Reporting Persons nor, to the best knowledge of any of the Reporting Persons, any person named in Item 2 who is not a Reporting Person, has any plan or proposal that relates to or would result in: (a) the acquisition by any person of additional securities of Starwood, or the disposition of securities of Starwood; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Starwood or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of Starwood or any of its subsidiaries; (d) any change in the present Board of Directors or management of Starwood; (e) any material change in the present capitalization or dividend policy of Starwood; (f) any other material change in Starwood's business or corporate structure; (g) changes in Starwood's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of Starwood by any person; (h) causing a class of securities of Starwood to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of Starwood becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) any action similar to any of those enumerated in (a)-(i) above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a), (b) As of January 26, 1998, HES beneficially owned 3,717,603 Paired Shares, representing approximately 7.2% of the outstanding Paired Shares and he has shared power to vote or to dispose with respect to such Paired Shares. As of January 26, 1998, AEIH beneficially owned 3,088,372 Paired Shares, representing approximately 6.0% of the outstanding Paired Shares and it has shared power to vote or to dispose with respect to such Paired Shares. As of January 26, 1998, PL beneficially owned 539,535 Paired Shares, representing approximately 1.1% of the outstanding Paired Shares and it has shared power to vote or to dispose with respect to such Paired Shares. As of January 26, 1998, MEIL beneficially owned 89,696 Paired Shares, representing approximately 0.2% of the outstanding Paired Shares and it has shared power to vote or to dispose with respect to such Paired Shares. 11 12 HES shares power to vote and dispose of the Paired Shares with each of AEIH, PL and MEIL and each of AEIH, PL and MEIL shares power to vote and to dispose of their respective Paired Shares with HES. None of the persons listed in Item 2 other than the Reporting Persons, to the best knowledge of the Reporting Persons, beneficially owns any Paired Shares. (c) None of the Reporting Persons and, to the best knowledge of the Reporting Persons, none of the persons listed in Item 2 except as set forth in this statement, has been party to any transaction in Paired Shares during the sixty-day period ending on January 26, 1998. (d) No other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any of Paired Shares that may be deemed to be beneficially owned by the Reporting Persons. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Transfer Restrictions. Pursuant to the Stock Agreements, if a Reporting Person (or a group of Reporting Persons) elects to make an open market sale of more than 100,000 Paired Shares (subject to adjustment in specified circumstances), such Reporting Person(s) must first give Starwood notice and Starwood will have until the second business day following such notice to irrevocably offer to purchase or place (with a purchaser to be designated by Starwood) all such Paired Shared at a price equal to the average closing price of the Paired Shares on the New York Stock Exchange on the first and second business day following the giving of such notice by the Reporting Person(s). If Starwood does not make such an offer, it shall have no further rights with respect to such Paired Shares if the Reporting Person(s) commences on "Orderly Market Disposition" (as defined in the respective Stock Agreements) thereof within five business days after delivery of its notice to Starwood. Registration Rights. Pursuant to the Registration Rights Agreements, Starwood is required to file the Registration Statement and use its best efforts to cause the Commission to declare it effective no later than the applicable "Required Effectiveness Date" (as specified in the respective Stock Agreements) and to keep the Registration Statement effective through January 14, 1999 (or earlier if all Paired Shares have been disposed of by the Reporting Persons and certain transferees). If the Registration Statement is not declared effective on or before seven days after the applicable "Required Effectiveness Date," Starwood is required to pay to each Reporting Person an interest factor equal to the product of LIBOR plus 2% per annum multiplied by the market value of the Paired Shares held by such Reporting Person, for each day until the Registration Statement is declared effective. If such effectiveness has not occurred by the 60th day following the Required Effectiveness Date, the Reporting Persons would have the right to require Starwood to repurchase the Paired Shares (see "Put Right" below). 12 13 Finder's Fees. No broker, finder, agent or similar intermediary acted on behalf of any Reporting Person or, to the best knowledge of any of the Reporting Persons, on behalf of any person listed in Item 2 above who is not a Reporting Person, in connection with the transactions contemplated by the Hotel Purchase Agreements or the Stock Agreements; and there are no brokerage commissions, finder's fees or similar fees or commissions payable in connection therewith based upon any agreement with any of the Reporting Persons or, to the best knowledge of any of the Reporting Persons, with any person listed in Item 2 above who is not a Reporting Person. Put Right. Pursuant to the Stock Agreements, each Reporting Persons has the one-time right (the "Put Right") to require Starwood to purchase all Paired Shares under specified conditions. The Put Right is exercisable if the Registration Statement has not been declared effective by the Commission within 60 days after the Required Effectiveness Date. The Put Right expires on the earlier to occur of (i) the date the Registration Statement is declared effective or (ii) January 14, 1999. If the Put Right is exercised, Starwood would be required to repurchase such Paired Shares on the third business day after exercise for a price equal to the average closing price of the Paired Shares on the New York Stock Exchange during the ten consecutive business days immediately preceding the notice of such exercise. Guarantees Against Loss. The Stock Agreements provide that on the date the Reporting Persons are first able to sell their Paired Shared into the public market pursuant to the Registration Statement (the "Settlement Date"), Starwood shall pay to the Reporting Persons an amount per Paired Share equal to the amount, if any, by which the Lock Price (as defined below) exceeds the average closing price of the Paired Shares on the New York Stock Exchange for the ten consecutive business days immediately preceding the Settlement Date. The Lock Price for the Paired Shares issued with respect to the Aspen Property and the Houston Property is $53.75. The Lock Price for the Paired Shares issued with respect to the New York Property and the Washington Property is $55.74. The summaries contained herein of certain provisions of the Hotel Purchase Agreements, the Stock Agreements and the Registration Rights Agreements are not intended to be complete and are qualified in their entirety by reference to the exhibits listed in Item 7. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 1. Purchase and Sale Agreement and Joint Escrow Instructions, dated as of December 30, 1997, among Savanah Limited Partnership, Starwood Lodging Trust and Starwood Lodging Corporation; 2. Purchase and Sale Agreement and Joint Escrow Instructions, dated as of December 30, 1997, among New Remington Partners, Starwood Lodging Trust and Starwood Lodging Corporation; 3. Purchase and Sale Agreement and Joint Escrow Instructions, dated as of December 30, 1997, among N.Y. Overnight Partners, L.P., Starwood Lodging Trust and Starwood Lodging Corporation; 13 14 4. Purchase and Sale Agreement and Joint Escrow Instructions, dated as of December 30, 1997, among D.C. Overnight Partners, L.P., Starwood Lodging Trust and Starwood Lodging Corporation; 5. Stock Agreement, dated as of January 15, 1998, among Savanah Limited Partnership, Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 6. Stock Agreement, dated as of January 15, 1998, among New Remington Partners, Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 7. Stock Agreement, dated as of January 15, 1998, among N.Y. Overnight Partners, L.P., Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 8. Stock Agreement, dated as of January 15, 1998, among D.C. Overnight Partners, L.P., Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 9. Registration Rights Agreement, dated as of January 15, 1998, among Savanah Limited Partnership, Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 10. Registration Rights Agreement, dated as of January 15, 1998, among New Remington Partners, Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 11. Registration Rights Agreement, dated as of January 15, 1998, among N.Y. Overnight Partners, L.P., Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 12. Registration Rights Agreement, dated as of January 15, 1998, among D.C. Overnight Partners, L.P., Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 13. Power of Attorney from Sheikh Abdulaziz bin Ibrahim Al Ibrahim; Aspen Enterprises International Holdings, Inc.; Polestar Limited and Moonbeam Enterprises International, Ltd. 14 15 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 26, 1998 Sheikh Abdulaziz bin Ibrahim Al Ibrahim By: /s/ Tarek Ayoubi --------------------------------------- Name: Tarek Ayoubi Attorney-in-fact 15 16 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 26, 1998 Aspen Enterprises International Holdings, Ltd. By: /s/ Tarek Ayoubi ---------------------------------------- Name: Tarek Ayoubi Attorney-in-fact 16 17 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 26, 1998 Polestar Limited By: /s/ Tarek Ayoubi ----------------------------------- Name: Tarek Ayoubi Attorney-in-fact 17 18 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: January 26, 1998 Moonbeam Enterprises International, Ltd. By: /s/ Tarek Ayoubi ----------------------------------- Name: Tarek Anyoubi Attorney-in-fact 18 19 EXHIBIT INDEX Exhibit No. Description 1. Purchase and Sale Agreement and Joint Escrow Instructions, dated as of December 30, 1997, among Savanah Limited Partnership, Starwood Lodging Trust and Starwood Lodging Corporation; 2. Purchase and Sale Agreement and Joint Escrow Instructions, dated as of December 30, 1997, among New Remington Partners, Starwood Lodging Trust and Starwood Lodging Corporation; 3. Purchase and Sale Agreement and Joint Escrow Instructions, dated as of December 30, 1997, among N.Y. Overnight Partners, L.P., Starwood Lodging Trust and Starwood Lodging Corporation; 4. Purchase and Sale Agreement and Joint Escrow Instructions, dated as of December 30, 1997, among D.C. Overnight Partners, L.P., Starwood Lodging Trust and Starwood Lodging Corporation; 5. Stock Agreement, dated as of January 15, 1998, among Savanah Limited Partnership, Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 6. Stock Agreement, dated as of January 15, 1998, among New Remington Partners, Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 7. Stock Agreement, dated as of January 15, 1998, among N.Y. Overnight Partners, L.P., Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 8. Stock Agreement, dated as of January 15, 1998, among D.C. Overnight Partners, L.P., Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 9. Registration Rights Agreement, dated as of January 15, 1998, among Savanah Limited Partnership, Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 10. Registration Rights Agreement, dated as of January 15, 1998, among New Remington Partners, Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 11. Registration Rights Agreement, dated as of January 15, 1998, among N.Y. Overnight Partners, L.P., Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 12. Registration Rights Agreement, dated as of January 15, 1998, among D.C. Overnight Partners, L.P., Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc. 13. Power of Attorney from Sheikh Abdulaziz bin Ibrahim Al Ibrahim; Aspen Enterprises International Holdings, Ltd.; Polestar Limited and Moonbeam Enterprises International, Ltd. EX-99.1 2 PURCHASE AND SALE AGREEMENT 1 Aspen Execution PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS By And Between SAVANAH LIMITED PARTNERSHIP, a District of Columbia Limited Partnership, As Seller And STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust And STARWOOD LODGING CORPORATION, a Maryland Corporation, As Buyer. Dated As Of: December 30, 1997 Relating to the Aspen Luxury Collection Hotel Aspen, Colorado 2 TABLE OF CONTENTS SECTION 1 - DEFINITIONS......................................................1 1.1 Defined Terms....................................................1 1.2 Other Definitional Provisions...................................11 SECTION 2 - PURCHASE AND SALE OF PROPERTY...................................11 SECTION 3 - PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES....11 3.1 Purchase Price..................................................11 3.2 Payment.........................................................11 3.3 Investment of Escrowed Funds....................................12 3.4 Allocation of Purchase Price....................................12 3.5 Default by Buyer Prior to Closing; Liquidated Damages...........12 SECTION 4 - ESCROW; CLOSING; COSTS..........................................13 4.1 Escrow..........................................................13 4.2 Seller's Deliveries to Escrow Holder............................13 4.2.1.1 Deed...................................................14 4.2.1.2 Assignment and Assumption of Tenant Leases.............14 4.2.1.3 General Assignment.....................................14 4.2.1.4 Assignment and Assumption of Management Agreement......14 4.2.1.5 Bill of Sale...........................................14 4.2.1.6 Stock Agreement........................................14 4.2.1.7 Liquor Licenses Management Agreement...................14 4.2.1.8 [Intentionally Omitted]................................14 4.2.1.9 [Intentionally Omitted]................................14 4.2.1.10 PUD Cooperation Agreement..............................14 4.2.1.11 [Intentionally Omitted]................................15 4.2.1.12 [Intentionally Omitted]................................15 4.2.1.13 Non-Foreign Person Certificate.........................15 4.2.1.14 Transfer Tax Forms.....................................15 4.2.1.15 Certified Rent Roll....................................15 4.2.1.16 Certified Operating Statement..........................15 4.2.1.17 Guest Ledger...........................................15 4.2.1.18 Closing Certificate....................................15 4.2.1.19 Schedule of Bookings...................................15 4.2.1.20 Title Requirements.....................................15 4.2.1.21 Payoff Letters.........................................16 4.2.1.22 Notices to Tenants.....................................16 4.2.1.23 Opinion of Seller's Counsel............................16 i 3 4.2.1.24 Other..................................................16 4.3 Buyer's Deliveries to Escrow Holder.............................16 4.3.1.1 The Cash Purchase Price................................16 4.3.1.2 Stock Certificates.....................................16 4.3.1.3 Assignment and Assumption of Management Agreement......16 4.3.1.4 Value Letter...........................................17 4.3.1.5 Opinion of Buyer's Counsel.............................17 4.3.1.6 Stock Agreement........................................17 4.3.1.7 [Intentionally Omitted]................................17 4.3.1.8 Liquor License Management Agreement....................17 4.3.1.9 PUD Cooperation Agreement..............................17 4.3.1.10 [Intentionally Omitted]................................17 4.3.1.11 [Intentionally Omitted]................................17 4.3.1.12 Closing Certificate....................................17 4.3.1.13 The Assignment and Assumption of Tenant Leases.........17 4.3.1.14 The General Assignment and Assumption Agreement........17 4.3.1.15 Transfer Tax Forms.....................................17 4.3.1.16 Other..................................................17 4.4 Seller's Deliveries to Buyer....................................17 4.4.1 Tenant Leases/Tenant Deposits..........................18 4.4.2 Service Contracts......................................18 4.4.3 Licenses and Permits...................................18 4.4.4 Records and Plans......................................18 4.5 Possession......................................................18 4.6 Evidence of Authorization.......................................18 4.7 Close of Escrow.................................................18 4.8 Costs of Escrow.................................................19 4.8.7 [Intentionally Omitted]................................20 4.9 Other Costs.....................................................20 4.10 Maintenance of Confidentiality by Escrow Holder.................20 SECTION 5 - PRORATIONS AND ASSUMPTION OF OBLIGATIONS........................20 5.1 General.........................................................20 5.2 General and Specific Prorations.................................21 5.3 Deposits........................................................23 5.4 Tenant Leases...................................................23 5.5 Service Contracts and Other Intangible Property.................23 5.6 Tax Refunds and Proceedings.....................................24 5.7 Guest Baggage...................................................24 5.8 Safe Deposit Boxes..............................................24 5.9 Advance Bookings................................................24 5.10 Special Purchase Price Adjustment...............................24 5.11 The PCL Litigation..............................................25 ii 4 SECTION 6 - REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY...........25 6.1 Of the Trust....................................................25 6.1.1 Power and Authority....................................26 6.1.2 Authorization; Valid Obligation........................26 6.1.3 Capital Structure......................................26 6.1.4 SEC Documents and Other Reports........................26 6.1.5 Absence of Certain Changes or Events...................27 6.1.6 Actions and Proceedings................................27 6.1.7 REIT Status............................................28 6.1.8 Partnership Status.....................................28 6.1.9 Hart-Scott-Rodino Act..................................28 6.2 Of the Corporation..............................................28 6.2.1 Power and Authority....................................28 6.2.2 Authorization; Valid Obligation........................28 6.2.3 Capital Structure......................................28 6.2.4 SEC Documents and Other Reports........................29 6.2.5 Absence of Certain Changes or Events...................29 6.2.6 Actions and Proceedings................................29 6.2.8 Hart-Scott-Rodino......................................30 6.3 Of Seller.......................................................30 6.3.1 Regarding Seller's Authority...........................30 6.3.2 Tenant Leases..........................................31 6.3.3 Service Contracts......................................31 6.3.4 Claims.................................................31 6.3.5 Employees..............................................31 6.3.6 Compliance with Laws...................................31 6.3.7 Hazardous Materials....................................32 6.3.8 Records and Plans......................................32 6.3.9 Licenses and Permits...................................32 6.3.10 Management Agreements..................................32 6.3.11 Personal Property......................................32 6.3.12 Insurance..............................................32 6.3.13 Real Estate Taxes......................................32 6.3.14 [Intentionally Omitted]................................32 6.3.15 [Intentionally Omitted]................................33 6.3.16 [Intentionally Omitted]................................33 6.4 Buyer's Review of Records and Plans.............................33 6.4.1 Access to Records and Plans; Specific Disclosures......33 6.4.2 Limitation on Access to Records and Plans..............33 6.5 PURCHASE AS IS..................................................34 6.6 Limitation on Representations and Warranties of Seller..........36 6.7 Right to Supplement Disclosures.................................36 6.8 Basket..........................................................36 iii 5 6.9 Survival........................................................36 6.10 [Intentionally Omitted].........................................37 SECTION 7 - TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING............37 7.1 Buyer's Review of Title.........................................37 7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens.........................................37 7.1.2 [Intentionally Omitted]................................38 7.2 Title Insurance Policy..........................................38 7.3 Title to Real Property..........................................38 SECTION 8 - INTERIM ACTIVITIES..............................................39 SECTION 9 - CONDITIONS PRECEDENT TO CLOSING.................................39 9.1 Conditions Precedent to Buyer's Obligations.....................39 9.1.1 Seller's Deliveries....................................39 9.1.2 Title Policy...........................................39 9.1.3 Preference Under Related Agreement.....................39 9.1.4 [Intentionally Omitted]................................40 9.1.5 Seller Performance.....................................40 9.1.6 Representations and Warranties of Seller...............40 9.2 Conditions Precedent to Seller's Obligations....................40 9.2.1 Funds and Documents....................................40 9.2.2 Representations and Warranties of Buyer................40 9.2.3 No Material Changes....................................40 9.2.4 [Intentionally Omitted]................................40 9.2.5 Performance Under Related Agreement....................40 9.3 Failure of Condition............................................40 SECTION 10 - BROKER.........................................................41 SECTION 11 - REMEDIES FOR SELLER'S DEFAULT..................................41 11.1 Buyer's Remedies in General.....................................41 11.2 MATERIAL INDUCEMENT.............................................42 SECTION 12 - DAMAGE TO OR DESTRUCTION OF THE PROPERTY.......................42 12.1 Insured Casualty................................................42 12.2 Uninsured Casualty..............................................43 SECTION 13 - CONDEMNATION...................................................43 SECTION 14 -EMPLOYEES.......................................................44 14.1 Hiring of Hotel Employees; WARN Act Compliance..................44 14.2 Collective Bargaining Agreements................................45 14.3 Continuation of Benefits........................................45 14.5 Indemnification.................................................47 iv 6 14.6 Survival........................................................47 SECTION 15 - COOPERATION....................................................47 SECTION 16 - NOTICES........................................................48 16.1 Addresses.......................................................48 16.2 Receipt of Notices..............................................49 16.3 Refusal of Delivery.............................................50 16.4 Change of Address...............................................50 SECTION 17 - GENERAL PROVISIONS.............................................50 17.1 Amendment.......................................................50 17.2 Time of Essence.................................................50 17.3 Entire Agreement................................................50 17.4 No Waiver.......................................................50 17.5 Counterparts....................................................51 17.6 Costs and Attorneys' Fees.......................................51 17.7 Payments; Interests.............................................51 17.8 Transfer By Buyer...............................................51 17.9 Parties in Interest.............................................51 17.10 Applicable Law..................................................52 17.11 Incorporation of Recitals and Exhibits..........................52 17.12 Construction of Agreement.......................................52 17.13 Severability....................................................52 17.14 Announcements...................................................52 17.15 Submission of Agreement.........................................52 17.16 Further Assurances..............................................52 17.17 Cooperation.....................................................53 17.18 Moratorium on Re-Sale...........................................53 17.19 Confidentiality.................................................53 17.20 Interim Management Agreement....................................53 17.21 Starwood Lodging Trust..........................................54 v 7 EXHIBITS Exhibit A....................................................Legal Description Exhibit B...............................................Memorandum of Contract Exhibit 4.2.1.1...........................................................Deed Exhibit 4.2.1.2.....................Assignment and Assumption of Tenant Leases Exhibit 4.2.1.3....................General Assignment and Assumption Agreement Exhibit 4.2.1.4..............Assignment and Assumption of Management Agreement Exhibit 4.2.1.5A................Bill of Sale for Capitalized Tangible Property Exhibit 4.2.1.5B...................Bill of Sale for Expensed Tangible Property Exhibit 4.2.1.6................................................Stock Agreement Exhibit 4.2.1.7............................Liquor License Management Agreement Exhibit 4.2.1.10.....................................PUD Cooperation Agreement Exhibit 4.2.1.13................................Non-Foreign Person Certificate Exhibit 17.20.....................................Interim Management Agreement SCHEDULES Schedule 1.1.1......................................Approved Service Contracts Schedule 1.1.2...........................................Employment Agreements Schedule 1.1.3................................................Equipment Leases Schedule 1.1.4...............................................Excluded Property Schedule 1.1.5.........................................[Intentionally Omitted] Schedule 1.1.6.................................................Hotel Employees Schedule 1.1.7.......................................Schedule of Tenant Leases Schedule 1.1.8.................. Seller's Due Diligence and Seller's Knowledge Schedule 1.1.9.....................................Specific Disclosure Matters Schedule 6.3.2............................Material Defaults Under Tenant Lease Schedule 6.3.3..............Material Defaults Under Approved Service Contracts Schedule 6.3.4.................................................Material Claims Schedule 6.3.5...................Material Defaults Under Employment Agreements Schedule 6.3.6.............................................Material Violations Schedule 6.3.7...............................Material Environmental Conditions Schedule 6.3.9............................................Licenses and Permits Schedule 6.3.12.............................................Seller's Insurance Schedule 6.3.13...........................................Pending Tax Protests Schedule 7.3............................................Permitted Encumbrances Schedule 14.2.................................Collective Bargaining Agreements vi 8 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this "Agreement") is entered into as of the 30th day of December, 1997, by and between SAVANAH LIMITED PARTNERSHIP, a District of Columbia limited partnership ("Seller"), and STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust (the "Trust"), and STARWOOD LODGING CORPORATION, a Maryland corporation (the "Corporation"; the Trust and the Corporation being referred to herein collectively as, "Buyer"). A. Seller owns that certain parcel of land described in Exhibit A attached hereto and made a part hereof, which is improved with a hotel building and certain related improvements, all as more particularly set forth in this Agreement. B. Seller desires to sell, and Buyer desires to purchase, the above described land and hotel together with the related improvements upon the terms and subject to the conditions set forth in this Agreement. A G R E E M E N T NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby mutually acknowledged, Buyer and Seller agree as follows: SECTION 1 DEFINITIONS 1.1 Defined Terms "Accounts Receivable" shall mean, collectively, all Cash Equivalent Receivables, all Invoiced Receivables and all Other Accounts Receivable. "Affiliate" shall have the meaning set forth in Rule 12b-2 of the regulations promulgated under the Exchange Act. "Anthem" shall have the meaning set forth in Section 14.3.1(ii). "Approved Service Contracts" shall mean the Service Contracts identified on Schedule 1.1.1 annexed hereto and made a part hereof and any other Service Contracts cancelable upon thirty (30) or fewer days notice without penalty, which Service Contracts Buyer shall assume as of the Closing pursuant to the General Assignment and Assumption Agreement. 9 "Aspen Subdivision" shall mean the land subject to that certain First Amended Plat of Aspen Mountain Subdivision and Planned Unit Development Agreement between the City of Aspen, Colorado and John M. Roberts, Jr., recorded October 3, 1988, in Book 574 at Page 792 of the Real Property records of Pitkin County, Colorado. "Assignment and Assumption of Management Agreement" shall have the meaning set forth in Section 4.2.1.4. "Assignment and Assumption of Tenant Leases" shall have the meaning set forth in Section 4.2.1.2. "Bill of Sale" shall have the meaning set forth in Section 4.2.1.5. "Business Day" shall mean any day other than Saturday or Sunday on which the New York Stock Exchange is open for business. "Booking" shall mean a contract or reservation for the use of guest rooms, banquet facilities, meeting rooms, and/or conference facilities at the Hotel. "Buyer's Counsel" shall mean the law firm of Greenberg Traurig Hoffman Lipoff Rosen & Quentel acting through Andrew E. Zobler, Esq. "Buyer Default" shall have the meaning set forth in Section 3.5.1. "Cash Equivalent Receivables" shall mean all Guest Ledger Receivables which are in the form of drafts or checks written on any bank or other financial institution, certified checks, money orders, amounts owed to Seller from credit card, debit card, travel and entertainment card or traveler's check companies, and are in such other forms which are considered to be cash equivalents under generally acceptable accounting principles, whether or not such Guest Ledger Receivables have been presented or billed to any such bank, financial institution or other company as of the Closing Date. "Cash Purchase Price" shall mean (a) Nine Million Dollars ($9,000,000.00) plus (b) the Overage Cash Payment, if any, as adjusted pursuant to Section 3.2.2. "Closing" or "Close of Escrow" shall have the meaning set forth in Section 4.7.2. "Closing Agent" shall have the meaning set forth in Section 4.8.10. "Closing Date" shall mean the day on which the Closing occurs hereunder. "Closing Payment" shall have the meaning set forth in Section 3.2.2. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. 2 10 "Collective Bargaining Agreements" shall have the meaning set forth in Section 14.2. "Conveyance Documents" shall mean the Deed, the Assignment and Assumption of Management Agreement, the Assignment and Assumption of Tenant Leases, the Bill of Sale and the General Assignment and Assumption Agreement. "Deed" shall have the meaning set forth in Section 4.2.1.1. "Deposit" shall mean an amount equal to $10,000,000.00 held in accordance with the provisions of Section 3 hereof together with all interest accrued thereon. "Employer Corporation" shall mean Luxury Holdings, Inc. (formerly known as TQM Inc.). "Employment Agreements" shall mean the Collective Bargaining Agreements and Employee Benefit Plans (as defined in Section 3(3) of ERISA), affecting Hotel Employees, including pension, profit sharing, employee benefit and similar plans, if any, and agreements with regard to any Hotel Employee each of which are identified on or expressly described in the materials identified on Schedule 1.1.2 annexed hereto and made a part hereof. "Environmental Condition" shall mean any condition with respect to soil, surface waters, groundwater, land, stream sediments, surface or subsurface strata, ambient air and any environmental medium comprising or surrounding the Real Property, which results in any damage, loss, cost, expense, claim, demand, order or liability to or against Seller or Buyer by any third party (including, without limitation, any government entity) as a result of a violation of any applicable Environmental Laws. "Environmental Laws" shall mean all presently applicable statutes, regulations, rules, ordinances, codes, licenses, permits and orders of any and all governmental agencies, departments, commissions, boards, bureaus or instrumentalities of the United States, states and political subdivisions thereof, and all applicable judicial and administrative and regulatory decrees, judgments and orders relating to the protection of the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq.; and analogous state laws and regulations. "Equipment Leases" shall mean all leases of equipment, vehicles, furniture or other personal property leased by, or on behalf of, Seller and located at, or used in the operation of the Real Property, together with any and all amendments thereto, which are identified on Schedule 1.1.3 annexed hereto. 3 11 "Equity Purchase Price" shall mean the number of Paired Shares with a value as determined pursuant to the Stock Agreement equal to $152,637,000.00 to be delivered in accordance with the applicable provisions of the Stock Agreement. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. "Escrow" shall mean an escrow opened with the Escrow Holder for the purchase and sale of the Property in accordance with the provisions of this Agreement. "Escrow Holder" shall mean the Title Company unless otherwise agreed in writing by Buyer and Seller. "Escrow Instructions" shall have the meaning set forth in Section 4.1. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Excluded Property" shall mean all Seller's right, title and interest in and to: (a) those claims of Seller attributable to the period prior to the Closing Date and described on Schedule 1.1.4 annexed hereto and made a part hereof, or which Seller is entitled to assert under the express provisions of Section 5; (b) all insurance proceeds under Seller's Insurance and workers' compensation policies, including return premiums and dividends thereon and all claims thereunder in each case to the extent attributable to acts or occurrences prior to the Closing Date; (c) all accounts owned or maintained by Seller, or Manager on Seller's behalf, in connection with the Hotel, including all operating and reserve accounts; (d) any books, records, files or papers specifically described in Section 6.3.2 as excluded from the Property Information; and (e) up to five (5) of the items of art work selected by Seller subject to Buyer's reasonable approval, provided, however, Seller shall replace each such item of art work prior to the Closing Date with a similar item of art work subject to Buyer's reasonable agreement that such art work is consistent with the quality, character and decor of the Hotel. "Excluded Parties" shall have the meaning set forth in Section 17.18 "Execution Date" shall mean the date hereof. "General Assignment and Assumption Agreement" shall have the meaning set forth in Section 4.2.1.3. "Guest Ledger Receivables" shall mean amounts, including, without limitation, room charges, accrued to the accounts of guests occupying rooms at the Hotel or group, conference or banquet customers of Seller at the Hotel. "Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder, as the same has been amended from time to time. 4 12 "Hotel" shall mean the hotel located on the Land and commonly known as the Aspen Luxury Collection Hotel. "Hotel Employees" shall mean all full-time, part-time or temporary employees of Seller and/or the Employer Corporation (but not employees of Manager or any of its affiliates) who are employed by Seller and/or the Employer Corporation exclusively at or in connection with the Hotel as of the Closing Date and who are listed on Schedule 1.1.6 annexed hereto and made a part hereof. "Improvements" shall mean Seller's right, title and interest in and to the hotel building and other improvements now or hereafter located on the Land. "Insured Casualty Notice" shall have the meaning set forth in Section 12.1.1. "Intangible Property" shall mean all of Seller's right, title and interest in and to the following, in each case excluding any Excluded Property: (i) Licenses and Permits; (ii) trademark rights, and other intangible property, rights, titles, interests, privileges and appurtenances related to or used in connection with the Hotel or its operations; (iii) warranties and guaranties of architects, engineers, contractors, subcontractors, suppliers or materialmen involved in the repair, construction, maintenance, design, reconstruction or operation of the Hotel, or any equipment or systems constituting a part of the Hotel; (iv) Approved Service Contracts; (v) Equipment Leases; (vi) Bookings; and (vii) computer programs, software and documentation thereof (subject to the limitations of any applicable license agreements pertaining thereto), and including all electronic data processing systems, program specifications, source codes, logs, input data and report layouts and forms, record file layouts, diagrams, functional specifications and variable descriptions, flow charts and other related materials used in connection therewith; and (viii) any goodwill associated with the operation of the Hotel. "Interim Management Agreement" shall have the meaning set forth in Section 17.20 hereto. "Invoiced Receivables" shall mean all Guest Ledger Receivables other than Cash Equivalent Receivables whether or not such Guest Ledger Receivables have been invoiced by Seller as of the Closing Date. "Land" shall mean Seller's right, title and interest in and to the land described on Exhibit A annexed hereto and made a part hereof. "Licenses and Permits" shall mean all licenses, permits, registrations, certificates, authorizations and governmental approvals other than the Liquor License obtained in connection with the design, construction, rehabilitation, use and/or operation of the Hotel. "LIBOR Rate" shall mean the average of interbank offered rates for three-month dollar deposits in the London market based on quotations at five (5) major banks, as published from time to time in The Wall Street Journal. If The Wall Street Journal ceases to publish such a compilation of interbank offered rates, or if The Wall Street Journal ceases to be published, then 5 13 Buyer shall propose a substitute method of determining the interest rate generally known as the three-month LIBOR rate, which method, absent manifest error, shall be binding on Seller and Buyer. "Liquor License" shall mean all licenses, permits, registrations, certificates, authorizations and governmental approvals with respect to service of alcoholic beverages at the Hotel. "Liquor License Management Agreement" shall have the meaning set forth in Section 4.2.1.8. "Lock Price" shall have the meaning set forth in the Stock Agreement. "Losses" shall mean any and all losses, liabilities, obligations, damages, claim or expense, including without limitation, reasonable attorneys' and accountants' fees and disbursements related thereto. "Manager" means Sheraton Operating Corporation, a wholly-owned subsidiary of ITT Sheraton Corporation. "Management Agreement" shall mean that certain Management Agreement entered into as of August 13, 1997 between Seller and Manager. "Market Price" shall have the meaning set forth in the Stock Agreement. "Material" shall mean $5,000 for any single occurrence and $15,000 in the aggregate for any group of occurrences whether or not related. "Material Casualty" shall mean a casualty or casualties that, in the aggregate: (i) causes in excess of $10,000,000.00 worth of damage to the Hotel; or (ii) will take twelve (12) months or longer from the date of the casualty to fully remediate. "Material Taking" shall mean an exercise by an applicable governmental authority of the power of condemnation or eminent domain that results in: (a) the taking of more than twenty percent (20%) of the Real Property; (b) a material reduction or restriction in access to the Property; or (c) the inability to operate the Hotel in substantially the same manner (without material additional expense) as it was operated prior to such taking. "Memorandum of Contract" shall mean a memorandum of this Agreement in the form attached as Exhibit B hereto. "Monetary Lien" shall mean any monetary lien affecting the Real Property of an ascertainable amount, other than any lien for taxes or assessments which are not yet due and payable. "Non-Foreign Person Certificate" shall have the meaning set forth in Section 4.2.1.13. 6 14 "Other Accounts Receivable" shall mean any and all rents, additional rent, deposits, and other sums and charges owing to Seller that are in any way attributable to the operation of the business at the Hotel, including, without limitation, all rents and/or license fees due from Tenants under Tenant Leases, and including any such amounts which are past due, but excluding Guest Ledger Receivables. "Overage Cash Payment" shall mean the portion of the Equity Purchase Price which is payable in cash at Closing as provided in Section 3.2.2.1, if any. "Ownership Limitation" shall mean the limitations contained in the declaration of trust for the Trust and the Corporation's articles of incorporation prohibiting actual or constructive ownership by any one person or group of related persons of more than 8% of the issued and outstanding Paired Shares taking into account the attribution rules of Section 544(a) of the Code as modified by Section 856(h) of the Code or Section 318(a) of the Code as modified by Section 856(d)(5) of the Code. "Paired Shares" shall mean one share of beneficial interest, par value $.01 per share of the Trust, and one share of common stock, par value $.01 per share, of the Corporation that are subject to the Pairing Agreement, which shares shall be transferable as provided in the Stock Agreement and the Pairing Agreement. "Pairing Agreement" shall mean the Pairing Agreement dated as of June 25, 1980, as amended, between the Trust and the Corporation providing, in relevant part, for the pairing of all outstanding beneficial interests of the Trust and shares of the Corporation. "PCL Litigation" shall have the meaning set forth in Section 5.10. "Permitted Encumbrances" shall have the meaning set forth in Section 7.3. "Person" shall mean any natural person, partnership, corporation, association, limited liability company, trust or any other legal entity. "Personal Property" shall mean collectively the Tangible Personal Property and the Intangible Property. "Preliminary Title Report" shall have the meaning set forth in Section 7.1. "Property" shall mean collectively the Real Property, the Personal Property, the Tenant Leases, and the Accounts Receivable, but shall exclude the Excluded Property. "Property Information" shall have the meaning set forth in Section 6.4.2. "Proration Time" shall mean 12:01 a.m. Mountain Time on the Closing Date. "PUD Cooperation Agreement" shall have the meaning set forth in Section 4.2.1.10. 7 15 "Purchase Price" shall mean the sum of the Cash Purchase Price and the Equity Purchase Price. "Real Property" shall mean the Land and the Improvements, together with Seller's right, title and interest in and to all rights of way, easements, water or littoral rights, rights to any minerals, oil, gas and other hydrocarbon substances, or any portion thereof, relating to the Land, and Seller's right, title and interest in and to all streets, alleys, strips and gores abutting the Land, if any. "Records and Plans" shall mean, all financial records showing the income and expenses of the Hotel for the prior three (3) calendar years and for the current year to date, certificates of occupancy, records of the Hotel's operations (including utility bills), building plans, specifications and drawings, lists of Personal Property, surveys, tax bills for the Real Property for the last three (3) years and for the current year to date, copies of the Service Contracts, Licenses and Permits and other documents related to the use, maintenance, repair, management, construction and/or operation of the Hotel, in each case, to the extent located on-site at the Hotel, or to Seller's Knowledge, otherwise under the control of Seller. "Related Agreement" shall have the meaning set forth in Section 9.1.3. "Schedule of Advance Bookings" means the Schedule of Advance Bookings delivered pursuant to Section 4.2.1.19. "Schedule of Tenant Leases" means the Schedule of Tenant Leases set forth in Schedule 1.1.7 annexed hereto and made a part hereof. "Scheduled Closing Date" shall mean January 15, 1998, as such date may be extended in accordance with the provisions of Section 7.1 - time being of the essence. "SEC" shall mean the United States Securities and Exchange Commission. "SEC Documents" shall have the meaning set forth in Section 6.1.4. "Securities Act" shall mean the Securities Act of 1933, as amended. "Seller Default" shall have the meaning set forth in Section 11.1. "Seller's Closing Certificate" shall have the meaning set forth in Section 4.2.1.18. "Seller's Counsel" shall mean Morrison & Foerster LLP acting through Thomas R. Fileti, Esq. "Seller's Due Diligence" shall mean the information gathering and review process described on Schedule 1.1.8. "Seller's Insurance" shall have the meaning set forth in Section 6.3.12. 8 16 "Seller's Knowledge" shall mean with respect to any representation or warranty so qualified, the knowledge of the person(s) identified on Schedule 1.1.8 annexed hereto and made a part hereof, on the date on or as of which such representation or warranty is made, following the completion by such person(s) of Seller's Due Diligence, but without any other duty to investigate or inquire and without attribution to any such identified person(s) of facts and matters otherwise within the personal knowledge of any other officers, employees, or agents of Seller or any third parties (including, but not limited to, the Manager or any previous manager of the Hotel), but not within the actual current knowledge of such named person(s). It is understood that none of the individuals identified on Schedule 1.1.8 shall have any personal liability for any of Seller's representations, warranties and other obligations under this Agreement. "Service Contracts" shall mean any and all service contracts, landscaping contracts, maintenance agreements, open purchase orders and other contracts for the provision of services, materials or supplies to or for the benefit of the Property, except for the Management Agreement, together with any and all amendments thereto. "Specific Disclosure Matters" shall mean certain disclosures and information provided or disclosed by Seller to Buyer described on Schedule 1.1.9 annexed hereto and made a part hereof. "Starwood Disclosure" shall mean collectively, the Form S-3 filed by the Corporation and the Trust with the SEC on November 12, 1997, and the Form S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as the same may be amended by any filing with the SEC made by the Trust or the Corporation as amended to date and from time to time thereafter. "Starwood Operating Partnership" shall mean SLC Operating Limited Partnership, a Delaware limited partnership. "Starwood Realty Partnership" shall mean SLT Realty Limited Partnership, a Delaware limited partnership. "State" shall mean the state in which the Hotel is located. "Stock Agreement" shall have the meaning set forth in Section 4.2.1.6. "Survey" shall mean an as-built ALTA survey of the Real Property certified to the Title Company meeting all State land survey requirements. "Tangible Personal Property" shall mean, in each case to the extent owned by Seller and excluding any and all of the Excluded Property: (i) all Records and Plans; (ii) all "Inventories", as such term is defined in the Uniform System of Accounts; (iii) all depreciable personal property; and (iv) all other tools, vehicles, supplies, artwork, furniture, furnishings, machinery, equipment, licensed software and personal computer based security systems, if any, specialized hotel equipment and other tangible personal property, used in connection with the ownership, operation or maintenance of the Property, including, without limitation, all china, 9 17 glassware, silverware, linens, towels, curtains, uniforms, engineering, maintenance, and housekeeping supplies, draperies, materials and carpeting, used or intended for use, but not for sale, in connection with the operation of the Hotel, all equipment used in the operation of the kitchen, dining rooms, lounges, bars, laundry, dry cleaners, lobby, reservation desk and all merchandise, food and beverages held for sale in connection with the operation of the Hotel, which are on hand on the Closing Date; provided, however, that to the extent that any applicable law prohibits the transfer of alcoholic beverages from Seller to Buyer, such beverages shall not be considered a part of the Tangible Personal Property. "Tenant" shall mean a tenant, licensee or concessionaire occupying space at any portion of the Property pursuant to a Tenant Lease. "Tenant Lease" shall mean a lease, concession agreement or license agreement entered into by or on behalf of Seller with a third party for the use of any part of the Real Property, including those leases, concession agreements and license agreements shown on the Schedule of Tenant Leases, together with any amendments thereto but excluding Bookings. "Tenant Security Deposits" shall mean all security deposits or other security of Tenants under the Tenant Leases, plus accrued interest, if any, payable thereon. "Termination Charges" shall have the meaning set forth in Section 14.1. "Termination Notice" shall have the meaning set forth in Section 3.5.1. "Threshold Amount" shall mean One Million Dollars ($1,000,000). "Title Company" shall mean Chicago Title Insurance Company. "Title Policy" shall have the meaning set forth in Section 7.2. "Transfer Restriction Period" shall have the meaning set forth in Section 17.18. "Uninsured Casualty Notice" shall have the meaning set forth in Section 12.2.1. "Uninsured Estimate to Repair" shall have the meaning set forth in Section 12.2.1. "Uniform System of Accounts" shall mean the Uniform System of Accounts for Hotels, prepared by The Hotel Association of New York City, Inc., in effect as of the date hereof. "Utility Deposits" shall mean Seller's right, title and interest in and to all deposits delivered by Seller to utilities, governmental agencies, suppliers or others pursuant to an Approved Service Contract or otherwise in connection with the Real Property. "Value Letter" shall have the meaning set forth in Section 4.3.1.4. 10 18 "WARN Act" shall mean the Workers Adjustment and Retraining Notification Act and the Regulations promulgated thereunder, as the same has been amended. 1.2 Other Definitional Provisions. The terms "hereof," "hereto," "hereunder" and similar terms when used in this Agreement shall refer to this Agreement generally, rather than to the section in which such term is used, unless otherwise specifically provided. Unless the context otherwise requires, any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. SECTION 2 PURCHASE AND SALE OF PROPERTY On the terms and subject to the conditions of this Agreement, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller all as hereinafter provided. Notwithstanding any other provision of this Agreement, there shall be excluded from the Property being conveyed hereunder the Excluded Property. SECTION 3 PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES 3.1 Purchase Price. The purchase price for the Property shall be the Purchase Price. 3.2 Payment. The Purchase Price shall be paid as follows: 3.2.1 Upon the execution hereof, Buyer shall deliver to Escrow Holder, in cash or other immediately available funds, the Deposit, to be held by Escrow Holder strictly in accordance with the provisions of this Agreement. If the Close of Escrow shall occur, Seller shall be entitled to receive the Deposit as a credit against the Purchase Price. 3.2.2 At least one (1) day prior to the Scheduled Closing Date (unless extended pursuant to Section 7.1), Buyer shall deliver to Escrow Holder an amount (the "Closing Payment") payable in the form specified in Sections 3.2.2.1 and 3.2.2.2 below, equal to the Purchase Price less the amount of the Deposit. The Closing Payment shall be paid as follows: 3.2.2.1 The Equity Purchase Price shall be delivered in Paired Shares without adjustment for the pro-rations hereunder, which shares shall be delivered in accordance with and subject to and transferable in accordance with the provisions of the Stock Agreement and the Pairing Agreement. If any portion of the Equity Purchase Price cannot be paid in Paired Shares on account of the Ownership Limitation, a cash payment in an amount equal to the 11 19 product of (a) the number of Paired Shares which are not delivered hereunder or under the Stock Agreement because of the Ownership Limitation and (b) the Lock Price (the "Overage Cash Payment") shall be paid in cash or other immediately available funds. 3.2.2.2 The balance of the Closing Payment shall be paid in cash or other immediately available funds adjusted for the pro-rations provided for expressly in this Agreement. 3.3 Investment of Escrowed Funds. Escrow Holder shall invest and reinvest any funds deposited by Buyer in the Escrow only in bonds, notes, Treasury bills or other securities having maturities of thirty (30) days or less and constituting direct obligations of, or fully guaranteed by, the United States of America (and provided, further, that such direct obligations or guarantees, as the case may be, are entitled to the full faith and credit of the United States of America) or such other investments as Buyer may direct and Seller may approve, until Escrow Holder is required to deliver or use such funds or any interest earned thereon in accordance with the provisions of this Agreement. All interest accruing on the Deposit shall be paid to the party ultimately entitled to the Deposit. All risk of loss on funds held in Escrow shall be borne by Buyer or Escrow Holder. 3.4 Allocation of Purchase Price. The Purchase Price shall be allocated among the assets and property that comprise the Property as proposed by Seller prior to Closing subject to the reasonable approval of Buyer, and such allocation shall be used by Seller and Buyer in connection with the preparation of their respective income tax, sales tax, transfer tax, and any other applicable tax returns. Seller and Buyer shall not, nor shall they permit their respective Affiliates to, take a federal or state income tax position with any taxing or other public authorities in any jurisdiction which is materially inconsistent with the allocation so agreed upon by the parties. 3.5 Default by Buyer Prior to Closing; Liquidated Damages. 3.5.1 EXCEPT AS PROVIDED TO THE CONTRARY IN SECTION 7.1.1., IF BUYER BREACHES ITS OBLIGATION TO PURCHASE THE PROPERTY UNDER THIS AGREEMENT AND FAILS TO CURE SUCH BREACH ON OR BEFORE THE SCHEDULED CLOSING DATE (A "BUYER DEFAULT"), THEN UPON WRITTEN NOTICE OF TERMINATION (A "TERMINATION NOTICE") FROM SELLER TO BUYER AND ESCROW HOLDER, THE ESCROW AND THIS AGREEMENT SHALL TERMINATE AND ESCROW HOLDER SHALL DISBURSE FROM THE ESCROW THE DEPOSIT TO SELLER AS LIQUIDATED DAMAGES, WHICH SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR THE BUYER DEFAULT, AND THEREAFTER NEITHER PURCHASER NOR SELLER SHALL HAVE ANY FURTHER LIABILITY HEREUNDER, EXCEPT THAT BUYER SHALL REMAIN OBLIGATED FOR PERFORMANCE OF ITS OBLIGATIONS UNDER SECTIONS 8, 10, 17.14, 17.19 AND ANY OTHER PROVISION HEREOF WHICH BY ITS EXPRESS TERMS SURVIVES THE TERMINATION OF THIS AGREEMENT. NOTHING CONTAINED HEREIN SHALL LIMIT SELLER'S RIGHT TO 12 20 OBTAIN SPECIFIC PERFORMANCE OF BUYER'S OBLIGATION TO CLOSE PURSUANT TO SECTION 7.1.1. 3.5.2 THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS SECTION 3.5.2 THAT IF A BUYER DEFAULT OCCURS ON OR PRIOR TO THE SCHEDULED CLOSING DATE AND IF, AS A RESULT OF SUCH BUYER DEFAULT, CLOSE OF ESCROW FAILS TO OCCUR, SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN; AND THE DEPOSIT BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR AND THAT SELLER'S RETENTION OF THE DEPOSIT IS FAIR AND REASONABLE COMPENSATION TO SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR. INITIALS: -------------------------- ------------------------- Seller Buyer SECTION 4 ESCROW; CLOSING; COSTS 4.1 Escrow. The purchase and sale of the Property shall be consummated through the Escrow. Immediately upon the execution of this Agreement, the parties shall deposit a copy of this Agreement with Escrow Holder. This Agreement, together with any general provisions agreed to in writing by Buyer and Seller for the benefit of Escrow Holder, shall constitute the escrow instructions for the transfer of the Property (the "Escrow Instructions"). In the event of any conflict between this Agreement and such general provisions, this Agreement shall control unless otherwise expressly agreed in writing by Buyer, Seller and Escrow Holder. If any requirements relating to the duties or obligations of Escrow Holder are not acceptable to Escrow Holder, or if Escrow Holder requires additional instructions, the parties shall make such deletions, substitutions and additions to the Escrow Instructions as Buyer's Counsel and Seller's Counsel shall mutually approve and which do not substantially alter this Agreement or its intent. Written instructions from Seller's Counsel, in the case of Seller, or from Buyer's Counsel, in the case of Buyer, shall be accepted by Escrow Holder and shall be binding upon the party whose counsel gave such instructions to Escrow Holder. 4.2 Seller's Deliveries to Escrow Holder. 4.2.1 Prior to the Scheduled Closing Date (subject to extension pursuant to Section 7.1), Seller shall deliver to Escrow Holder the following documents duly executed and, where applicable, acknowledged by Seller, each of which shall be undated and the delivery of each of which shall be a condition precedent to the obligation of Buyer to close hereunder. 13 21 4.2.1.1 Deed. A deed with respect to the Real Property in the form of Exhibit 4.2.1.1 annexed hereto and made a part hereof, sufficient to transfer all of Seller's right, title and interest in and to the Real Property, subject only to the matters of record as of the Closing Date, from Seller to Buyer (the "Deed"); 4.2.1.2 Assignment and Assumption of Tenant Leases. An Assignment and Assumption of Tenant Leases in the form of Exhibit 4.2.1.2 annexed hereto and made a part hereof pursuant to which Seller shall assign the Tenant Leases to Buyer and Buyer shall assume all of Seller's obligations thereunder (the "Assignment and Assumption of Tenant Leases"); 4.2.1.3 General Assignment. A General Assignment and Assumption Agreement in the form of Exhibit 4.2.1.3 annexed hereto and made a part thereof pursuant to which Seller shall assign to Buyer all of Seller's right, title and interest in and to all of the Intangible Property and Buyer shall assume all obligations thereunder (the "General Assignment and Assumption Agreement"); 4.2.1.4 Assignment and Assumption of Management Agreement. An Assignment and Assumption of Management Agreement in the form of Exhibit 4.2.1.4 annexed hereto and made a part hereof pursuant to which Seller shall assign to Buyer the Management Agreement and Buyer shall assume the obligations of Seller thereunder, provided, however, the obligation to deliver the Assignment and Assumption of Management Agreement shall be irrevocably waived, if prior to the Close of Escrow, the Management Agreement shall have been terminated and the Interim Management Agreement shall have become effective in accordance with Section 17.20; 4.2.1.5 Bill of Sale. One or more Bills of Sale in the form of Exhibit 4.2.1.5A and B annexed hereto and made a part hereof conveying to Buyer or designees of Buyer all of Seller's right, title and interest in and to the Tangible Personal Property (the "Bill of Sale"); 4.2.1.6 Stock Agreement. The Stock Agreement in the form of Exhibit 4.2.1.6 annexed hereto and made a part hereof (the "Stock Agreement"); 4.2.1.7 Liquor License Management Agreement. The Liquor License Management Agreement in the form of Exhibit 4.2.1.7 annexed hereto and made a part hereof (the "Liquor License Management Agreement"). 4.2.1.8 [Intentionally Omitted] 4.2.1.9 [Intentionally Omitted] 4.2.1.10 PUD Cooperation Agreement. A PUD Cooperation Agreement in the form of Exhibit 4.2.1.10 annexed hereto and made a part hereof pursuant to which Buyer and Seller shall further allocate the respective rights and obligations of the owners 14 22 of Lot 1, 3, 5 and 6, including without limitation the obligation to maintain the Ice Rink on Lot 6 in the Aspen Subdivision (the "PUD Cooperation Agreement"); 4.2.1.11 [Intentionally Omitted] 4.2.1.12 [Intentionally Omitted] 4.2.1.13 Non-Foreign Person Certificate. A Non-Foreign Person Certificate in the form of Exhibit 4.2.1.13 annexed hereto and made a part hereof (the "Non-Foreign Person Certificate"); 4.2.1.14 Transfer Tax Forms. Any statements, such as a transfer or conveyance tax forms or returns required by applicable state or local law to be executed by Seller in order to effect the Closing; 4.2.1.15 Certified Rent Roll. A copy of the rent roll for the Property dated as of the Closing Date and certified by Seller to be (a) a true, correct and complete copy of the rent roll for the Property provided to Seller by the Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.16 Certified Operating Statement. An operating statement for the Property dated as of a date no more than thirty (30) days prior to the Closing Date and certified by Seller to be (a) a true, correct and complete copy of the operating statement for the Property provided to Seller by Manager for the period of Manager's employment at the Property; and (b) to Seller's Knowledge, to be, true, correct and complete; 4.2.1.17 Guest Ledger. A copy of the guest ledger dated as of the Proration Time showing all Guest Ledger Receivables and certified by Seller (a) to be a true, correct and complete copy of the guest ledger provided to Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.18 Closing Certificate. A certification by Seller to Seller's Knowledge that the representations and warranties set forth in Section 6.3 are true, correct and complete as of the Closing Date, except to the extent that any such representation or warranty is expressly made only as of the Execution Date subject to Seller's right to make revisions pursuant to Section 6.7 to such representations and warranties ("Seller's Closing Certificate"); 4.2.1.19 Schedule of Bookings. A schedule of all Bookings relating to periods after the Proration Time, certified by Seller (a) to be a true, correct and complete copy of the schedule of Bookings provided to Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.20 Title Requirements. Any and all certificates, affidavits and other instruments and documents which the Title Company shall reasonably require to permit it to issue the Title Policy in the condition required herein; provided, however, that (a) Seller is given written notice by Title Company of the requirement of any such certificates, affidavits or 15 23 other instruments and documents within a reasonably sufficient time in advance of the Scheduled Closing Date and (b) such incidental documents do not create any liability to Seller that is inconsistent with the liability retained by Seller under the terms of this Agreement; 4.2.1.21 Payoff Letters. A pay-off letter from the holder of any mortgage or deed of trust presently encumbering the Real Property indicating all sums required to satisfy the debt secured by and permit the discharge of record the lien of such mortgage or deed of trust; 4.2.1.22 Notices to Tenants. Notices to Tenants of the assignment to Buyer of the Tenant Leases in form and substance satisfactory to Seller and Buyer; 4.2.1.23 Opinion of Seller's Counsel. An opinion of Seller's Counsel in a form to be agreed upon by the parties; and 4.2.1.24 Other. Any other incidental documents, not otherwise expressly provided for herein, reasonably required by Escrow Holder to consummate the purchase and sale of the Property; provided, however, that (a) Seller is given written notice by Escrow Holder of the requirement of any such incidental documents within a reasonably sufficient time in advance of the Scheduled Closing Date (subject to extension in accordance with the provisions of Section 7.1); and (b) such incidental documents do not create any liability to Seller that is inconsistent with the liability retained by Seller under the terms of the this Agreement. 4.3 Buyer's Deliveries to Escrow Holder. 4.3.1 Prior to the Scheduled Closing Date (subject to extension in accordance with the provisions of Section 7.1), and subject further to the provisions of Section 4.3.1.4 in the case of the Value Letter, Buyer shall deliver to Escrow Holder the following items and documents, which documents shall be duly executed and, where applicable, acknowledged by Buyer or its designee, as applicable, and undated, and the delivery of each of which shall be a condition precedent to the obligation of Seller to close hereunder: 4.3.1.1 The Cash Purchase Price. The Cash Purchase Price; 4.3.1.2 Stock Certificates. Paired Shares in the amount required to be delivered at the Closing in accordance with the provisions of this Agreement and in accordance with and subject to the provisions of the Stock Agreement; 4.3.1.3 Assignment and Assumption of Management Agreement. A counterpart of the Assignment and Assumption of Management Agreement, provided, however, the obligation to deliver the Assignment and Assumption of Management Agreement shall be irrevocably waived, if prior to the Close of Escrow, the Management Agreement shall have been terminated and the Interim Management Agreement shall have become effective in accordance with Section 17.20; 16 24 4.3.1.4 Value Letter. A letter (the "Value Letter") to be obtained by Buyer at Buyer's expense with respect to the reasonableness of the allocation of the purchase price among the transactions being entered into as of the date hereof between Buyer and Seller and/or Seller's Affiliates issued by Bear Stearns; 4.3.1.5 Opinion of Buyer's Counsel. An opinion of Buyer's counsel in a form to be agreed upon by the parties; 4.3.1.6 Stock Agreement. A counterpart of the Stock Agreement; 4.3.1.7 [Intentionally Omitted] 4.3.1.8 Liquor License Management Agreement. A counterpart of the Liquor License Management Agreement; 4.3.1.9 PUD Cooperation Agreement. A counterpart of the PUD Cooperation Agreement; 4.3.1.10 [Intentionally Omitted]. 4.3.1.11 [Intentionally Omitted] 4.3.1.12 Closing Certificate. A certification by Buyer that the representations and warranties set forth in Section 6.1 and Section 6.2 are true, correct and complete as of the Closing Date; 4.3.1.13 The Assignment and Assumption of Tenant Leases. A counterpart of the Assignment and Assumption of Tenant Leases; 4.3.1.14 The General Assignment and Assumption Agreement. A counterpart of the General Assignment and Assumption Agreement; 4.3.1.15 Transfer Tax Forms. Any statements, such as a transfer or conveyance tax forms or returns required by applicable state or local law to be executed by Buyer in order to effect the closing; and 4.3.1.16 Other. Any other incidental documents, not otherwise expressly provided for herein, required by Escrow Holder to consummate the purchase and sale of the Property; provided, however, that (a) Buyer is given written notice by Escrow Holder of the requirement of such incidental documents within a reasonably sufficient time in advance of the Scheduled Closing Date; and (b) Buyer shall not be required to incur any liability, in connection with the delivery of such incidental documents inconsistent with the provisions of this Agreement. 4.4 Seller's Deliveries to Buyer. At or prior to the Close of Escrow, Seller shall deliver to Buyer or cause to be available to Buyer on-site at the Hotel, the following documents, 17 25 to the extent the same have not already been delivered and to the extent in the possession or control of Seller: 4.4.1 Tenant Leases/Tenant Deposits. The original Tenant Leases (or if not available, the best available copies), and the originals of Tenant Security Deposits which are evidenced by letters of credit or escrow agreements, if any, and if necessary to enable Buyer to realize or draw upon same, consents of the applicable Tenants and/or financial institutions or replacement letters of credit or escrow agreements in favor of Buyer; 4.4.2 Service Contracts. The originals, or, if not available, the best available copies, of the Approved Service Contracts; 4.4.3 Licenses and Permits. The originals, or, if not available, the best available copies of the Licenses and Permits; and 4.4.4 Records and Plans. The originals, or, if not available, the best available copies of the Records and Plans. 4.5 Possession. Seller shall deliver the keys and possession of the Property to Buyer at the Close of Escrow free and clear of all leases, tenancies and occupancies, except for the Management Agreement, the Bookings, the rights of guests in guest rooms, banquet facilities, conference rooms and meeting rooms, the rights of Tenants under the Tenant Leases (including their assignees, subtenants or licensees), and the other Permitted Encumbrances. 4.6 Evidence of Authorization. At the Close of Escrow, each party shall deliver to the other party evidence in form and content reasonably satisfactory to the other party and the Title Company that (a) the party is duly organized and validly existing under the laws of the state of its organization and has the power and authority to enter into this Agreement, (b) this Agreement and all documents delivered pursuant hereto have been duly executed and delivered by the party, and (c) the performance by the party of its obligations under this Agreement have been duly authorized by all necessary corporate, partnership or other action. 4.7 Close of Escrow. 4.7.1 The Escrow shall close on or before the Scheduled Closing Date. 4.7.2 Provided that Escrow Holder has not received from either party written notice of the failure of any condition precedent specified in Section 9 to the obligations of such party (or any previous such notice has been withdrawn), then when the parties have each deposited into the Escrow the documents and funds required by this Agreement and the Title Company is unconditionally prepared to issue the Title Policy at the Close of Escrow, Escrow Holder shall perform the following actions (collectively, "Close of Escrow" or "Closing"): 4.7.2.1 Prepare a closing statement for the transaction for approval by Seller and Buyer prior to the Close of Escrow; 18 26 4.7.2.2 Insert the Closing Date as the date of any undated document to be delivered through Escrow; 4.7.2.3 Cause the Deed and the PUD Cooperation Agreement to be recorded in the land records of the state and county where the Real Property is located; 4.7.2.4 Deliver to Buyer the documents deposited into the Escrow for delivery to Buyer at the Close of Escrow; 4.7.2.5 Deliver to Seller (a) all funds and Paired Shares to be received by Seller from Buyer through the Escrow at the Close of Escrow less (i) all amounts to be paid by Seller for Escrow Holder's fees and expenses and (ii) all amounts paid by Escrow Holder in satisfaction of liens and encumbrances on the Real Property or other matters pursuant to the written instruction of Seller, and (b) the documents deposited into the Escrow for delivery to Seller at the Close of Escrow; and 4.7.2.6 Cause the Title Policy to be issued by the Title Company and delivered to Buyer. 4.8 Costs of Escrow. Costs of the Escrow shall be allocated as follows: 4.8.1 Buyer and Seller shall each pay one-half (1/2) of the fees of Escrow Holder; 4.8.2 Buyer and Seller shall each pay one-half (1/2) of the cost of providing the Survey required to be delivered in accordance with the provisions of Section 7.1; provided, however, Buyer shall be responsible for the full cost of the Survey in the event the Closing does not occur hereunder other than on account of default of Seller; 4.8.3 Buyer and Seller shall each pay one-half (1/2) of all transfer taxes and recording fees payable in connection with the conveyance of each portion of the Real Property and/or the recording of the Deed and any other documents or instruments recorded pursuant to this Agreement; 4.8.4 Buyer and Seller shall each pay one-half (1/2) of all sales or other personal property taxes, levies, fees and charges payable as a result of the transfer of the Personal Property to Buyer and the consummation of the transactions contemplated hereby. Buyer shall be the reporting person for such purposes and shall prepare the necessary sales tax reports based upon the allocations set forth in Section 3.4. The parties acknowledge that additional sales tax may be assessed as a result of the transfer of the Personal Property to Buyer and the consummation of the transactions contemplated hereby after the Closing and that Buyer and Seller shall continue to each be responsible for one-half of any such additional taxes. The provisions of Section 4.8.3 and Section 4.8.4 shall survive the Closing; 19 27 4.8.5 Buyer and Seller shall each pay one-half (1/2) of the cost of obtaining the coverage under the Title Policy, except that the cost of any special endorsements shall be paid exclusively by Buyer; 4.8.6 At Closing or thereafter Buyer shall pay for the cost of the Value Letter; 4.8.7 [Intentionally Omitted] 4.8.8 If the Close of Escrow fails to occur other than as a result of a default hereunder by either party, including, without limitation, as a result of a failure of a condition precedent set forth in Section 9, the fees of the Escrow Holder and Title Company (including, without limitation, cancellation fees) shall be borne equally between Buyer and Seller; and 4.8.9 If the Close of Escrow fails to occur as a result of a default hereunder by either party, the fees of the Escrow Holder and Title Company (including, without limitation, cancellation fees) shall be borne by the defaulting party. 4.8.10 Pursuant to ss.6045 of the Internal Revenue and Taxation Code, the Title Company shall be designated the "Closing Agent" hereunder and shall be solely responsible for complying with the Tax Reform Act of 1986 with regard to the reporting of all settlement information to the Internal Revenue Service. 4.9 Other Costs. Except as set forth in Section 4.8.6, Section 11.1 and Section 15.1.6, each party shall pay all of its own legal, accounting and consulting fees and other costs and expenses incurred in connection with this Agreement. 4.10 Maintenance of Confidentiality by Escrow Holder. Escrow Holder shall maintain in strict confidence and not disclose to anyone the existence of the Escrow, the identity of the parties thereto, the amount of the Purchase Price, the existence or provisions of this Agreement or any other information concerning the Escrow or the transactions contemplated hereby, without the prior written consent of Buyer and Seller. SECTION 5 PRORATIONS AND ASSUMPTION OF OBLIGATIONS 5.1 General. All income, receivables, expenses (whether payable or prepaid) and payables of the Property shall be apportioned equitably between the parties as of the Proration Time in accordance with the provisions of this Section 5 (all prorations are to be based upon the number of days in a 365 day year). The obligation to make apportionments under Sections 5.1 and 5.2 shall, unless otherwise expressly provided in this Section 5, survive the Close of Escrow for a period of sixty (60) days at which time such apportionment shall be final unless disputed during such period. 20 28 5.2 General and Specific Prorations. Without limitation, the following items shall be apportioned: 5.2.1 At the Closing, Buyer shall assume all of the accounts payable relating to goods and services ordered or obtained in the ordinary course of operation of the business of the Hotel (including without limitation, payments under the Service Contracts and Equipment Leases) prior to the Proration Time. Seller shall be obligated to credit Buyer at the Close of Escrow with an amount mutually agreed upon by Buyer and Seller at the Closing, reflecting the parties' good faith estimate of such accounts payable as of the Proration Time (which estimate shall deduct any discounts then available in the ordinary course of business for the prompt payment of such accounts payable), plus a further credit for any late fees then payable with respect to any identified accounts payable. Buyer shall be responsible for paying when due all accounts payable arising from the operation of the Property on or after the Proration Time, and Seller shall have no further liability for such payables or charges. As of the date which is sixty (60) days following the Closing Date, Buyer and Seller shall calculate the amount of all accounts payable relating to goods and services ordered or obtained in the ordinary course of operation of the business of the Hotel (including without limitation, payments under the Service Contracts and Equipment Leases) prior to the Proration Time. Seller shall reimburse Buyer for any payments made on account of any such accounts payable which were not reflected in the Parties' estimate of such amount credited to Buyer at Closing and which have been paid by Buyer or for which Buyer is obligated to pay in accordance with the provisions hereof, and if the amount of such credit exceeds the amounts so paid or for which Buyer is so obligated, Buyer shall pay such excess amount to Seller; 5.2.2 At the Closing, Seller shall assign to Buyer all of the Accounts Receivable, for which Seller shall receive a credit at the Close of Escrow in an amount equal to (a) the full, aggregate outstanding balance of the Cash Equivalent Receivables (without discount except for service charges due to charge card companies) plus (b) the full aggregate outstanding balance of the Invoiced Receivables and Other Accounts Receivable as of the Proration Time, provided, Buyer shall at its option accept or reject any Invoiced Receivables and Other Accounts Receivable over ninety (90) days and Seller shall not receive a credit for any Invoiced Receivables and Other Accounts Receivable over ninety (90) days rejected by Buyer; provided, that Buyer shall at its own expense use reasonable efforts to collect any such rejected Invoiced Receivables and Other Accounts Receivable on behalf of Seller for a period of sixty (60) days after the Closing Date and thereafter Seller shall have the right to collect same for its own account; provided, further, as of the date which is sixty (60) days following the Closing Date, Buyer and Seller shall make any adjustments required to reflect the collectibility of any Invoiced Receivables and Other Accounts Receivable (it being agreed that (a) any accounts receivable not listed on the schedule of accounts receivable of the Property as of the date which is sixty (60) days following the Closing Date shall be deemed paid as of such date and (b) except as provided in (a), any accounts receivable which are more than ninety (90) days past due as of the date which is sixty (60) days following the Closing Date shall be deemed uncollectable as of such date) and Seller and Buyer shall make a corresponding payment to the other as required to accurately reflect the collectibility of such Invoiced Receivables and Other Accounts Receivable and any accounts receivable deemed uncollectable as of such date in accordance with the terms 21 29 herof shall be the property of Seller and Seller shall be permitted (at its expense and for its own account) to collect the same; 5.2.3 In prorating the Accounts Receivable, Buyer and Seller shall each receive credit for one-half (1/2) of all Guest Ledger Receivables attributable to the room night during which the Proration Time occurs. Seller shall receive the income from all restaurant and bar facilities located at the Property through the Proration Time and Buyer shall receive such income thereafter; 5.2.4 At the Closing, Seller shall deliver to Buyer all of the merchandise owned by Seller and held for retail sale at the Hotel, for which Seller shall receive a credit at the Close of Escrow in an amount equal to Seller's cost for such merchandise; 5.2.5 All sales, use and occupancy taxes arising from the operation of the Property shall be prorated as of the Proration Time; 5.2.6 Fees for transferable annual permits, licenses, and/or inspection fees, if any, for periods during which the Proration Time occurs shall be prorated as of the Proration Time; 5.2.7 Utility charges with respect to the Property levied against Seller or the Property and the value of fuel stored on the Property shall be prorated at Seller's cost therefor as of the Proration Time. Seller shall notify all utilities, governmental agencies, suppliers and others providing services to the Property of the prospective change in ownership and operation of the Property, and Seller shall use its reasonable efforts to cause all utilities furnished to the Property, including, but not limited to, electricity, gas, water and sewer, along with any fuel storage tanks to be read the day prior to the Proration Time; 5.2.8 Permitted administrative charges, if any, on Tenant Security Deposits shall be prorated; 5.2.9 Buyer shall receive a credit for advance payments and/or deposits, if any, under Bookings to the extent the Bookings relate to a period after the Proration Time; 5.2.10 Vending machine monies will be removed by Seller as of the Proration Time for the benefit of Seller; 5.2.11 Buyer shall purchase and Seller shall sell to Buyer (or Seller shall receive a credit therefore) all petty cash funds and cash in the Property's house banks at 100% of face value at the Proration Time; 5.2.12 Wages, salaries and payroll taxes and other payroll deductions for all Hotel Employees shall be apportioned as of the Proration Time (i.e., the night shift shall be prorated 50/50 for the night preceding the Closing Date). Buyer shall assume all accrued vacation benefits and sick leave benefits due to such Hotel Employees which relate to any period prior to the Proration Time and shall receive a credit for the full amount of all such accrued 22 30 benefits reasonably expected to be paid after the Closing Date; provided, that as of the date which is sixty (60) days following the Closing, Buyer and Seller shall adjust the amount of the credit if required to take into account the benefits actually required to be paid by Buyer or then reasonably expected to be paid following the Closing Date by Buyer. Buyer shall also assume all obligations of Seller and the Employer Corporation, under the Employment Agreements and/or the Management Agreement to pay all such wages, salaries, and compensation set forth above accruing subsequent to Proration Time; provided, however, that other than as set forth in Section 14.1 hereof, no provision contained in this Agreement shall be construed to prevent the Buyer from terminating or amending in any manner such Employment Agreements and Management Agreements subsequent to the Proration Time. The obligation to pay bonuses, if any, following the Closing shall be allocated as of the Proration Time and adjusted between Buyer and Seller; and 5.2.13 Real and personal property taxes, assessments and special district levies shall be prorated for the tax fiscal year in which the Closing Date occurs on the basis of the then most current available tax bills, Seller being charged through the day prior to the Closing Date and Buyer with the Closing Date and thereafter. 5.3 Deposits. All rights to utility, assessment, and other cash deposits (including, without limitation, any Utility Deposits) held by others for Seller's account, and all certificates of deposit or other forms of cash collateral held by or otherwise pledged to others for Seller's account to secure obligations of Seller under Service Contracts, Equipment Leases or other obligations assumed by Buyer, shall be assigned or transferred to Buyer at the Close of Escrow; provided, that if any of such deposits are not transferable, Seller shall retain all rights with respect thereto and there shall be no debit made to Buyer on account thereof. 5.4 Tenant Leases. At the Close of Escrow, pursuant to the Assignment and Assumption of Tenant Leases, Buyer shall assume all of the obligations of Seller under the Tenant Leases as of the Proration Time, including, without limitation, tenant improvement obligations of landlord thereunder and obligations with respect to Tenant Security Deposits (to the extent received by Buyer or credited to Buyer hereunder). 5.5 Service Contracts and Other Intangible Property. At the Close of Escrow, Seller shall assign to Buyer pursuant to the terms of the General Assignment and Assumption Agreement, all right, title and interest of Seller in and to the Approved Service Contracts and other Intangible Property, and Buyer shall assume all of the obligations of Seller under the Approved Service Contracts arising from and after the Close of Escrow. Buyer shall protect, hold harmless, indemnify and defend Seller and its directors, officers, agents, affiliates, principals, partners, shareholders, representatives and controlling persons from any Losses attributable to the period beginning on and after the Closing Date with respect to the Approved Service Contracts. Seller shall be responsible for all obligations thereunder attributable to the period prior to the Closing Date with respect to Approved Service Contracts (except to the extent that Buyer shall have received a credit hereunder with respect to any such obligations). The provisions of this Section 5.5 shall survive the Close of Escrow. 23 31 5.6 Tax Refunds and Proceedings. Buyer shall have the exclusive right to commence or continue any proceeding to determine the assessed value of the Property, the real or personal property taxes payable with respect to the Property or any action to contest water charges, sewer charges, sales tax or use tax for the relevant taxable period during which the Proration Time occurs and to settle or compromise any claim thereof, and any refunds or proceeds resulting from such proceedings along with the costs (including reasonable legal and accounting fees) incurred by Buyer in obtaining the same, shall be prorated as of the Proration Time. In prosecuting any such action, Buyer shall utilize the services of Marvin Poer & Co. Seller shall retain the right to continue, commence, prosecute, settle or compromise any proceedings relating exclusively to any relevant taxable period or periods prior to the period during which the Proration Time shall occur. Buyer and Seller agree to cooperate with each other and to execute any and all documents reasonably requested in furtherance of the foregoing. The provisions of Section 5.6 shall survive the Closing. 5.7 Guest Baggage. As of the Close of Escrow, Buyer shall indemnify and hold harmless Seller against all Losses with respect to all baggage of departed guests or guests who are still registered at the Hotel on the Closing Date which has been checked with the Hotel. As of the Close of Escrow, Seller shall assign to Buyer all claims and causes of action against the Manager with respect to any Losses with respect to such baggage. Seller agrees to submit to Seller's Insurance any claims for Losses with respect to such baggage which arose from acts or omissions prior to the Closing Date to the extent coverage is available under said insurance and provide Buyer with the proceeds therefrom provided Buyer is not in default under this Section 5.7. The provisions of this Section 5.7 shall survive the Closing. 5.8 Safe Deposit Boxes. As of the Close of Escrow, Buyer shall indemnify and hold harmless Seller against all Losses with respect to the contents of any safety deposit boxes in use at the Hotel. As of the Close of Escrow, Seller shall assign to Buyer all claims and causes of action against the Manager with respect to any Losses relating to said safety deposit boxes. Seller agrees to submit to Seller's insurance any claims for Losses which arose from acts or omissions prior to the Closing Date to the extent coverage is available under said insurance and provide Buyer with the proceeds therefrom provided Buyer is not in default under this Section 5.8. The provisions of this Section 5.8 shall survive the Closing. 5.9 Advance Bookings. Buyer shall assume and honor for its account all Bookings relating to dates after the Proration Time set forth on the Schedule of Advance Bookings delivered by Seller to Buyer at the Close of Escrow pursuant to Section 4.2.1.9. 5.10 Special Purchase Price Adjustment. In the event that the Closing Date is extended beyond January 30, 1998 for any reason other than on account of a default by Buyer hereunder, Buyer shall receive a credit at Closing against the Cash Purchase Price in an amount equal to interest on the Purchase Price calculated at the LIBOR Rate plus 2% per annum for the period from January 30, 1998 through the earlier of (a) the Closing Date and (b) sixty (60) days after January 30, 1998. Nothing in this Section 5.10 shall create a waiver of any other remedy of Buyer for a Seller default permitted under the provisions of this Agreement. 24 32 5.11 The PCL Litigation. Seller or its designee shall prosecute, in its own name and at its expense, diligently, and without delay, the lawsuit brought by it against PCL Construction Services, Inc. et al, in the District Court of, and for Pitkin County, Colorado as Index #96 CV/6982 (the "PCL Litigation"). Buyer shall have the right to participate, at its sole cost and expense, in the prosecution and defense of the PCL Litigation. Seller shall have the right to settle the PCL Litigation provided in Seller's good faith judgment such settlement is fair and reasonable under the circumstances and Buyer is provided notice of such settlement prior to the entry into same. Seller shall keep Buyer informed on a regular basis with respect to the PCL Litigation and shall promptly provide Buyer with a copy of all papers filed or received by Seller in connection therewith, together with a copy of all correspondence related to the PCL Litigation and/or the proposed settlement thereof other than any attorney-client privileged documents unless such privilege has been waived. Any proceeds resulting from a settlement or a judgment in the PCL Litigation and the return of the escrow account at Citibank Private Bank #558415, if released to Seller pursuant to such judgment or settlement, as the case may be, shall be applied as follows: (a) up to $2,200,000.00 shall be paid to Buyer; and (b) any proceeds in excess of $2,200,000.00 shall be split equally between Buyer and Seller. Seller shall be solely liable for any adverse judgment in the PCL Litigation. Any such judgment may be paid from the PCL escrow account referred to above to the extent of funds available therein. Buyer shall have no rights with respect to the conduct or disposition of the PCL Litigation or the claims asserted by Seller therein or any right to control the disposition of the PCL escrow account, except as specifically set forth in this Agreement. Subject to the express provisions of this Agreement, Seller shall retain all rights and responsibilities with respect to the conduct of the PCL Litigation and the pursuit of all claims against PCL. Seller may elect in its sole and absolute discretion to seek arbitration or other dispute resolution with respect to the PCL Litigation. Buyer hereby agrees and acknowledges that Buyer is purchasing the Hotel with full knowledge of the claims alleged in the PCL Litigation and after conducting such investigation thereof as Buyer deems necessary and sufficient. Buyer further agrees and acknowledges the sums, if any, payable to Buyer in accordance with this Section 5.10 are the sole amounts payable by Seller to Buyer on account of or in connection with the claims alleged in the PCL Litigation. Without limiting Seller's rights under Section 15, Buyer agrees to provide such cooperation to Seller, its Affiliates and their representatives as Seller may reasonably request in connection with the PCL Litigation, including, without limitation, Seller's efforts to settle the same, and in connection with any discovery related thereto, provided such cooperation shall be at no material cost or expense to Buyer. SECTION 6 REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY 6.1 Of the Trust. As an inducement to Seller to enter into this Agreement, the Trust hereby represents, warrants and covenants to Seller as follows: 25 33 6.1.1 Power and Authority. The Trust is a real estate investment trust duly organized and validly existing under the laws of the State of Maryland. The Trust has the power and authority to carry on its present business, to enter into this Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement by the Trust, nor the performance by the Trust of the Trust's obligations hereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Trust is a party or by which the Trust is bound and/or violate any applicable law, rule or regulation, the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.1.2 Authorization; Valid Obligation. All proceedings required to be taken by or on behalf of the Trust to authorize the Trust to make, deliver and carry out the terms of this Agreement will be duly taken prior to the Closing Date. No consent to the execution, delivery and performance of this Agreement will be required from any partner, board of directors, shareholder, creditor, investor, judicial or administrative body, governmental authority or other person, other than any such consent which already has been (or prior to the Closing will have been unconditionally given. The individuals executing this Agreement and the documents referenced herein on behalf of the Trust have the legal power, right and actual authority to bind the Trust to the terms and conditions hereof. This Agreement is a valid and binding obligation of Trust, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 6.1.3 Capital Structure. The authorized and outstanding capital stock and units of the Trust and its operating partnership are as set forth in the Starwood Disclosure. All Paired Shares to be issued as the Equity Purchase Price at the Closing in accordance with this Agreement will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. 6.1.4 SEC Documents and Other Reports. The Trust has filed all required documents with the SEC since January 1, 1996 (such documents together with the Starwood Disclosure being referred to herein as the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Trust included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Trust and its consolidated subsidiaries as of the respective dates thereof and the 26 34 consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Trust has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. Prior to the Closing Date, the Trust will file all required documents with the SEC, which documents will comply in all material respects with the requirements of the applicable law, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 6.1.5 Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed prior to the date of this Agreement, since December 31, 1996, (a) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole, or (b) there has not been any split, combination or reclassification of any of the capital stock or units of the Trust or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. 6.1.6 Actions and Proceedings. Except as set forth in the SEC Documents filed prior to the date of this Agreement, there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Trust or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Trust or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. Except as set forth in the SEC Documents, there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Trust, threatened against or involving the Trust or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits, labor disputes or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Trust, threatened against or affecting the Trust or any of their subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement. 27 35 6.1.7 REIT Status. The Trust is currently a "real estate investment trust" ("REIT") for federal income tax purposes and, to its knowledge, the Trust is and at all times during the testing period described in Code Section 897(h)(4)(D) has been a "domestically controlled REIT" (as defined in Section 897(h)(4)(D) of the Code). From and after January 1, 1995, neither the Internal Revenue Service nor any other taxing entity or authority has made any assertion that the Trust does not qualify as a REIT for income tax purposes, nor has there been any challenge to the REIT status of the Trust. From time to time upon request by the Seller or its assigns after the Closing Date, the Trust agrees to inform Seller or such assigns whether to its knowledge it complies with the representation and warranties set forth in this Section 6.1.7. 6.1.8 Partnership Status. Starwood Realty Partnership is classified and taxable as a partnership for U.S. federal income tax purposes. 6.1.9 Hart-Scott-Rodino Act. The provisions of the Hart-Scott-Rodino Act are not applicable to the transactions contemplated hereby and neither the Trust nor Seller is required to make any filings or submissions or obtain any approvals thereunder in connection herewith. 6.2 Of the Corporation. As an inducement to Seller to enter into this Agreement, the Corporation hereby represents, warrants and covenants to Seller as follows: 6.2.1 Power and Authority. The Corporation is a corporation duly organized and validly existing under the laws of the State of Maryland. The Corporation has the power and authority to carry on its present business, to enter into this Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement by the Corporation nor the performance by the Corporation of the Corporation's obligations hereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Corporation is a party or by which the Corporation is bound and/or violate any applicable law, rule or regulation, the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.2.2 Authorization; Valid Obligation. All proceedings required to be taken by, or on behalf of the Corporation, to authorize the Corporation to make, deliver and carry out the terms of this Agreement will be duly taken prior to the Closing Date. No consent to the execution, delivery and performance of this Agreement will be required from any partner, board of directors, shareholder, creditor, investor, judicial or administrative body, governmental authority or other person, other than any such consent which already has been (or prior to the Closing will have been) unconditionally given. The individuals executing this Agreement and the documents referenced herein on behalf of the Corporation have the legal power, right and actual authority to bind the Corporation to the terms and conditions hereof. This Agreement is a valid and binding obligation of Corporation, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 6.2.3 Capital Structure. The authorized and outstanding capital stock and units of the Corporation and its operating partnership are as set forth in the Starwood Disclosure. All 28 36 Paired Shares to be issued as the Equity Purchase Price at the Closing in accordance with this Agreement will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. 6.2.4 SEC Documents and Other Reports. The Corporation has filed all required SEC Documents since January 1, 1996. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Corporation included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Corporation and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Corporation has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. Prior to the Closing Date, the Corporation will file all required documents with the SEC, which documents will comply in all material respects with the requirements of the applicable law, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 6.2.5 Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed prior to the date of this Agreement, since December 31, 1996, (a) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole, or (b) there has not been any split, combination or reclassification of any of the capital stock or units of the Corporation or its respective operating partnerships or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of such capital stock. 6.2.6 Actions and Proceedings. Except as set forth in the SEC Documents filed prior to the date of this Agreement, there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Corporation or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Corporation or any of its subsidiaries, as such, or any of its or their properties, assets or business 29 37 that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. Except as set forth in the SEC Documents, there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Corporation, threatened against or involving the Corporation or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits, labor disputes or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Corporation, threatened against or affecting the Corporation or any of their subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement. 6.2.7 Starwood Operating Partnership is classified and taxable as a partnership for U.S. Federal Income Tax purposes. 6.2.8 Hart-Scott-Rodino. The provisions of the Hart-Scott-Rodino Act are not applicable to the transactions contemplated hereby and neither the Corporation nor Seller is required to make any filings or submissions to obtain any approvals thereunder in connection herewith. 6.3 Of Seller. As an inducement to Buyer to enter into this Agreement, Seller, represents, warrants and covenants to Buyer as follows: 6.3.1 Regarding Seller's Authority. 6.3.1.1 Seller is a limited partnership in dissolution under the laws of the District of Columbia. Seller has the power and authority to enter into this Agreement and the Conveyance Documents and, to sell the Property on the terms set forth in this Agreement. The execution and delivery hereof and the performance by Seller of its obligations hereunder, will not violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which Seller is a party or by which Seller is bound and/or violate any applicable law, rule or regulation, the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.3.1.2 The individuals executing this Agreement and the documents referenced herein on behalf of Seller have the legal power, right and actual authority to bind Seller to the terms and conditions hereof. This Agreement is a valid and binding obligation of Seller, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 30 38 6.3.2 Tenant Leases. There are no leases, licenses or concessions for space which will affect the Real Property or any portion thereof following the Close of Escrow other than as set forth on the Schedule of Tenant Leases. Seller has delivered to Buyer a true, correct and complete copy of each lease and agreement listed on the Schedule of Lease. Seller has not received written notice of any sublease and/or assignment of any Tenant Lease except as set forth on Schedule 6.3.2. No outstanding written notice of any Material default has been delivered by Seller or received by Seller with respect to any Tenant Lease, except as disclosed on the Schedule 6.3.2 annexed hereto and made a part hereof. To Seller's knowledge, all rent under the leases listed on the Schedule of Leases is being paid currently. All Material brokerage, leasing and other commissions due in connection with the Tenant Leases have been paid by Seller other than those payable with respect to the renewal or extension of such Tenant Leases or expansion of the leased premises thereunder after the Closing Date, each of which are payable under agreements described on Schedule 6.3.2. 6.3.3 Service Contracts. There are no Service Contracts which will affect the Property after the Closing Date except for the Approved Service Contracts. No outstanding written notice of any Material default has been delivered by Seller or received by Seller with respect to any Approved Service Contract, except as disclosed on Schedule 6.3.3 annexed hereto and made a part hereof. 6.3.4 Claims. There are no pending litigation or condemnation proceedings with respect to Seller or the Property which would result in an adverse effect on the ability of Buyer to operate the Property after the Closing, except as disclosed on Schedule 6.3.4 annexed hereto and made a part hereof. There is no pending litigation or to Seller's knowledge, other claims of Seller with respect to the Property attributable to the period prior to the date hereof which may result in a material judgment in favor of Seller except as disclosed on Schedule 6.3.4. 6.3.5 Employees. To Seller's Knowledge, Schedule 1.1.6 sets forth a true and complete list of all Hotel Employees as of the Execution Date together with their positions, salaries or hourly wages, as applicable, and years of service. Except for or pursuant to the Employment Agreements, the Collective Bargaining Agreements, the Management Agreement and the agreements related to the Ritz-Carlton management of the Hotel described on Schedule 6.3.5 hereto, neither Seller nor the Employer Corporation has relating to the Property (i) at any time maintained, contributed to or participated in, (ii) or had at any time obligation to maintain, contribute to, or participate in, or (iii) any liability or contingent liability, direct or indirect, with respect to: any employment agreement, oral or written retirement or deferred compensation plan, incentive compensation plan, stock plan, unemployment compensation plan, vacation pay plan, severance plan, bonus plan, stock compensation plan or any other type or form of employee-related (or independent contractor-related) arrangement, program, policy, plan or agreement. Except as set forth on Schedule 6.3.5, to Seller's knowledge there is no Material default under any of the Employment Agreements. 6.3.6 Compliance with Laws. During the past twelve (12) months, Seller has not received any written notice from any party, including, without limitation, from any municipal, state, federal or other governmental authority, of a Material violation of any zoning, 31 39 building, fire, water, use, health, or other similar statute, ordinance, or code bearing on the construction, operation or use of the Property or any part thereof (other than as to matters previously cured), except as disclosed on Schedule 6.3.6 annexed hereto and made a part hereof and except for violations of Environmental Laws, which are addressed in Section 6.3.7 below. 6.3.7 Hazardous Materials. Seller has not received any written notice from any municipal, state, federal or other governmental authority or from any other person during the last three (3) years of (a) any Material violation of applicable Environmental Laws or (b) any Environmental Condition requiring Material remediation under applicable Environmental Laws, in either case only to the extent relating to Environmental Conditions at or on the Real Property, except as disclosed on Schedule 6.3.7 annexed hereto and made a part hereof; 6.3.8 Records and Plans. Seller will have delivered to Buyer on the Closing Date true and correct copies of the Records and Plans. 6.3.9 Licenses and Permits. Seller has delivered to Buyer true and correct copies of the Liquor License and all other Material Licenses and Permits and such Licenses and Permits are identified on Schedule 6.3.9 annexed hereto and made a part hereof. 6.3.10 Management Agreements. There are no hotel management or property management agreements, which will be binding upon Buyer after the Closing Date, other than the Management Agreement, a true and complete copy of which will be delivered to Buyer on the Closing Date. Seller has not sent or received any notice of default or notice of termination under or with respect to the Management Agreement. 6.3.11 Personal Property. Seller owns the Tangible Personal Property (other than the Tangible Personal Property that is subject to the Equipment Leases) free and clear of any liens and/or encumbrances other than the Permitted Encumbrances. 6.3.12 Insurance. The Seller in respect of the Real Property is insured under those policies of casualty and general liability insurance ("Seller's Insurance") described on Schedule 6.3.12 annexed hereto, each of which is in full force and effect as of the date hereof and will remain in full force and effect through the Closing Date. Seller has received no notices of any Material default or demands to cure from any applicable insurer in respect of Seller's Insurance. 6.3.13 Real Estate Taxes. Except as set forth on Schedule 6.3.13 annexed hereto and made a part hereof, Seller has not commenced any proceedings which are pending for the reduction of the assessed valuation of the Real Property or any portion thereof, and other than the Permitted Encumbrances, to Seller's Knowledge, there are no special assessments affecting the Property. Nothing in this Section 6.3.13 or any other provision of this Agreement shall be construed to limit Seller's rights to initiate or prosecute after the Close of Escrow additional proceedings for property tax refunds for taxes relating to any relevant taxable period or periods prior to the taxable period during which the Proration Time occurs. 6.3.14 [Intentionally Omitted] 32 40 6.3.15 [Intentionally Omitted] 6.3.16 [Intentionally Omitted] 6.4 Buyer's Review of Records and Plans. 6.4.1 Access to Records and Plans; Specific Disclosures. Buyer acknowledges that prior to the Closing Date, Buyer has been provided with such access to the Records and Plans and such other information relating to the Hotel as Buyer has deemed relevant. Buyer acknowledges that it (a) has been made aware of and given an opportunity to inquire into the Specific Disclosure Matters described herein; (b) has been given access to the Property and the opportunity to conduct such inquiries and analyses as Buyer has deemed necessary or appropriate in order to evaluate the physical condition of the Property and any and all other matters concerning the current and future use, feasibility, or value, or any other matter or circumstance relevant to Buyer concerning the Property or its marketability; and (c) the Records and Plans and the other books and records of Seller with respect to the Hotel may not be complete. 6.4.2 Limitation on Access to Records and Plans. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and agrees that the Records and Plans or other information made available to or delivered to Buyer prior to, or at the Closing, shall not include any information which is privileged, confidential or proprietary to Seller or any of its constituent partners or affiliates, including without limitation, (i) Seller's internal financial analyses, any appraisals undertaken for Seller or other parties, income tax returns, financial statements, corporate or partnership governance records, investment advisory records, and other records concerning Seller's professional relationships, any Hotel Employee personnel files (prior to the Closing), or any other internal, proprietary, or confidential information, files, or records of Seller, (ii) the work papers, memoranda, analysis, correspondence, and similar materials prepared by or for Seller in connection with the negotiation and documentation of the transaction contemplated hereby or any other offer to purchase the Property received by Seller, and (iii) any documents or communications subject to the attorney/client privilege or attorney work product privilege. Buyer expressly agrees that its review of the Records and Plans, and any and all other information of any type or nature, whether oral or written, provided to Buyer by or on behalf of Seller and relating to the Property (collectively, the "Property Information") is for informational purposes only, and neither Seller nor any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller has verified either the accuracy of the Property Information, or the adequacy of any method used to compile the Property Information or the qualifications of any person preparing the Property Information except that, in delivering or making available a copy of any document or papers to Buyer, Seller has delivered or made available copies of the originals of such documents or papers in Seller's possession or included in the Records and Plans. Except as expressly set forth in this Section 6, neither Seller nor any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller is making or giving any representation or warranty about, or assuming any responsibility for, the accuracy or completeness of the Property Information. Reliance by Buyer upon any Property Information shall not create or give rise to any liability of or against Seller or any agent, advisor, officer, attorney, representative or other person acting or 33 41 purporting to act on behalf of Seller. Subject to Seller's express representations and warranties set forth herein, the consummation of the Closing shall constitute Buyer's unconditional approval of all aspects of the Property and Buyer's unconditional acknowledgment that Buyer has had the opportunity to request from Seller and review such documents and materials relating of the Property as Buyer deems appropriate. All copies of such documents delivered to Buyer shall be returned to Seller if the Closing fails to occur for any reason. 6.5 PURCHASE AS IS. BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER THAT BUYER HAS INDEPENDENTLY AND PERSONALLY INSPECTED THE PROPERTY AND THE PROPERTY INFORMATION AND THAT BUYER HAS ENTERED INTO THIS AGREEMENT BASED UPON SUCH PERSONAL EXAMINATION AND INSPECTION. BUYER ACCEPTS THE PROPERTY, IN ITS CONDITION ON THE CLOSE OF ESCROW AS-IS AND WITH ALL ITS FAULTS, INCLUDING WITHOUT LIMITATION, ANY FAULTS AND CONDITIONS SPECIFICALLY REFERENCED IN THIS AGREEMENT. NO PERSON ACTING ON BEHALF OF SELLER IS AUTHORIZED TO MAKE, AND BY EXECUTION HEREOF, BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO: (A) THE VALUE OF THE PROPERTY; (B) THE INCOME TO BE DERIVED FROM THE PROPERTY; (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON; (D) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (E) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (F) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY; (G) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (H) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY; 34 42 (I) THE COMPLIANCE OF THE PROPERTY WITH ANY ENVIRONMENTAL LAWS OR THE AMERICANS WITH DISABILITIES ACT; (J) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR ADJACENT TO THE PROPERTY; (K) THE CONTENT, COMPLETENESS OR ACCURACY OF ANY OF THE RECORDS AND PLANS OR OTHER INFORMATION PROVIDED BY SELLER TO BUYER WITH RESPECT TO THE PROPERTY; (L) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER; (M) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE APPLICABLE ZONING OR BUILDING REQUIREMENTS; (N) DEFICIENCY OF ANY UNDER SHORING; (O) DEFICIENCY OF ANY DRAINAGE; (P) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; (Q) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE PROPERTY; (R) WITH RESPECT TO ANY OTHER MATTER CONCERNING THE PROPERTY (INCLUDING, WITHOUT LIMITATION, THE TENANT LEASES, THE EQUIPMENT LEASES, ANY FIXTURES AND EQUIPMENT, THE LICENSES AND PERMITS, THE PERSONAL PROPERTY, THE SERVICE CONTRACTS, THE EMPLOYMENT CONTRACTS, ANY EMPLOYEE BENEFIT PLANS AND THE LIQUOR LICENSE) EXCEPT AS MAY BE OTHERWISE EXPRESSLY STATED HEREIN; (S) [Intentionally Omitted] (T) ANY OF THE SPECIFIC DISCLOSURE MATTERS; OR (U) WITHOUT LIMITING THE OTHER DISCLAIMERS SET FORTH HEREIN BUT SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, THE ASSIGNMENTS AND CONVEYANCES OF THE PERSONAL PROPERTY AND THE MANAGEMENT AGREEMENT ARE WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS OF ANY KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, (1) WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY OR ASSIGNABILITY OF THE MANAGEMENT AGREEMENT, (2) WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, (3) WARRANTIES RELATING TO THE DESIGN, 35 43 CONDITION, QUALITY, WORKMANSHIP OR CAPACITY OF THE TANGIBLE PERSONAL PROPERTY, (4) REPRESENTATIONS OR WARRANTIES THAT THE TANGIBLE PERSONAL PROPERTY IS IN COMPLIANCE WITH ALL LAWS, STATUTES, ORDINANCES RULES, REGULATIONS, SPECIFICATIONS OR CONTRACTS PERTAINING THERETO, (5) WARRANTIES AGAINST PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, AND (F) WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY, OR COLLECTIBILITY OF ANY ITEM. 6.6 Limitation on Representations and Warranties of Seller. In no event shall Buyer be entitled to seek recovery against Seller for an alleged breach of any representation or warranty by Seller if the information, transaction, or occurrence alleged to give rise to such breach was disclosed to, made available to or discovered by Buyer, whether in the course of its review of the Records and Plans or otherwise, prior to the Close of Escrow (the sole adjustment with respect to same being as set forth in Section 6.7 below). Without limiting the foregoing, each of the representations and warranties by Seller set forth herein shall be deemed to be qualified in their entirety by the Specific Disclosure Matters in addition to any other qualifications of such representations and warranties. 6.7 Right to Supplement Disclosures. At any time prior to the Closing, Seller may add additional disclosures to the Specific Disclosure Matters and the Schedules referenced in this Section 6, and may make appropriate revisions thereto, provided, however, that any such revisions do not in the aggregate disclose any matter or matters which would reasonably be expected to have an impact upon the value of the Property in excess of the amount of the Deposit; and provided, further, that the receipt of any notice of termination under the Management Agreement shall not be deemed to create any diminution in value to the Property. In the event that Buyer or Seller discovers any matter or matters which would be expected to exceed the Threshold Amount, then, in such event, the provisions of Section 7.1.1 shall apply. 6.8 Basket. In no event will Seller be liable to Buyer for any breach of a representation or warranty hereunder unless and to the extent the Loss actually and directly incurred by Buyer as results of such breach together with the Loss actually and directly incurred by Buyer as results of any other breach(s) in the aggregate exceed the Threshold Amount, provided, that in no event shall Seller have any liability to Buyer for any consequential damages arising from a breach by Seller of any representation or warranty unless such breach results from the intentional concealment by Seller. 6.9 Survival. The Trust, the Corporation and Seller each hereby covenants and agrees with the other that the representations and warranties of the Trust, the Corporation and Seller (as the case may be) set forth in Sections 6.1.1 through 6.1.3, inclusive, Section 6.2.1 through Section 6.2.3, inclusive and Section 6.3.1 and Section 6.3.2 shall survive the Close of Escrow without limitation as to duration. The remaining warranties and representations set forth in Section 6 shall survive the Close of Escrow until the date which is one (1) year following the Closing Date, at which time such representations and warranties shall expire unless prior to such time Buyer or Seller, as the case may be, have duly commenced an action in a court of competent jurisdiction, alleging a breach of such representation or warranty. Notwithstanding anything 36 44 herein to the contrary, in no event shall either Buyer or Seller have any right to make a claim after the Closing with respect to any representation or warranty, the breach of which such party shall have discovered prior to the Closing, unless such party shall have notified the other party of such breach prior to the Close of Escrow. Nothing contained in this Section 6.9 shall limit the right of Seller to any remedy otherwise available under Federal or other applicable securities law. 6.10 [Intentionally Omitted] SECTION 7 TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING 7.1 Buyer's Review of Title. Seller has caused to be delivered to Buyer and Buyer's Counsel a current preliminary title commitment for title insurance issued by the Title Company showing the condition of title to the Real Property (the "Preliminary Title Report") together with a copy of all documents evidencing or creating the exceptions to title referenced therein. 7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens. On or prior to the Close of Escrow, Seller shall be obligated (i) to cause to be insured over or removed as matters of record all Monetary Liens affecting the Property as of the date hereof; and (ii) to remove or to bond over any Monetary Lien arising after the issuance of the Preliminary Title Report which (a) was created by or with the consent of Seller, or (b) is in an amount less than or equal to the Deposit. In the event that any Monetary Lien not reflected on the Preliminary Title Report exceeds the Deposit and was not created by or with the consent of Seller or any other title defect or other matters arise which requires Seller to supplement its disclosure pursuant to Section 6.7 and which in the aggregate may create a diminution in value to the Property in excess of the Deposit: (i) the Deposit shall be refunded by Escrow Holder to Buyer on February 28, 1998 if the Closing does not occur by such date in accordance with the provisions hereof; (ii) the Scheduled Closing Date shall be extended and Seller shall use all reasonable efforts, to remove or bond over or otherwise cause the Title Company to omit such Monetary Lien as an exception from coverage under the Title Policy and/or remove or cure as applicable such other defect or condition; and (iii) Buyer shall be permitted to record the Memorandum of Contract in the real property records of the state and county in which the Real Property is located. In the event that the Scheduled Closing Date is so extended and Seller is able to remove or cure such Monetary Lien, remove or cure as applicable the title defect or other condition, the Close of Escrow shall occur as soon as practicable following such removal or cure with time being of the essence as to the performance of both Buyer's and Seller's obligations hereunder. THE PARTIES ACKNOWLEDGE AND AGREE THAT DAMAGES WILL NOT BE AN ADEQUATE REMEDY TO SELLER IF BUYER SHALL DEFAULT IN ITS OBLIGATION TO CLOSE IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND CONSEQUENTLY THAT BUYER'S OBLIGATIONS UNDER THIS SECTION 7.1.1 SHALL BE SPECIFICALLY ENFORCEABLE AGAINST THE TRUST. IN 37 45 CONSIDERATION FOR THE REFUND TO BUYER OF THE DEPOSIT PROVIDED FOR UNDER THIS SECTION 7.1.1, THE RIGHT OF BUYER TO RECORD THE MEMORANDUM OF CONTRACT PURSUANT TO THIS SECTION 7.1.1, SELLER'S AGREEMENT TO ENTER INTO THE INTERIM MANAGEMENT AGREEMENT PURSUANT TO THE PROVISIONS OF THIS SECTION 17.20 (UNDER WHICH AGREEMENT THE VALUE OF THE HOTEL MAY BE AFFECTED BY THE PERFORMANCE BY THE MANAGER OF ITS RESPONSIBILITIES THEREUNDER) AND TO ENCUMBER THE PROPERTY WITH THIS AGREEMENT FOR A PERIOD OF UP TO FIVE (5) YEARS IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND IN LIGHT OF THE RISKS WHICH SELLER WILL BE ASSUMING AS A RESULT IN RELATION TO THE VALUE OF THE EQUITY PURCHASE PRICE TO BE DELIVERED IF AND WHEN THE CLOSING OCCURS HEREUNDER, THE PARTIES HAVE AGREED THAT THE PROVISIONS OF THIS SECTION 7.1.1 ARE SPECIFICALLY ENFORCEABLE AGAINST THE TRUST AS AND TO THE EXTENT PROVIDED IN THE PRECEDING SENTENCE. In the event that a Monetary Lien cannot be removed or cured or a title defect or other condition cannot be removed or cured as required hereunder to close within five (5) years of the date of this Agreement, this Agreement shall terminate and the parties hereto shall have no further obligations. 7.1.2 [Intentionally Omitted]. 7.2. Title Insurance Policy. Buyer's title to the Real Property shall be insured at Closing by an ALTA extended coverage owner's policy or policies of title insurance in the amount of the Purchase Price (the "Title Policy") issued by the Title Company, insuring title to the Real Property vested in Buyer, subject only to the Permitted Encumbrances, together with such customary endorsements or affirmative insurance as may be reasonably requested by Buyer and purchased at Buyer's sole cost and expense. 7.3 Title to Real Property. At the Close of Escrow, title to the Real Property will be conveyed to Buyer by Seller pursuant to the Deed, subject only to the matters of title respecting the Property shown on Schedule 7.3 annexed hereto and, if the Closing is delayed pursuant to Section 7.1.1, any additional easements, covenants, conditions, restrictions or other matters entered into with the prior written consent of Buyer which consent shall not be unreasonably withheld, delayed or conditioned (collectively, the "Permitted Encumbrances"); Buyer agrees to rely exclusively on the Title Policy for protection against any title defects except as set forth in Section 7.1.2. Buyer shall have no claim following the Closing against Seller on account of the Permitted Encumbrances. Buyer's agreement under this Section 7.1 shall survive the execution, delivery, and recordation of the Deed. 38 46 SECTION 8 INTERIM ACTIVITIES During the period from the Execution Date through the Close of Escrow, Seller shall (subject to the provisions of the Interim Management Agreement if entered into in accordance with the provisions of this Agreement) cause the Property to be continued to be operated in ordinary course as a hotel consistent with current operating practices during the period since Manager has been manager of the Hotel. Buyer shall have the right to enter onto and inspect the Property, from and after the date hereof, through the Closing Date to inspect the Property and otherwise perform its due diligence provided such inspections are performed upon prior notice to Seller and so as not to interfere with the operation of the Property or to disclose the pendency of the transaction contemplated hereby. All fees and expenses of any kind relating to the inspection of the Property by Buyer will be paid for by Buyer. Buyer agrees to keep the Property free from any liens arising out of or in connection with Buyer's or its agents entry or the Property. Buyer shall at its sole cost and expense, clean up and repair the Property as reasonably necessary after Buyer's or its agents entry thereon. Buyer shall hold harmless, indemnify and defend Seller from all Losses relating to any action by Buyer, its Affiliates and/or agents at or on the Property prior to Closing. Any of Buyer's agents shall be bound by the provisions of Section 17.19. SECTION 9 CONDITIONS PRECEDENT TO CLOSING 9.1 Conditions Precedent to Buyer's Obligations. The Close of Escrow and the obligation of Buyer to purchase the Property is subject to the satisfaction, not later than the Scheduled Closing Date, (subject to extensions as provided in Section 7.1) of the following conditions: 9.1.1 Seller's Deliveries. Seller shall have delivered the items described in Section 4.2 and shall be prepared to deliver the items described in Section 4.4; 9.1.2 Title Policy. The Title Company shall be unconditionally prepared (subject only to payment of all necessary title insurance premiums and other charges) to issue to Buyer the Title Policy insuring Buyer's title to the Real Property subject only to the Permitted Encumbrances; 9.1.3 Performance Under Related Agreement. All conditions precedent to the closing of the transactions contemplated by that certain Purchase and Sale Agreement and Joint Escrow Instructions (the "Related Agreement") dated as of the date hereof by and between Buyer and New Remington Partners shall have been satisfied or waived and the Seller and Escrow Holder thereunder shall be ready, willing and able to perform thereunder, and there shall be no default of Seller under such agreement. 39 47 9.1.4 [Intentionally Omitted] 9.1.5 Seller Performance. Seller shall have performed in all material respects all of the obligations of Seller under this Agreement, to the extent required to be performed at or prior to the Close of Escrow. 9.1.6 Representations and Warranties of Seller. The Seller's representations and warranties set forth in Section 6.3 shall be true, correct and complete, as of the Close of Escrow subject to modification thereof to the extent permitted under Section 6.7 and subject further to the applicable provisions of Section 7.1.1. The conditions set forth in this Section 9.1 are solely for the benefit of Buyer and may be waived only by Buyer. Buyer shall at all times have the right to waive any such condition. Any such waiver or waivers shall be in writing and shall be delivered to Seller and Escrow Holder. 9.2 Conditions Precedent to Seller's Obligations. The Close of Escrow and Seller's obligation with respect to the transactions contemplated by this Agreement are subject to the satisfaction, not later than the Scheduled Closing Date, of the following conditions: 9.2.1 Funds and Documents. Buyer shall have delivered to Escrow Holder, prior to the Closing Date, for disbursement as directed by Seller, the Paired Shares and all cash or other immediately available funds due from Buyer in accordance with Section 4 of this Agreement and the documents described in Section 4.3; 9.2.2 Representations and Warranties of Buyer. The Trust's representations and warranties set forth in Section 6.1 and the Corporation's representations and warranties set forth in Section 6.2 shall be true, correct and complete, as of the Close of Escrow; 9.2.3 No Material Changes. There shall have been no casualty or condemnation for which Buyer has elected to terminate this Agreement pursuant to Section 12 or Section 13 of this Agreement; 9.2.4 [Intentionally Omitted] 9.2.5 Performance Under Related Agreement. All conditions precedent to the closing of the transactions contemplated by the Related Agreement shall have been satisfied or waived and the Buyer and Escrow Holder thereunder shall be ready willing and able to perform thereunder and there shall be no default of Buyer under such agreement. The conditions set forth in this Section 9.2 are solely for the benefit of Seller and may be waived only by Seller. Seller shall at all times have the right to waive any such condition. Any such waiver or waivers shall be in writing and shall be delivered to Buyer and Escrow Holder. 9.3 Failure of Condition. Except as otherwise provided in this Agreement, if the Escrow fails to close on the Outside Closing Date for any reason whatsoever, including, without limitation, a failure of a condition precedent set forth in this Section 9, either Buyer or Seller, if 40 48 not then in default under this Agreement, may terminate the Escrow and this Agreement upon notice to the other; and, thereupon: 9.3.1 This Agreement and the Escrow shall terminate; 9.3.2 The costs of the Escrow through the Scheduled Closing Date shall be governed by Section 4.8. 9.3.3 All monies paid into the Escrow and all documents deposited in the Escrow shall be returned to the party paying or depositing the same together with interest earned thereon; and 9.3.4 Each party shall be released from all obligations under this Agreement except for the obligations that are expressly stated to survive the termination of this Agreement. SECTION 10 BROKER Buyer and Seller each represent and warrant to the other that it has not dealt with any broker, finder or other middleman in connection with this Agreement, or the transactions contemplated hereby and that no broker, finder, middleman or other person has claimed, or has the right to claim a commission, finder's fee or other brokerage fee in connection with this Agreement or the transactions contemplated hereby. Each party shall indemnify, protect, defend and hold the other party harmless from and against any costs, claims or expenses (including actual attorneys' fees and expenses), arising out of the breach by the indemnifying party of any of its representations, warranties or agreements contained in this Section 10. The representations and obligations under this Section 10 shall survive the Close of Escrow, or, if the Close of Escrow does not occur, the termination of this Agreement. SECTION 11 REMEDIES FOR SELLER'S DEFAULT 11.1 Buyer's Remedies in General. If Buyer shall discover prior to the Close of Escrow any default in any of Seller's obligations under this Agreement (a "Seller Default"), Buyer shall notify Seller thereof, and Seller shall have a reasonable period of time (not in excess of thirty (30) days) unless extended by Buyer in its sole discretion in which to cure such default, in which case the Scheduled Closing Date shall be extended during the continuation of such cure period. If there shall be any Seller Default discovered by Buyer prior to the Close of Escrow and not cured by the Scheduled Closing Date, then Buyer's sole right and remedy other than with respect to a breach of a representation and warranty which shall be subject to the provisions of Section 6.7, shall be to compel specific performance of this Agreement; provided, however, that Buyer 41 49 shall only be entitled to compel specific performance of this Agreement if, as of the time of Seller's default, Buyer shall (a) not be in default hereunder, (b) shall be ready, willing and able to perform its obligations hereunder, and (c) shall have waived all contingencies to closing other than those relating to Seller's default. 11.2 MATERIAL INDUCEMENT. BUYER SPECIFICALLY ACKNOWLEDGES THAT THE LIMITATIONS ON DAMAGES AND SURVIVAL AND OTHER REMEDIES WHICH BUYER MAY RECOVER FROM AND ENFORCE AGAINST SELLER UNDER THIS AGREEMENT ARE A SPECIFIC AND MATERIAL INDUCEMENT TO SELLER TO ENTER INTO THIS TRANSACTION. SECTION 12 DAMAGE TO OR DESTRUCTION OF THE PROPERTY 12.1 Insured Casualty. 12.1.1 If, prior to the Close of Escrow, the Property is damaged or destroyed, whether by fire or other insured casualty, Seller shall promptly notify Buyer of such damage or destruction and of the good-faith estimate of a reputable licensed contractor selected by Seller and reasonably approved by Buyer of the cost to repair the damage and Seller's good-faith belief that such casualty is insured (the "Insured Casualty Notice"). If the Insured Casualty Notice indicates that such casualty is a Material Casualty, Buyer may elect to be released from its obligations hereunder (including its obligation to purchase the Property) by delivering to Seller written notice of Buyer's intent to do so within ten (10) days after the date Buyer receives the Insured Casualty Notice. In such event, the Deposit together with all interest accrued thereon shall be promptly returned to Buyer. 12.1.2 If the casualty is insured, and (i) it is not a Material Casualty, or (ii) it is a Material Casualty, but Buyer elects not to terminate this Agreement in accordance with this Section 12.1, then the Escrow and this Agreement shall remain in full force and effect, the Closing shall occur on or before the Outside Closing Date, and Seller shall assign to Buyer, as a condition precedent to the Close of Escrow, all of Seller's right, title and interest in and to any of the casualty insurance proceeds or claims therefor with respect to such damage or destruction, together with any and all rental loss or business interruption insurance of Seller, if any, payable with respect to the Property for any period after the Proration Time and any and all claims against other persons for such damage or destruction. Additionally, if the Escrow and this Agreement remain in full force and effect, Seller shall pay to Buyer, by way of a reduction in the Cash Portion of the Closing Payment, an amount equal to the deductible under the casualty insurance. Within twelve (12) months following the Close of Escrow, Buyer shall upon thirty (30) days written notice by Seller, present reasonably satisfactory evidence to Seller that Buyer applied the proceeds of such insurance to the Property. If Buyer fails to present such evidence or such evidence is not reasonably satisfactory to Seller, Buyer shall promptly, but in any event within thirty (30) days of demand therefor from Seller, pay to Seller the proceeds of the casualty 42 50 insurance assigned by Seller to Buyer as provided herein, together with an amount equal to the deductible under such insurance for which Buyer received a credit to the Purchase Price. 12.2 Uninsured Casualty. 12.2.1 If, prior to the Close of Escrow, all or any portion of the property is damaged or destroyed by an uninsured casualty (including, without limitation, a casualty as to which coverage has been disclaimed by Seller's insurers), Seller shall promptly notify Buyer of such damage or destruction and of the Seller's reasonable estimate of the cost to Seller to repair the same of a reputable licensed contractor selected by Seller and reasonably approved by Buyer (the "Uninsured Estimate to Repair") and Seller's reasonable belief that such casualty is uninsured (the "Uninsured Casualty Notice"). 12.2.2 If such Uninsured Estimate to Repair indicates the occurrence of a Material Casualty, either Seller or Buyer may elect to terminate this Agreement by giving to the other party written notice of its intent to do so within ten (10) days after the Seller delivers the Uninsured Casualty Notice to Buyer. If this Agreement is terminated pursuant to this Section 12.2.2, the Deposit together with interest accrued thereon shall be promptly returned to Buyer. 12.2.3 If the casualty is uninsured, and (i) it is not a Material Casualty, or (ii) it is a Material Casualty and Buyer and Seller have not elected to terminate this Agreement in accordance with Section 12.2.2, then the Escrow and this Agreement shall remain in full force and effect, the Closing shall occur on or before the Outside Closing Date, and Buyer shall be entitled to a reduction in the Purchase Price in an amount equal to the Uninsured Estimate to Repair. 12.2.4 If and to the extent that the Purchase Price is adjusted pursuant to this Section 12.2 as a result of a disclaimer of coverage by Seller's insurers, Buyer shall not be entitled to insurance proceeds due under Seller's policies, or to be assigned any claim under or with respect to Seller's policies, and Seller shall retain all rights thereunder or with respect thereto and to proceeds therefrom, it being the intent of this Section 12 that there be no double recovery by, or double compensation of, Buyer for the casualty. SECTION 13 CONDEMNATION If, prior to the Close of Escrow, a Material Taking has occurred or is pending, Seller shall immediately notify Buyer of such fact. In such event, Buyer may elect upon written notice to Seller given not later than fifteen (15) days after receipt of Seller's notice to terminate this Agreement. If Buyer does not exercise option which Buyer may have pursuant to this Section 13 to terminate this Agreement, or if any such taking is not a Material Taking, then neither party shall have the right to terminate this Agreement, but Seller shall assign and turn over, and Buyer shall be entitled to receive and keep, all awards for the taking of any of the Real Property by 43 51 eminent domain which accrue to Seller (other than those relating to loss of use prior to the Closing), and the parties shall proceed to the Close of Escrow pursuant to the terms hereof, without modification of the terms of this Agreement and without any reduction in the Purchase Price. SECTION 14 EMPLOYEES 14.1 Hiring of Hotel Employees; WARN Act Compliance. Buyer agrees to make an offer of employment to all existing Hotel Employees as of the Close of Escrow, on terms and conditions generally comparable to their existing terms and conditions of employment (to the extent such terms and conditions have been disclosed by Seller and/or its agents to Buyer) and to make all reasonable efforts to retain such employees for a reasonable period of time. Without limiting the foregoing, Buyer shall offer to maintain without loss of employment (as defined in the WARN Act) the employment at the Property (other than upon good cause for termination) of such number of Hotel Employees and on such terms and conditions as shall not result in, and only to the extent necessary to prevent, a plant closing or mass layoff as defined in the WARN Act. Buyer (i) shall also cause each of the health and medical benefit plans maintained for Hotel Employees to waive any preexisting condition in connection with employment at the Property that was not excluded under the applicable program as of the Closing Date, (ii) shall also cause each of such benefit plans to take into account any deductibles or coinsurance amounts incurred by each Hotel Employee for the year in which the Closing Date occurs, and (iii) shall also cause each of the health and medical benefit plans to deem each Hotel Employee to be eligible for participation in such plan as of the Close of Escrow. In the event that Buyer fails to comply with any of the foregoing covenants, Buyer agrees that Buyer shall be solely responsible for the payment of any and all costs, charges, penalties, compensation, severance pay, benefits and liabilities, arising under the WARN Act, and any other applicable law, rule or regulation on account thereof, and Buyer agrees to indemnify, defend and hold Seller and the Employer Corporation and their directors, officers, agents, affiliates, principals, partners, shareholders representatives and controlling persons harmless from and against any and all claims, causes of action, judgments, damages, penalties and liabilities asserted under the WARN Act or any other applicable law, rule or regulation, whether against Buyer or Seller, the Employer Corporation or any other such indemnified party and whether based on employment of any of the Hotel Employees prior to or following the Closing, arising from Buyer's failure to comply with the foregoing covenants (collectively, "Termination Charges"). Following the Closing, if Buyer desires to terminate the employment of any Hotel Employees other than for cause, Buyer shall be solely responsible for complying with all applicable provisions of the WARN Act and all other applicable laws, rules and regulations with respect to such termination, including without limitation, the payment of all costs and termination payments owing under the WARN Act and all other applicable laws, rules and regulations to any of such employees. Buyer shall assume all obligations under the Employment Agreement for the Director of Finance attributable to the 44 52 period from and after the Closing Date (it being agreed that the Directors of Finance may resign thereunder at any time without penalty). 14.2 Collective Bargaining Agreements. Without limiting the provisions of Section 14.1, immediately upon the Close of Escrow, without the necessity of further action by Buyer, Buyer shall assume each collective bargaining agreement or other labor union contracts identified on Schedule 14.2 (the "Collective Bargaining Agreements"). Buyer further agrees to indemnify Seller and the Employer Corporation and their directors, officers, employees, agents, affiliates, principals, partners, shareholders, representatives and controlling persons for any and all liability to the bargaining agents or Hotel Employees, resulting from the failure of Buyer to comply with the terms and conditions of any of the Collective Bargaining Agreements with respect to periods beginning after the Close of Escrow. 14.3 Continuation of Benefits. 14.3.1 (i) Except as provided in Section 14.3.2 , on and after the Closing Date, Seller (or any insurer at Seller's cost) shall continue to process and pay (or cause applicable insurers and third party administrators, including ITT Sheraton, to process and pay) in an expeditious manner and with respect to all covered Hotel Employees (and, to the extent applicable, their covered spouses, dependents and beneficiaries) all claims under the Employment Agreements that provide health and medical, or other welfare, benefits submitted for covered expenses with respect to occurrences commencing on or prior to the Closing Date, including, but not limited to: (A) covered hospital benefits for any confinements; (B) covered life and survivor income benefits, if any, for deaths which occur on or prior to the Closing Date; (C) workers' compensation benefits for disabilities resulting from a work-related accident which occurred on or prior to the Closing Date; (D) all covered benefits that are being, or that may be, paid to, or with respect to, any of such individuals who are on short or long term disability, or medical, personal or other leaves of absence as of the Closing Date; (E) covered benefits under any "spending account," or similar arrangement, under any "cafeteria plan" (as defined under Section 125 of the Internal Code) with respect to salary reduction elections made prior to the Closing Date; and (F) covered benefits under all other such Employment Agreements which accrue on or before the Closing Date; but, only in each instance, to the extent that Buyer shall not have received a credit against the Purchase Price on account of such item. (ii) In order to effectuate the provisions of Section 14.3.1(i), hereof, Seller shall cause to be deposited with Anthem Health and Life Insurance Company ("Anthem") the full amount required by Anthem to cover the payment of benefits accrued but unpaid as of the Closing Date with respect to employees located at the Aspen facility and their dependents. Seller shall cause to be paid all premiums due to be paid under such Employment Agreements for all periods ending on or prior to the Closing Date. 14.3.2 Buyer (or any plan maintained by Buyer) will provide continued health and medical coverage as required under Section 4980B of the Code, Part 6 of Title I of ERISA or any other applicable federal, state or local law or ordinance to all current and former Hotel Employees (and their spouses, dependents and beneficiaries) with respect to whom a "qualifying 45 53 event" (as such term is defined under Sections 4980B(f)(3) of the Code or 603 of ERISA) or other triggering event described under the applicable federal, state or local laws or ordinances occurred on or before the Closing Date. 14.3.3 Buyer shall maintain supplies of claims forms necessary for Hotel Employees to make claims under Employment Agreements that provide health, medical or other welfare benefits with respect to occurrences commencing on or prior to the Closing Date, and shall furnish such forms to the Hotel Employees when needed and otherwise assist the Hotel Employees in presenting such claims. 14.4 Buyer and Seller intend by this Agreement to comply with Section 4204 of ERISA, so as to prevent Seller from incurring at the Closing Date a complete or partial withdrawal in respect of any employee benefit plans, if any, in which the Hotel Employees currently participate that are "multiemployer plans," as defined in Section 4001(a)(3) of ERISA (and which have been disclosed to Buyer on the Schedule of Employment Agreements), determined as if Buyer is the "buyer" referred to in such Section 4204. Accordingly, with respect to such multiemployer plans, Buyer agrees as follows: (A) For the first plan year of each such multiemployer plan commencing after the Close of Escrow, and for each of the succeeding four plan years for each such plan, Buyer shall assume the obligation to contribute to each such plan with respect to operations conducted with business assets acquired from Seller for substantially the same number of contribution base units (as defined in Section 4001(a)(11) of ERISA) for which Seller had an obligation to contribute to such plan. (B) Prior to each such multiemployer plan's first plan year beginning after the Close of Escrow, Buyer shall apply to such plan for a variance from the requirement of Section 4204(a)(1)(b) of ERISA, that a bond be obtained or an amount be held in escrow as provided in said Section. In the event any such plan determines that the request does not qualify for a variance on it, Buyer shall obtain any required bond or establish any required escrow within thirty (30) days after the date on which it receives notice of the plan's decision, and shall maintain such bond or escrow until the earliest of: (i) the date a variance is obtained from the plan; (ii) the date a variance or exemption is obtained from the Pension Benefit Guaranty Corporation; or (iii) the last day of the fifth (5th) plan year commencing after the Close of Escrow; which bond or escrow shall be paid to such plan if Buyer withdraws therefrom or fails to make a contribution to such plan when due, at any time during the first (1st) five (5) plan years of such plan beginning after the Closing Date. In order to comply with subsection (a)(1)(C) of such Section 4204, if Buyer withdraws in a complete withdrawal or a partial withdrawal from any multiemployer plan with respect to which Buyer has assumed an obligation to contribute pursuant to this Agreement and such withdrawal or partial withdrawal occurs during the five (5) plan years commencing with the first (1st) plan year beginning after the date of the Close of Escrow, Seller shall be secondarily liable for any withdrawal liability it would have had to such multiemployer plan on the date of the Close of Escrow under Title IV of ERISA. Buyer agrees to provide Seller with reasonable advance notice of its anticipated failure to pay any withdrawal 46 54 liability and to furnish Seller promptly with a copy of any notice of withdrawal liability it may receive with respect to such plans. 14.5 Indemnification. Buyer and Seller (as applicable, the "Indemnitor") agrees to indemnify, defend, protect and hold the other and, the Employer Corporation in the case of Seller, and their directors, officers, agents, affiliates, principals, partners, shareholders, representatives and controlling persons (as applicable, the "Indemnitee") harmless from and against any and all claims, damages, liabilities, losses, and expenses, (including attorneys' fees and costs) paid, suffered or incurred by the Indemnitee, arising out of or related to Indemnitor's failure to comply with any of the covenants, obligations, or duties contained in Section 14. 14.6 Survival. The provisions of this Section 14 shall survive the Close of Escrow. SECTION 15 COOPERATION 15.1 Seller has advised Buyer that it may be necessary after the Close of Escrow for Seller (or its representatives) to audit the Records and Plans with respect to the period prior to the Closing Date. In addition, Seller may require access to the such Books and Records in connection with any litigation by or against Seller and its Affiliates with respect to the Property, any tax audit, examination or challenge or similar proceeding, or any calculation of sums payable under Section 5. Accordingly, Buyer hereby: (i) agrees to retain the Records and Plans with respect to the period prior to the Closing Date at the Property for a period of seven (7) years after the Close of Escrow or such additional period as may reasonably be requested by Seller; (ii) grants Seller, its Affiliates and their respective representatives access to the such Records and Plans and the Property after the Close of Escrow, at reasonable times and upon reasonable prior notice, for such purposes; (iii) subject to the rights of guests in guest rooms, tenants under tenant leases, grants Seller, its Affiliates, and their respective representatives access to the Property after the Close of Escrow for the purpose of conducting such inspections and/or testing (including destructive testing) of the Property as may be necessary or advisable in connection with any litigation and other proceedings to which Seller is a party (provided that Seller shall give Buyer prior notice of the scope of such inspections and testing) which shall be scheduled for such periods as shall be reasonably agreeable to the parties; 15.1.1 All inspections fees, appraisal fees, engineering fees and other expenses of any kind relating to the inspection of the Property by Seller or Seller's Affiliate will paid for by Seller and/or Seller's Affiliate. 15.1.2 Prior to Seller or Seller's Affiliate's entry on the Property for the purpose of conducting inspections and/or tests, Seller or Seller's Affiliate shall provide Buyer with certificates of insurance from Seller's agents from an insurance carrier and for such risks and policy limits as Seller shall reasonably approve. 47 55 15.1.3 Seller agrees to keep the Property free from any liens arising out of or in connection with such testing and inspection. 15.1.4 Seller, shall, at its sole cost and expense, clean up and repair the Property as reasonably necessary, after Seller's or Seller's agents, entry thereon. 15.1.5 Seller shall hold harmless, indemnify and defend Buyer for all losses relating to any action by Seller, its Affiliates and/or agents at or on the Property after the Closing; [and] 15.1.6 Buyer agrees to cooperate with Seller, its Affiliates and their respective representatives in connection with any such litigation or proceedings with respect to the Property, any such tax audit, examination or challenge or similar proceeding, or any such calculation of sums payable under Section 5, said cooperation to be at no material cost or expense to Buyer; and 15.2 Seller shall cooperate with Buyer in connection with the assignment of all transferable Licenses and Permits to Buyer and the application for and procurement of replacements of any non-transferable Licenses and Permits. SECTION 16 NOTICES 16.1 Addresses. Whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be made in writing and shall be (a) sent via a nationally recognized overnight courier service fully prepaid, (b) deposited in the United States by mail, registered or certified, return receipt requested, postage prepaid, or (c) sent via telefacsimile, provided that the original of such notice, demand or request shall also be sent via one of the methods described in (a) and (b) above, in each case to the addressees (and individuals) set forth below: As to Seller: Savanah Limited Partnership c/o Al Anwa USA Incorporated 1925 Century Park East Suite 1900 Los Angeles, CA 90067 Attn: General Counsel Telefacsimile: (310) 229-2939 With a copy to Seller's Additional Addressees: Gordon Eng, Esq. 48 56 19191 S. Vermont Avenue Suite 420 Torrance, CA 90502 Telefacsimile: (310) 207-1006 Morrison & Foerster LLP 555 West Fifth Street, Suite 3500 Los Angeles, CA 90013-1024 Attn: Thomas R. Fileti, Esq. Telefacsimile: (213) 892-5454 As to Buyer: Starwood Lodging Corporation Starwood Lodging Trust 2231 E. Camelback Road Suite 400 Phoenix, AZ 85016 Attn: Steven R. Goldman Telefacsimile: (602) 852-0115 With a copy to Buyer's Additional Addressee: Greenberg Traurig Hoffman Lipoff Rosen & Quentel 153 East 53rd Street New York, NY 10022 Attn: Andrew E. Zobler, Esq. Telefacsimile: (212) 223-7161 As to Escrow Holder: Chicago Title Insurance Company 700 South Flower Street, Suite 900 Los Angeles, CA 90017 Attn: Maggie Watson Telefacsimile: (213) 488-4388 16.2 Receipt of Notices. Any notice, demand or request that shall be delivered to Buyer and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Buyer for all purposes hereunder, and any notice, demand or request that shall be delivered to Seller and its Additional Addresses in the manner aforesaid shall be deemed sufficiently given to and received by Seller for all purposes hereunder (i) the next business day following the day such notice, demand or request is delivered by a nationally recognized 49 57 overnight courier service fully prepaid, to such party and its Additional Addressee, (ii) if sent via registered or certified mail, at the time of receipt by such party and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date and time stated upon confirmation reports generated by the sending party's telefacsimile machine confirming the delivery of such notice, demand or request to such party and its Additional Addressee. 16.3 Refusal of Delivery. The inability to deliver any notice, demand or request because the individual to whom it is properly addressed in accordance with this Section 16 refused delivery thereof or no longer can be located at that address shall constitute delivery thereof to such individual. 16.4 Change of Address. Each party shall have the right from time to time to designate by written notice to the other parties hereto such other person or persons and such other place or places as said party may desire written notices to be delivered or sent in accordance herewith. SECTION 17 GENERAL PROVISIONS 17.1 Amendment. Except as provided in Section 4.1, no provision of this Agreement or of any documents or instrument entered into, given or made pursuant to this Agreement may be amended, changed, waived, discharged or terminated except by an instrument in writing, signed by the party against whom enforcement of the amendment, change, waiver, discharge or termination is sought. 17.2 Time of Essence. All times provided for in this Agreement for the performance of any act will be strictly construed, time being of the essence. 17.3 Entire Agreement. This Agreement and other documents delivered at Closing, set forth the entire agreement and understanding of the parties in respect of the transactions contemplated by this Agreement, and supersede all prior agreements, arrangements and understandings relating to the subject matter hereof and thereof. No representation, promise, inducement or statement of intention has been made by Seller or Buyer which is not embodied in this Agreement, or in the attached Exhibits or the written certificates, schedules or instruments of assignment or conveyance delivered pursuant to this Agreement, and neither Buyer nor Seller shall be bound by or liable for any alleged representations, promise, inducement or statement of intention not therein so set forth. 17.4 No Waiver. No failure of any party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder shall constitute a waiver of any party's right to demand strict compliance with the terms of this Agreement. 50 58 17.5 Counterparts. This Agreement, any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby, and any amendment or supplement thereto may be executed in two or more counterparts, and, when so executed, will have the same force and effect as though all signatures appeared on a single document. Any signature page of this Agreement or of such an amendment, supplement, document or instrument may be detached from any counterpart without impairing the legal effect of any signatures thereon, and may be attached to another counterpart identical in form thereto but having attached to it one or more additional signature pages. 17.6 Costs and Attorneys' Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement or any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby or thereby (including, without limitation, the enforcement of any obligation to indemnify, defend or hold harmless provided for herein or therein), or because of an alleged dispute, default, or misrepresentation in connection with any of the provisions of this Agreement or of such document or instrument, or if Escrow Holder commences any action with respect to the Escrow(s), the successful or prevailing party shall be entitled to recover actual attorneys' fees, charges and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 17.7 Payments; Interests. Except as otherwise provided herein, payment of all amounts required by the terms of this Agreement shall be made in the United States and in immediately available funds of the United States of America which, at the time of payment, is accepted for the payment of all public and private obligations and debts. Unless the parties otherwise agree, payments shall be made through the Escrow Holder. If any payment due under this Agreement is not paid when due, it shall thereafter bear interest at a variable rate equal to the rate announced from time to time by Citibank, N.A. as its prime or reference rate, plus five percent (5%) per annum, but in no event more than the maximum rate, if any, allowed by law to be charged by the party receiving the interest on such type of indebtedness. 17.8 Transfer By Buyer. Buyer shall not have the right to assign this Agreement, but shall be permitted to designate an Affiliate or Affiliates to take title to the Property. In the event that Buyer elects to so designate any Affiliate or Affiliates to take title to the Property hereunder, (i) Buyer shall upon close of Escrow be released of all obligations hereunder other than pursuant to Section 6, Section 7.1, Section 10, Section 17.18, Section 17.19 and Section 17.20 or arising prior to the Close of Escrow, (ii) such Affiliate or Affiliates shall assume all of Buyer's obligations hereunder; and (iii) such Affiliate of Affiliates shall represent and warrant to Seller that such entities are duly organized and validly existing and otherwise as to the matters covered in Section 6.1.1 and Section 6.1.2 as applicable. 17.9 Parties in Interest. Subject to Section 17.8, the rights and obligations of the parties hereto shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs and the legal representatives of their respective estates. Nothing in this Agreement is intended to confer any right or remedy under this Agreement on any person other than the parties to this Agreement and their respective successors and permitted 51 59 assigns, or to relieve or discharge the obligation or liability of any person to any party to this Agreement or to give any person any right of subrogation or action over or against any party to this Agreement. 17.10 Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the state in which the Real Property is located without giving effect to the conflict-of-law rules and principles of that state. 17.11 Incorporation of Recitals and Exhibits. The Recitals and Exhibits attached to this Agreement are incorporated into and made a part of this Agreement. 17.12 Construction of Agreement. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any of the parties hereto. Headings at the beginning of sections of this Agreement are solely for the convenience of the parties and are not a part of this Agreement. When required by the context, whenever the singular number is used in this Agreement, the same shall include the plural, and the plural shall include the singular, the masculine gender shall include the feminine and neuter genders, and vice versa. As used in this Agreement, the term "Seller" shall include the respective permitted successors and assigns of Seller, and the term "Buyer" shall include the permitted successors and assigns of Buyer, if any. 17.13 Severability. If any term or provision of this Agreement is determined to be illegal, unconscionable or unenforceable, all of the other terms, provisions and sections hereof will nevertheless remain effective and be in force to the fullest extent permitted by law. 17.14 Announcements. Seller and Buyer shall consult with each other and provide each other one (1) Business Day prior notice with regard to all press releases and other announcements issued at or prior to the Close of Escrow and during the one year period thereafter concerning the existence of this Agreement or the sale of the Property and, except as permitted under Section 17.19, neither Seller nor Buyer shall issue any such press release or other such publicity prior to the Close of Escrow without the prior written consent of the other party, which consent may be withheld in such other party's sole and absolute discretion. Buyer will not issue any public announcement with respect to Seller (other than to describe the transaction contemplated hereby to the extent permitted hereunder) without the prior written consent of Seller which may be withheld in its sole and absolute discretion. The agreements of the parties in this Section 17.14 shall survive the Close of Escrow or any termination of this Agreement. 17.15 Submission of Agreement. The submission of this Agreement to Buyer or its broker, agent or attorney for review or signature does not constitute an offer to sell the Property to Buyer or the granting of an option or other rights with respect to the Property to Buyer. No agreement with respect to the purchase and sale of the Property shall exist, and this writing shall have no binding force or effect, until this Agreement shall have been executed and delivered by Buyer and by Seller and Buyer shall have deposited the Deposit with Escrow Holder. 17.16 Further Assurances. Buyer and Seller agree to execute such instructions to the Escrow Holder and such other instruments and take such further actions either before or after the 52 60 Close of Escrow as may be reasonably necessary to carry out the provisions of this Agreement provided that no material additional cost or liability shall be created thereby. 17.17 Cooperation. Buyer and Seller shall cooperate with the other to carry out the purpose of this Agreement (provided, such cooperation shall not require either party to expend any sum not otherwise required pursuant to the other provisions of this Agreement). This Section 17.17 shall survive the Close of Escrow. 17.18 Moratorium on Re-Sale. Buyer covenants and agrees that it will not sell the Property to any third-party for a period (the "Transfer Restriction Period") commencing upon the Closing of Escrow and expiring upon the later of (a) five (5) years following the Close of Escrow and (b) settlement of or the final non-appealable judgment is issued in connection with the existing litigation between Seller and the Ritz Carlton Hotel Company, LLC and their respective affiliates, provided, however, the foregoing prohibition shall not apply to a sale of all or substantially all of the assets of Buyer, the merger of Buyer into another entity or the transfer of the Property to a subsidiary and/or Affiliate of Buyer but shall be binding upon the party succeeding to all or substantially all of the assets of Buyer, the surviving entity in such merger, or such subsidiary or Affiliate. The provisions of this Section 17.18 shall be specifically enforceable. Buyer hereby waives any requirement for Seller to post a bond in order to seek or obtain any temporary restraining order or other injunctive relief pursuant to this Section 17.18. The parties acknowledge and agree that the provisions of this Section 17.18 form a material part of the consideration to Seller for entering into this Agreement. The parties agree that these provisions are reasonable in light of Seller's ongoing litigation with Ritz Carlton Hotel Company and its affiliates. 17.19 Confidentiality. Buyer shall hold as confidential all information concerning the transaction contemplated by this Agreement, Seller and the Property disclosed in connection with this transaction and Buyer shall not, prior to the Close of Escrow, release any such information relating to the transaction, Seller or the Property to any governmental agencies or third parties without Seller's prior written consent except as may be required by law and in such case subject to the provisions of Section 17.14. Seller hereby gives its consent to Buyer's disclosure of information relating to the transaction contemplated hereby to Buyer's Counsel and other consultants, in each instance to the extent reasonably necessary to verify information given to Buyer by Seller or otherwise to carry out the purposes of this Agreement and provided in each instance, such consultants agree in writing to be bound by the confidentiality provisions of this Section 17.19. If the Close of Escrow shall fail to occur for any reason, neither party shall issue any press release, publicity or other public announcement of the subject matter of this Agreement, or to make any other disclosure concerning the subject matter of this Agreement (except as may be required by law and in such case subject to the provisions of Section 17.14.), without the prior written consent of the other party, which consent may be withheld in such other party's sole and absolute discretion. The agreements of the parties in this Section 17.19 shall survive any termination of this Agreement. 17.20 Interim Management Agreement. Seller shall provide Manager with a notice of termination of the Management Agreement on January 2, 1998 or as soon thereafter as Seller 53 61 shall have obtained any required lender consent thereto. Seller shall, on or prior to January 2, 1998, seek any required lender consent and use all reasonable commercial efforts to obtain same as promptly as possible. Buyer and Seller shall enter into a management agreement with respect to the Property in the form attached as Exhibit 17.20 hereto (the "Interim Management Agreement") which shall be effective (and the Interim Management Agreement shall be dated as of such effective date) on the earlier of (a) thirty days from the date of the delivery to Manager of such termination notice and (b) the effective date of a written waiver of Manager of the notice of termination required under the Management Agreement. Buyer shall advance any fee payable to Manager under the Management Agreement on account of the termination thereof up to $122,481.00. Buyer shall be deemed to have waived delivery of all items under Sections 4.2.1.15, 4.2.1.16, 4.2.1.17 and 4.2.1.19 in the event the Management Agreement is terminated in accordance with the provisions of this Section 17.20 prior to the Closing Date. 17.21 Starwood Lodging Trust. The parties hereto understand and agree that the name "Starwood Lodging Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] 54 62 IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be executed as of the day and year first above written. "Seller" SAVANAH LIMITED PARTNERSHIP, a District of Columbia limited partnership By: ASPEN ENTERPRISES INTERNATIONAL, INC., a Colorado corporation, its General Partner By: /s/ Mansor Dalaan -------------------------- Name: Mansor Dalaan Title: President "Buyer" STARWOOD LODGING TRUST, a Maryland real estate investment trust By: /s/ Steven R. Goldman -------------------------- Name: Steven R. Goldman Title: Senior Vice President STARWOOD LODGING CORPORATION, a Maryland corporation By: /s/ Michael C. Mueller -------------------------- Name: Michael C.Mueller Title: Vice President "Escrow Agent" CHICAGO TITLE INSURANCE COMPANY, a Missouri corporation By: /s/ Maggie G. Watsu* -------------------------- Name: Maggie G. Watsu Title: Authorized Signatory * Subject to receiving mutual instructions in the event Paragraph 3.5 become operative. 55 EX-99.2 3 PURCHASE AND SALE AGREEMENT 1 Houston Execution PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS By And Between NEW REMINGTON PARTNERS, a Texas General Partnership, As Seller And STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust And STARWOOD LODGING CORPORATION, a Maryland Corporation, As Buyer. Dated As Of: December 30, 1997 Relating to the Houston Luxury Collection Hotel, Houston, Texas 2 TABLE OF CONTENTS SECTION 1 - DEFINITIONS......................................................1 1.1 Defined Terms....................................................1 1.2 Other Definitional Provisions...................................10 SECTION 2 - PURCHASE AND SALE OF PROPERTY...................................11 SECTION 3 - PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES....11 3.1 Purchase Price..................................................11 3.2 Payment.........................................................11 3.3 Investment of Escrowed Funds....................................11 3.4 Allocation of Purchase Price....................................12 3.5 Default by Buyer Prior to Closing; Liquidated Damages...........12 SECTION 4 - ESCROW; CLOSING; COSTS..........................................13 4.1 Escrow..........................................................13 4.2 Seller's Deliveries to Escrow Holder............................13 4.2.1.1 Deed...................................................13 4.2.1.2 Assignment and Assumption of Tenant Leases.............13 4.2.1.3 General Assignment.....................................14 4.2.1.4 Assignment and Assumption of Management Agreement......14 4.2.1.5 Bill of Sale...........................................14 4.2.1.6 Stock Agreement........................................14 4.2.1.7 Liquor Licenses Management Agreement...................14 4.2.1.8 [Intentionally Omitted]................................14 4.2.1.9 [Intentionally Omitted]................................14 4.2.1.10 [Intentionally Omitted]................................14 4.2.1.8 Houston Master Lease...................................14 4.2.1.12 Houston Right of First Offer Agreement.................14 4.2.1.13 Non-Foreign Person Certificate.........................15 4.2.1.14 Transfer Tax Forms.....................................15 4.2.1.15 Certified Rent Roll....................................15 4.2.1.16 Certified Operating Statement..........................15 4.2.1.17 Guest Ledger...........................................15 4.2.1.18 Closing Certificate....................................15 4.2.1.19 Schedule of Bookings...................................15 4.2.1.20 Title Requirements.....................................15 4.2.1.21 Payoff Letters.........................................15 4.2.1.22 Notices to Tenants.....................................16 4.2.1.23 Opinion of Seller's Counsel............................16 i 3 4.2.1.24 Other..................................................16 4.3 Buyer's Deliveries to Escrow Holder.............................16 4.3.1.1 The Cash Purchase Price................................16 4.3.1.2 Stock Certificates.....................................16 4.3.1.3 Assignment and Assumption of Management Agreement......16 4.3.1.4 Value Letter...........................................16 4.3.1.5 Opinion of Buyer's Counsel.............................17 4.3.1.6 Stock Agreement........................................17 4.3.1.7 [Intentionally Omitted]................................17 4.3.1.8 Assignment and Assumption of Liquor-Related Agreements.............................................17 4.3.1.9 [Intentionally Omitted]................................17 4.3.1.10 Houston Master Lease..................................17 4.3.1.11 Houston Right of First Offer...........................17 4.3.1.12 Closing Certificate....................................17 4.3.1.13 The Assignment and Assumption of Tenant Leases.........17 4.3.1.14 The General Assignment and Assumption Agreement........17 4.3.1.15 Transfer Tax Forms.....................................17 4.3.1.16 Other..................................................17 4.4 Seller's Deliveries to Buyer....................................17 4.4.1 Tenant Leases/Tenant Deposits..........................17 4.4.2 Service Contracts......................................18 4.4.3 Licenses and Permits...................................18 4.4.4 Records and Plans......................................18 4.5 Possession......................................................18 4.6 Evidence of Authorization.......................................18 4.7 Close of Escrow.................................................18 4.8 Costs of Escrow.................................................19 4.9 Other Costs.....................................................20 4.10 Maintenance of Confidentiality by Escrow Holder.................20 SECTION 5 - PRORATIONS AND ASSUMPTION OF OBLIGATIONS........................20 5.1 General.........................................................20 5.2 General and Specific Prorations.................................20 5.3 Deposits........................................................23 5.4 Tenant Leases...................................................23 5.5 Service Contracts and Other Intangible Property.................23 5.6 Tax Refunds and Proceedings.....................................23 5.7 Guest Baggage...................................................24 5.8 Safe Deposit Boxes..............................................24 5.9 Advance Bookings................................................24 5.10 Special Purchase Price Adjustment...............................24 SECTION 6 - REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY...........24 6.1 Of the Trust....................................................24 ii 4 6.1.1 Power and Authority....................................24 6.1.2 Authorization; Valid Obligation........................25 6.1.3 Capital Structure......................................25 6.1.4 SEC Documents and Other Reports........................25 6.1.5 Absence of Certain Changes or Events...................26 6.1.6 Actions and Proceedings................................26 6.1.7 REIT Status............................................27 6.1.8 Partnership Status.....................................27 6.1.9 Hart-Scott-Rodino Act..................................27 6.2 Of the Corporation..............................................27 6.2.1 Power and Authority....................................27 6.2.2 Authorization; Valid Obligation........................27 6.2.3 Capital Structure......................................27 6.2.4 SEC Documents and Other Reports........................28 6.2.5 Absence of Certain Changes or Events...................28 6.2.6 Actions and Proceedings................................28 6.2.8 Hart-Scott-Rodino......................................29 6.3 Of Seller.......................................................29 6.3.1 Regarding Seller's Authority...........................29 6.3.2 Tenant Leases..........................................30 6.3.3 Service Contracts......................................30 6.3.4 Claims.................................................30 6.3.5 Employees..............................................30 6.3.6 Compliance with Laws...................................30 6.3.7 Hazardous Materials....................................31 6.3.8 Records and Plans......................................31 6.3.9 Licenses and Permits...................................31 6.3.10 Management Agreements..................................31 6.3.11 Personal Property......................................31 6.3.12 Insurance..............................................31 6.3.13 Real Estate Taxes......................................31 6.3.14 Liquor Related Agreements..............................32 6.4 Buyer's Review of Records and Plans.............................32 6.4.1 Access to Records and Plans; Specific Disclosures......32 6.4.2 Limitation on Access to Records and Plans..............32 6.5 PURCHASE AS IS..................................................33 6.6 Limitation on Representations and Warranties of Seller..........35 6.7 Right to Supplement Disclosures.................................35 6.8 Basket..........................................................35 6.9 Survival........................................................36 SECTION 7 - TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING............36 7.1 Buyer's Review of Title.........................................36 7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens.........................................36 iii 5 7.1.2 [Intentionally Omitted].........................................37 7.2 Title Insurance Policy..........................................37 7.3 Title to Real Property..........................................37 SECTION 8 - INTERIM ACTIVITIES..............................................38 SECTION 9 - CONDITIONS PRECEDENT TO CLOSING.................................38 9.1 Conditions Precedent to Buyer's Obligations.....................38 9.1.1 Seller's Deliveries....................................38 9.1.2 Title Policy...........................................38 9.1.3 Performance Under Related Agreement....................38 9.1.4 [Intentionally Omitted]................................39 9.1.5 Seller Performance.....................................39 9.1.6 Representations and Warranties of Seller...............39 9.2 Conditions Precedent to Seller's Obligations....................39 9.2.1 Funds and Documents....................................39 9.2.2 Representations and Warranties of Buyer................39 9.2.3 No Material Changes....................................39 9.2.4 [Intentionally Omitted]................................39 9.2.5 Performance Under Related Agreement....................39 9.3 Failure of Condition............................................39 SECTION 10 - BROKER.........................................................40 SECTION 11 - REMEDIES FOR SELLER'S DEFAULT..................................40 11.1 Buyer's Remedies in General.....................................40 11.2 MATERIAL INDUCEMENT.............................................41 SECTION 12 - DAMAGE TO OR DESTRUCTION OF THE PROPERTY.......................41 12.1 Insured Casualty................................................41 12.2 Uninsured Casualty..............................................42 SECTION 13 - CONDEMNATION...................................................42 SECTION 14 -EMPLOYEES.......................................................43 14.1 Hiring of Hotel Employees; WARN Act Compliance..................43 14.2 Collective Bargaining Agreements................................44 14.3 Continuation of Benefits........................................44 14.5 Indemnification.................................................46 14.6 Survival........................................................46 SECTION 15 - COOPERATION....................................................46 SECTION 16 - NOTICES........................................................47 16.1 Addresses.......................................................47 16.2 Receipt of Notices..............................................48 iv 6 16.3 Refusal of Delivery.............................................49 16.4 Change of Address...............................................49 SECTION 17 - GENERAL PROVISIONS.............................................49 17.1 Amendment.......................................................49 17.2 Time of Essence.................................................49 17.3 Entire Agreement................................................49 17.4 No Waiver.......................................................49 17.5 Counterparts....................................................49 17.6 Costs and Attorneys' Fees.......................................50 17.7 Payments; Interests.............................................50 17.8 Transfer By Buyer...............................................50 17.9 Parties in Interest.............................................50 17.10 Applicable Law..................................................51 17.11 Incorporation of Recitals and Exhibits..........................51 17.12 Construction of Agreement.......................................51 17.13 Severability....................................................51 17.14 Announcements...................................................51 17.15 Submission of Agreement.........................................51 17.16 Further Assurances..............................................51 17.17 Cooperation.....................................................52 17.18 Moratorium on Re-Sale...........................................52 17.19 Confidentiality.................................................52 17.20 Interim Management Agreement....................................53 v 7 EXHIBITS - - -------- Exhibit A .....................................................Legal Description Exhibit B ................................................Memorandum of Contract Exhibit 4.2.1.1 ............................................................Deed Exhibit 4.2.1.2 ......................Assignment and Assumption of Tenant Leases Exhibit 4.2.1.3 .....................General Assignment and Assumption Agreement Exhibit 4.2.1.4 ...............Assignment and Assumption of Management Agreement Exhibit 4.2.1.5A .................Bill of Sale for Capitalized Tangible Property Exhibit 4.2.1.5B ....................Bill of Sale for Expensed Tangible Property Exhibit 4.2.1.6 .................................................Stock Agreement Exhibit 4.2.1.7 ..........Assignment and Assumption of Liquor-Related Agreements Exhibit 4.2.1.11 ...................................................Master Lease Exhibit 4.2.1.12 .................................Right of First Offer Agreement Exhibit 4.2.1.13 .................................Non-Foreign Person Certificate Exhibit 17.20 ......................................Interim Management Agreement SCHEDULES - - --------- Schedule 1.1.1 .......................................Approved Service Contracts Schedule 1.1.2 ............................................Employment Agreements Schedule 1.1.3 .................................................Equipment Leases Schedule 1.1.4 ................................................Excluded Property Schedule 1.1.5 ..........................................[Intentionally Omitted] Schedule 1.1.6 ..................................................Hotel Employees Schedule 1.1.7 ........................................Schedule of Tenant Leases Schedule 1.1.8 ................... Seller's Due Diligence and Seller's Knowledge Schedule 1.1.9 ......................................Specific Disclosure Matters Schedule 3.4 .......................................Allocation of Purchase Price Schedule 4.2.1.11 .......................................Houston Adjacent Assets Schedule 6.3.2 .............................Material Defaults Under Tenant Lease Schedule 6.3.3 ...............Material Defaults Under Approved Service Contracts Schedule 6.3.4 ..................................................Material Claims Schedule 6.3.5 ....................Material Defaults Under Employment Agreements Schedule 6.3.6 ..............................................Material Violations Schedule 6.3.7 ................................Material Environmental Conditions Schedule 6.3.9 .............................................Licenses and Permits Schedule 6.3.12 ..............................................Seller's Insurance Schedule 6.3.13 ............................................Pending Tax Protests Schedule 7.3 .............................................Permitted Encumbrances Schedule 14.2 ..................................Collective Bargaining Agreements vi 8 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this "Agreement") is entered into as of the 30th day of December, 1997, by and between NEW REMINGTON PARTNERS, a Texas general partnership ("Seller"), and STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust (the "Trust"), and STARWOOD LODGING CORPORATION, a Maryland corporation (the "Corporation"; the Trust and the Corporation being referred to herein collectively as, "Buyer"). A. Seller owns that certain parcel of land described in Exhibit A attached hereto and made a part hereof, which is improved with a hotel building and certain related improvements, all as more particularly set forth in this Agreement. B. Seller desires to sell, and Buyer desires to purchase, the above described land and hotel together with the related improvements upon the terms and subject to the conditions set forth in this Agreement. A G R E E M E N T NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby mutually acknowledged, Buyer and Seller agree as follows: SECTION 1 DEFINITIONS 1.1 Defined Terms "Accounts Receivable" shall mean, collectively, all Cash Equivalent Receivables, all Invoiced Receivables and all Other Accounts Receivable. "Affiliate" shall have the meaning set forth in Rule 12b-2 of the regulations promulgated under the Exchange Act. "Approved Service Contracts" shall mean the Service Contracts identified on Schedule 1.1.1 annexed hereto and made a part hereof and any other Service Contracts cancelable upon thirty (30) or fewer days notice without penalty, which Service Contracts Buyer shall assume as of the Closing pursuant to the General Assignment and Assumption Agreement. "Assignment and Assumption of Management Agreement" shall have the meaning set forth in Section 4.2.1.4. 9 "Assignment and Assumption of Tenant Leases" shall have the meaning set forth in Section 4.2.1.2. "Assignment and Assumption of Liquor-Related Agreements" shall have the meaning set forth in Section 4.2.1.7. "Bill of Sale" shall have the meaning set forth in Section 4.2.1.5. "Business Day" shall mean any day other than Saturday or Sunday on which the New York Stock Exchange is open for business. "Booking" shall mean a contract or reservation for the use of guest rooms, banquet facilities, meeting rooms, and/or conference facilities at the Hotel. "Buyer's Counsel" shall mean the law firm of Greenberg Traurig Hoffman Lipoff Rosen & Quentel acting through Andrew E. Zobler, Esq. "Buyer Default" shall have the meaning set forth in Section 3.5.1. "Cash Equivalent Receivables" shall mean all Guest Ledger Receivables which are in the form of drafts or checks written on any bank or other financial institution, certified checks, money orders, amounts owed to Seller from credit card, debit card, travel and entertainment card or traveler's check companies, and are in such other forms which are considered to be cash equivalents under generally acceptable accounting principles, whether or not such Guest Ledger Receivables have been presented or billed to any such bank, financial institution or other company as of the Closing Date. "Cash Purchase Price" shall mean (a) Twenty-One Million Dollars ($21,000,000.00) plus (b) the Overage Cash Payment, if any, as adjusted pursuant to Section 3.2.2. "Closing" or "Close of Escrow" shall have the meaning set forth in Section 4.7.2. "Closing Agent" shall have the meaning set forth in Section 4.8.10. "Closing Date" shall mean the day on which the Closing occurs hereunder. "Closing Payment" shall have the meaning set forth in Section 3.2.2. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. "Collective Bargaining Agreements" shall have the meaning set forth in Section 14.2. "Conveyance Documents" shall mean the Deed, the Assignment and Assumption of Management Agreement, the Assignment and Assumption of Tenant Leases, the Bill of Sale, 2 10 the General Assignment and Assumption Agreement and the Assignment and Assumption of Liquor-Related Agreements. "Deed" shall have the meaning set forth in Section 4.2.1.1. "Deposit" shall mean an amount equal to $2,857,143.00, held in accordance with the provisions of Section 3 hereof together with all interest accrued thereon. "Employer Corporation" shall mean Luxury Holdings, Inc. (formerly known as TQM Inc.). "Employment Agreements" shall mean the Collective Bargaining Agreements and Employee Benefit Plans (as defined in Section 3(3) of ERISA), affecting Hotel Employees, including pension, profit sharing, employee benefit and similar plans, if any, and agreements with regard to any Hotel Employee each of which are identified on or expressly described in the materials identified on Schedule 1.1.2 annexed hereto and made a part hereof. "Environmental Condition" shall mean any condition with respect to soil, surface waters, groundwater, land, stream sediments, surface or subsurface strata, ambient air and any environmental medium comprising or surrounding the Real Property, which results in any damage, loss, cost, expense, claim, demand, order or liability to or against Seller or Buyer by any third party (including, without limitation, any government entity) as a result of a violation of any applicable Environmental Laws. "Environmental Laws" shall mean all presently applicable statutes, regulations, rules, ordinances, codes, licenses, permits and orders of any and all governmental agencies, departments, commissions, boards, bureaus or instrumentalities of the United States, states and political subdivisions thereof, and all applicable judicial and administrative and regulatory decrees, judgments and orders relating to the protection of the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq.; and analogous state laws and regulations. "Equipment Leases" shall mean all leases of equipment, vehicles, furniture or other personal property leased by, or on behalf of, Seller and located at, or used in the operation of the Real Property, together with any and all amendments thereto, which are identified on Schedule 1.1.3 annexed hereto. "Equity Purchase Price" shall mean the number of Paired Shares with a value as determined pursuant to the Stock Agreement equal to $26,665,500.00 to be delivered in accordance with the applicable provisions of the Stock Agreement. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. 3 11 "Escrow" shall mean an escrow opened with the Escrow Holder for the purchase and sale of the Property in accordance with the provisions of this Agreement. "Escrow Holder" shall mean the Title Company unless otherwise agreed in writing by Buyer and Seller. "Escrow Instructions" shall have the meaning set forth in Section 4.1. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Excluded Property" shall mean all Seller's right, title and interest in and to: (a) those claims of Seller attributable to the period prior to the Closing Date and described on Schedule 1.1.4 annexed hereto and made a part hereof, or which Seller is entitled to assert under the express provisions of Section 5; (b) all insurance proceeds under Seller's Insurance and workers' compensation policies, including return premiums and dividends thereon and all claims thereunder in each case to the extent attributable to acts or occurrences prior to the Closing Date; (c) all accounts owned or maintained by Seller, or Manager on Seller's behalf, in connection with the Hotel, including all operating and reserve accounts; and (d) any books, records, files or papers specifically described in Section 6.3.2 as excluded from the Property Information. "Excluded Parties" shall have the meaning set forth in Section 17.18. "Execution Date" shall mean the date hereof. "General Assignment and Assumption Agreement" shall have the meaning set forth in Section 4.2.1.3. "Guest Ledger Receivables" shall mean amounts, including, without limitation, room charges, accrued to the accounts of guests occupying rooms at the Hotel or group, conference or banquet customers of Seller at the Hotel. "Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder, as the same has been amended from time to time. "Hotel" shall mean the hotel located on the Land and commonly known as Houston Luxury Collection Hotel. "Hotel Employees" shall mean all full-time, part-time or temporary employees of Seller and/or the Employer Corporation (but not employees of Manager or any of its affiliates) who are employed by Seller and/or the Employer Corporation exclusively at or in connection with the Hotel as of the Closing Date and who are listed on Schedule 1.1.6 annexed hereto and made a part hereof. "Houston Adjacent Assets" shall have the meaning set forth in Section 4.2.1.11. 4 12 "Houston Right of First Offer Agreement" shall have the meaning set forth in Section 4.2.1.12. "Improvements" shall mean Seller's right, title and interest in and to the hotel building and other improvements now or hereafter located on the Land. "Insured Casualty Notice" shall have the meaning set forth in Section 12.1.1. "Intangible Property" shall mean all of Seller's right, title and interest in and to the following, in each case excluding any Excluded Property: (i) Licenses and Permits; (ii) trademark rights, and other intangible property, rights, titles, interests, privileges and appurtenances related to or used in connection with the Hotel or its operations; (iii) warranties and guaranties of architects, engineers, contractors, subcontractors, suppliers or materialmen involved in the repair, construction, maintenance, design, reconstruction or operation of the Hotel, or any equipment or systems constituting a part of the Hotel; (iv) Approved Service Contracts; (v) Equipment Leases; (vi) Bookings; and (vii) computer programs, software and documentation thereof (subject to the limitations of any applicable license agreements pertaining thereto), and including all electronic data processing systems, program specifications, source codes, logs, input data and report layouts and forms, record file layouts, diagrams, functional specifications and variable descriptions, flow charts and other related materials used in connection therewith; and (viii) any goodwill associated with the operation of the Hotel. "Interim Management Agreement" shall have the meaning set forth in Section 17.20 hereto. "Invoiced Receivables" shall mean all Guest Ledger Receivables other than Cash Equivalent Receivables whether or not such Guest Ledger Receivables have been invoiced by Seller as of the Closing Date. "Land" shall mean Seller's right, title and interest in and to the land described on Exhibit A annexed hereto and made a part hereof. "LIBOR rate" shall mean the average of interbank offered rates for three-month dollar deposits in the London market based on quotations at five (5) major banks, as published from time to time in The Wall Street Journal. If The Wall Street Journal ceases to be published, then Buyer shall propose a substitute method of determining the interest rate generally known as the three-month LIBOR rate, which method, absent manifest error, shall be binding on Buyer and Seller. "Licenses and Permits" shall mean all licenses, permits, registrations, certificates, authorizations and governmental approvals other than the Liquor License obtained in connection with the design, construction, rehabilitation, use and/or operation of the Hotel. "Liquor Agreements" shall have the meaning set forth in Section 6.3.14. "Liquor Lease" shall have the meaning set forth in Section 6.3.17. 5 13 "Liquor License" shall mean all licenses, permits, registrations, certificates, authorizations and governmental approvals with respect to service of alcoholic beverages at the Hotel. "Lock Price" shall have the meaning set forth in the Stock Agreement. "Losses" shall mean any and all losses, liabilities, obligations, damages, claim or expense, including without limitation, reasonable attorneys' and accountants' fees and disbursements related thereto. "Manager" means Sheraton Operating Corporation, a wholly-owned subsidiary of ITT Sheraton Corporation. "Management Agreement" shall mean that certain Management Agreement entered into as of August 13, 1997 between Seller and Manager. "Market Price" shall have the meaning set forth in the Stock Agreement. "Master Lease" shall have the meaning set forth in Section 4.2.1.11. "Material" shall mean $5,000 for any single occurrence and $15,000 in the aggregate for any group of occurrences whether or not related. "Material Casualty" shall mean a casualty or casualties that, in the aggregate: (i) causes in excess of $10,000,000.00 worth of damage to the Hotel; or (ii) will take twelve (12) months or longer from the date of the casualty to fully remediate. "Material Taking" shall mean an exercise by an applicable governmental authority of the power of condemnation or eminent domain that results in: (a) the taking of more than twenty percent (20%) of the Real Property; (b) a material reduction or restriction in access to the Property; or (c) the inability to operate the Hotel in substantially the same manner (without material additional expense) as it was operated prior to such taking. "Memorandum of Contract" shall mean a memorandum of this Agreement in the form attached as Exhibit B hereto. "Monetary Lien" shall mean any monetary lien affecting the Real Property of an ascertainable amount, other than any lien for taxes or assessments which are not yet due and payable. "Non-Foreign Person Certificate" shall have the meaning set forth in Section 4.2.1.13. "Other Accounts Receivable" shall mean any and all rents, additional rent, deposits, and other sums and charges owing to Seller that are in any way attributable to the operation of the business at the Hotel, including, without limitation, all rents and/or license fees 6 14 due from Tenants under Tenant Leases, and including any such amounts which are past due, but excluding Guest Ledger Receivables. "Overage Cash Payment" shall mean the portion of the Equity Purchase Price which is payable in cash at Closing as provided in Section 3.2.2.1, if any. "Ownership Limitation" shall mean the limitations contained in the declaration of trust for the Trust and the Corporation's articles of incorporation prohibiting actual or constructive ownership by any one person or group of related persons of more than 8% of the issued and outstanding Paired Shares taking into account the attribution rules of Section 544(a) of the Code as modified by Section 856(h) of the Code or Section 318(a) of the Code as modified by Section 856(d)(5) of the Code. "Paired Shares" shall mean one share of beneficial interest, par value $.01 per share of the Trust, and one share of common stock, par value $.01 per share, of the Corporation that are subject to the Pairing Agreement, which shares shall be transferable as provided in the Stock Agreement and the Pairing Agreement. "Pairing Agreement" shall mean the Pairing Agreement dated as of June 25, 1980, as amended, between the Trust and the Corporation providing, in relevant part, for the pairing of all outstanding beneficial interests of the Trust and shares of the Corporation. "Permitted Encumbrances" shall have the meaning set forth in Section 7.3. "Person" shall mean any natural person, partnership, corporation, association, limited liability company, trust or any other legal entity. "Personal Property" shall mean collectively the Tangible Personal Property and the Intangible Property. "Preliminary Title Report" shall have the meaning set forth in Section 7.1. "Property" shall mean collectively the Real Property, the Personal Property, the Tenant Leases, and the Accounts Receivable, but shall exclude the Excluded Property. "Property Information" shall have the meaning set forth in Section 6.4.2. "Proration Time" shall mean 12:01 a.m. Mountain Time on the Closing Date. "Purchase Price" shall mean the sum of the Cash Purchase Price and the Equity Purchase Price. "Real Property" shall mean the Land and the Improvements, together with Seller's right, title and interest in and to all rights of way, easements, water or littoral rights, rights to any minerals, oil, gas and other hydrocarbon substances, or any portion thereof, relating to the Land, and Seller's right, title and interest in and to all streets, alleys, strips and gores abutting the Land, if any. 7 15 "Records and Plans" shall mean, all financial records showing the income and expenses of the Hotel for the prior three (3) calendar years and for the current year to date, certificates of occupancy, records of the Hotel's operations (including utility bills), building plans, specifications and drawings, lists of Personal Property, surveys, tax bills for the Real Property for the last three (3) years and for the current year to date, copies of the Service Contracts, Licenses and Permits and other documents related to the use, maintenance, repair, management, construction and/or operation of the Hotel, in each case, to the extent located on-site at the Hotel, or to Seller's Knowledge, otherwise under the control of Seller. "Related Agreement" shall have the meaning set forth in Section 9.1.3. "Schedule of Advance Bookings" means the Schedule of Advance Bookings delivered pursuant to Section 4.2.1.19. "Schedule of Tenant Leases" means the Schedule of Tenant Leases set forth in Schedule 1.1.7 annexed hereto and made a part hereof. "Scheduled Closing Date" shall mean January 15, 1998, as such date may be extended in accordance with the provisions of Section 7.1 time being of the essence. "SEC" shall mean the United States Securities and Exchange Commission. "SEC Documents" shall have the meaning set forth in Section 6.1.4. "Securities Act" shall mean the Securities Act of 1933, as amended. "Seller Default" shall have the meaning set forth in Section 11.1. "Seller's Closing Certificate" shall have the meaning set forth in Section 4.2.1.18. "Seller's Counsel" shall mean Morrison & Foerster LLP acting through Thomas R. Fileti, Esq. "Seller's Due Diligence" shall mean the information gathering and review process described on Schedule 1.1.8. "Seller's Insurance" shall have the meaning set forth in Section 6.3.12. "Seller's Knowledge" shall mean with respect to any representation or warranty so qualified, the knowledge of the person(s) identified on Schedule 1.1.8 annexed hereto and made a part hereof, on the date on or as of which such representation or warranty is made, following the completion by such person(s) of Seller's Due Diligence, but without any other duty to investigate or inquire and without attribution to any such identified person(s) of facts and matters otherwise within the personal knowledge of any other officers, employees, or agents of Seller or any third parties (including, but not limited to, the Manager or any previous manager of the Hotel), but not within the actual current knowledge of such named person(s). It is understood 8 16 that none of the individuals identified on Schedule 1.1.8 shall have any personal liability for any of Seller's representations, warranties and other obligations under this Agreement. "Service Contracts" shall mean any and all service contracts, landscaping contracts, maintenance agreements, open purchase orders and other contracts for the provision of services, materials or supplies to or for the benefit of the Property, except for the Management Agreement, together with any and all amendments thereto. "Specific Disclosure Matters" shall mean certain disclosures and information provided or disclosed by Seller to Buyer described on Schedule 1.1.9 annexed hereto and made a part hereof. "Starwood Disclosure" shall mean collectively, the Form S-3 filed by the Corporation and the Trust with the SEC on November 12, 1997, and the Form S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as the same may be amended by any filing with the SEC made by the Trust or the Corporation, as amended to date and from time to time thereafter. "Starwood Operating Partnership" shall mean SLC Operating Limited Partnership, a Delaware limited partnership. "Starwood Realty Partnership" shall mean SLT Realty Limited Partnership, a Delaware limited partnership. "State" shall mean the state in which the Hotel is located. "Stock Agreement" shall have the meaning set forth in Section 4.2.1.6. "Survey" shall mean an as-built ALTA survey of the Real Property certified to the Title Company meeting all State land survey requirements. "Tangible Personal Property" shall mean, in each case to the extent owned by Seller and excluding any and all of the Excluded Property: (i) all Records and Plans; (ii) all "Inventories", as such term is defined in the Uniform System of Accounts; (iii) all depreciable personal property; and (iv) all other tools, vehicles, supplies, artwork, furniture, furnishings, machinery, equipment, licensed software and personal computer based security systems, if any, specialized hotel equipment and other tangible personal property, used in connection with the ownership, operation or maintenance of the Property, including, without limitation, all china, glassware, silverware, linens, towels, curtains, uniforms, engineering, maintenance, and housekeeping supplies, draperies, materials and carpeting, used or intended for use, but not for sale, in connection with the operation of the Hotel, all equipment used in the operation of the kitchen, dining rooms, lounges, bars, laundry, dry cleaners, lobby, reservation desk and all merchandise, food and beverages held for sale in connection with the operation of the Hotel, which are on hand on the Closing Date; provided, however, that to the extent that any applicable law prohibits the transfer of alcoholic beverages from Seller to Buyer, such beverages shall not be considered a part of the Tangible Personal Property. 9 17 "Tenant" shall mean a tenant, licensee or concessionaire occupying space at any portion of the Property pursuant to a Tenant Lease. "Tenant Lease" shall mean a lease, concession agreement or license agreement entered into by or on behalf of Seller with a third party for the use of any part of the Real Property, including those leases, concession agreements and license agreements shown on the Schedule of Tenant Leases, together with any amendments thereto but excluding Bookings. "Tenant Security Deposits" shall mean all security deposits or other security of Tenants under the Tenant Leases, plus accrued interest, if any, payable thereon. "Termination Charges" shall have the meaning set forth in Section 14.1. "Termination Notice" shall have the meaning set forth in Section 3.5.1. "Threshold Amount" shall mean One Million Dollars ($1,000,000). "Title Company" shall mean Chicago Title Insurance Company. "Title Policy" shall have the meaning set forth in Section 7.2. "Transfer Restriction Period" shall have the meaning set forth in Section 17.18. "Uninsured Casualty Notice" shall have the meaning set forth in Section 12.2.1. "Uninsured Estimate to Repair" shall have the meaning set forth in Section 12.2.1. "Uniform System of Accounts" shall mean the Uniform System of Accounts for Hotels, prepared by The Hotel Association of New York City, Inc., in effect as of the date hereof. "Utility Deposits" shall mean Seller's right, title and interest in and to all deposits delivered by Seller to utilities, governmental agencies, suppliers or others pursuant to an Approved Service Contract or otherwise in connection with the Real Property. "Value Letter" shall have the meaning set forth in Section 4.3.1.4. "WARN Act" shall mean the Workers Adjustment and Retraining Notification Act and the Regulations promulgated thereunder, as the same has been amended. 1.2 Other Definitional Provisions. The terms "hereof," "hereto," "hereunder" and similar terms when used in this Agreement shall refer to this Agreement generally, rather than to the section in which such term is used, unless otherwise specifically provided. Unless the context otherwise requires, any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. 10 18 SECTION 2 PURCHASE AND SALE OF PROPERTY On the terms and subject to the conditions of this Agreement, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller all as hereinafter provided. Notwithstanding any other provision of this Agreement, there shall be excluded from the Property being conveyed hereunder the Excluded Property. SECTION 3 PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES 3.1 Purchase Price. The purchase price for the Property shall be the Purchase Price. 3.2 Payment. The Purchase Price shall be paid as follows: 3.2.1 Upon the execution hereof, Buyer shall deliver to Escrow Holder, in cash or other immediately available funds, the Deposit, to be held by Escrow Holder strictly in accordance with the provisions of this Agreement. If the Close of Escrow shall occur, Seller shall be entitled to receive the Deposit as a credit against the Purchase Price. 3.2.2 At least one (1) day prior to the Scheduled Closing Date (unless extended pursuant to Section 7.1), Buyer shall deliver to Escrow Holder an amount (the "Closing Payment") payable in the form specified in Sections 3.2.2.1 and 3.2.2.2 below, equal to the Purchase Price less the amount of the Deposit. The Closing Payment shall be paid as follows: 3.2.2.1 The Equity Purchase Price shall be delivered in Paired Shares without adjustment for the pro-rations hereunder, which shares shall be delivered in accordance with and subject to and transferable in accordance with the provisions of the Stock Agreement and the Pairing Agreement. If any portion of the Equity Purchase Price cannot be paid in Paired Shares on account of the Ownership Limitation, a cash payment in an amount equal to the product of (a) the number of Paired Shares which are not delivered hereunder or under the Stock Agreement because of the Ownership Limitation and (b) the Lock Price (the "Overage Cash Payment") shall be paid in cash or other immediately available funds. 3.2.2.2 The balance of the Closing Payment shall be paid in cash or other immediately available funds adjusted for the pro-rations provided for expressly in this Agreement. 3.3 Investment of Escrowed Funds. Escrow Holder shall invest and reinvest any funds deposited by Buyer in the Escrow only in bonds, notes, Treasury bills or other securities having maturities of thirty (30) days or less and constituting direct obligations of, or fully guaranteed by, the United States of America (and provided, further, that such direct obligations 11 19 or guarantees, as the case may be, are entitled to the full faith and credit of the United States of America) or such other investments as Buyer may direct and Seller may approve, until Escrow Holder is required to deliver or use such funds or any interest earned thereon in accordance with the provisions of this Agreement. All interest accruing on the Deposit shall be paid to the party ultimately entitled to the Deposit. All risk of loss on funds held in Escrow shall be borne by Buyer or Escrow Holder. 3.4 Allocation of Purchase Price. The Purchase Price shall be allocated among the assets and property that comprise the Property as proposed by Seller prior to Closing subject to the reasonable approval of Buyer, and such allocation shall be used by Seller and Buyer in connection with the preparation of their respective income tax, sales tax, transfer tax, and any other applicable tax returns. Seller and Buyer shall not, nor shall they permit their respective Affiliates to, take a federal or state income tax position with any taxing or other public authorities in any jurisdiction which is materially inconsistent with the allocation so agreed upon by the parties. 3.5 Default by Buyer Prior to Closing; Liquidated Damages. 3.5.1 EXCEPT AS PROVIDED TO THE CONTRARY IN SECTION 7.1.1., IF BUYER BREACHES ITS OBLIGATION TO PURCHASE THE PROPERTY UNDER THIS AGREEMENT AND FAILS TO CURE SUCH BREACH ON OR BEFORE THE SCHEDULED CLOSING DATE (A "BUYER DEFAULT"), THEN UPON WRITTEN NOTICE OF TERMINATION (A "TERMINATION NOTICE") FROM SELLER TO BUYER AND ESCROW HOLDER, THE ESCROW AND THIS AGREEMENT SHALL TERMINATE AND ESCROW HOLDER SHALL DISBURSE FROM THE ESCROW THE DEPOSIT TO SELLER AS LIQUIDATED DAMAGES, WHICH SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR THE BUYER DEFAULT, AND THEREAFTER NEITHER PURCHASER NOR SELLER SHALL HAVE ANY FURTHER LIABILITY HEREUNDER, EXCEPT THAT BUYER SHALL REMAIN OBLIGATED FOR PERFORMANCE OF ITS OBLIGATIONS UNDER SECTIONS 8, 10, 17.14, 17.19 AND ANY OTHER PROVISION HEREOF WHICH BY ITS EXPRESS TERMS SURVIVES THE TERMINATION OF THIS AGREEMENT. NOTHING CONTAINED HEREIN SHALL LIMIT SELLER'S RIGHT TO OBTAIN SPECIFIC PERFORMANCE OF BUYER'S OBLIGATION TO CLOSE PURSUANT TO SECTION 7.1.1. 3.5.2 THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS SECTION 3.5.2 THAT IF A BUYER DEFAULT OCCURS ON OR PRIOR TO THE SCHEDULED CLOSING DATE AND IF, AS A RESULT OF SUCH BUYER DEFAULT, CLOSE OF ESCROW FAILS TO OCCUR, SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN; AND THE DEPOSIT BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR AND THAT SELLER'S RETENTION OF THE DEPOSIT IS FAIR AND 12 20 REASONABLE COMPENSATION TO SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR. INITIALS: -------------------------- ------------------------- Seller Buyer SECTION 4 ESCROW; CLOSING; COSTS 4.1 Escrow. The purchase and sale of the Property shall be consummated through the Escrow. Immediately upon the execution of this Agreement, the parties shall deposit a copy of this Agreement with Escrow Holder. This Agreement, together with any general provisions agreed to in writing by Buyer and Seller for the benefit of Escrow Holder, shall constitute the escrow instructions for the transfer of the Property (the "Escrow Instructions"). In the event of any conflict between this Agreement and such general provisions, this Agreement shall control unless otherwise expressly agreed in writing by Buyer, Seller and Escrow Holder. If any requirements relating to the duties or obligations of Escrow Holder are not acceptable to Escrow Holder, or if Escrow Holder requires additional instructions, the parties shall make such deletions, substitutions and additions to the Escrow Instructions as Buyer's Counsel and Seller's Counsel shall mutually approve and which do not substantially alter this Agreement or its intent. Written instructions from Seller's Counsel, in the case of Seller, or from Buyer's Counsel, in the case of Buyer, shall be accepted by Escrow Holder and shall be binding upon the party whose counsel gave such instructions to Escrow Holder. 4.2 Seller's Deliveries to Escrow Holder. 4.2.1 Prior to the Scheduled Closing Date (subject to extension pursuant to Section 7.1), Seller shall deliver to Escrow Holder the following documents duly executed and, where applicable, acknowledged by Seller, each of which shall be undated and the delivery of each of which shall be a condition precedent to the obligation of Buyer to close hereunder. 4.2.1.1 Deed. A deed with respect to the Real Property in the form of Exhibit 4.2.1.1 annexed hereto and made a part hereof, sufficient to transfer all of Seller's right, title and interest in and to the Real Property, subject only to matters of record as of the Closing Date, from Seller to Buyer (the "Deed"); 4.2.1.2 Assignment and Assumption of Tenant Leases. An Assignment and Assumption of Tenant Leases in the form of Exhibit 4.2.1.2 annexed hereto and made a part hereof pursuant to which Seller shall assign the Tenant Leases to Buyer and Buyer shall assume all of Seller's obligations thereunder (the "Assignment and Assumption of Tenant Leases"); 13 21 4.2.1.3 General Assignment. A General Assignment and Assumption Agreement in the form of Exhibit 4.2.1.3 annexed hereto and made a part thereof pursuant to which Seller shall assign to Buyer all of Seller's right, title and interest in and to all of the Intangible Property and Buyer shall assume all obligations thereunder (the "General Assignment and Assumption Agreement"); 4.2.1.4 Assignment and Assumption of Management Agreement. An Assignment and Assumption of Management Agreement in the form of Exhibit 4.2.1.4 annexed hereto and made a part hereof pursuant to which Seller shall assign to Buyer the Management Agreement and Buyer shall assume the obligations of Seller thereunder, provided, however, the obligation to deliver the Assignment and Assumption of Management Agreement shall be irrevocably waived, if prior to the Close of Escrow, the Management Agreement shall have been terminated and the Interim Management Agreement shall have become effective in accordance with Section 17.20. 4.2.1.5 Bill of Sale. One or more Bills of Sale in the form of Exhibit 4.2.1.5A and 4.2.1.5B annexed hereto and made a part hereof conveying to Buyer or designees of Buyer all of Seller's right, title and interest in and to the Tangible Personal Property (the "Bill of Sale"); 4.2.1.6 Stock Agreement. The Stock Agreement in the form of Exhibit 4.2.1.6 annexed hereto and made a part hereof (the "Stock Agreement"); 4.2.1.7 Assignment and Assumption of Liquor-Related Agreements. The Assignment and Assumption of Liquor-Related Agreements in the form of Exhibit 4.2.1.7 annexed hereto and made a part hereof (the "Assignment and Assumption of Liquor-Related Agreements"); 4.2.1.8 [Intentionally Omitted] 4.2.1.9 [Intentionally Omitted] 4.2.1.10 [Intentionally Omitted] 4.2.1.11 Houston Master Lease. The Master Lease in the form of Exhibit 4.2.1.11 annexed hereto and made a part hereof pursuant to which Seller shall lease to Buyer on a triple net basis the land (the "Houston Adjacent Assets") more particularly described on Schedule 4.2.1.11 (the "Master Lease"); 4.2.1.12 Houston Right of First Offer Agreement. A Right of First Offer Agreement in the form of Exhibit 4.2.1.12 annexed hereto pursuant to which Seller shall grant Buyer a right of first offer with respect to the Houston Adjacent Assets (the "Houston Right of First Offer Agreement"); 14 22 4.2.1.13 Non-Foreign Person Certificate. A Non-Foreign Person Certificate in the form of Exhibit 4.2.1.13 annexed hereto and made a part hereof (the "Non-Foreign Person Certificate"); 4.2.1.14 Transfer Tax Forms. Any statements, such as a transfer or conveyance tax forms or returns required by applicable state or local law to be executed by Seller in order to effect the Closing; 4.2.1.15 Certified Rent Roll. A copy of the rent roll for the Property dated as of the Closing Date and certified by Seller to be (a) a true, correct and complete copy of the rent roll for the Property provided to Seller by the Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.16 Certified Operating Statement. An operating statement for the Property dated as of a date no more than thirty (30) days prior to the Closing Date and certified by Seller to be (a) a true, correct and complete copy of the operating statement for the Property provided to Seller by Manager for the period of Manager's employment at the Property; and (b) to Seller's Knowledge, to be, true, correct and complete; 4.2.1.17 Guest Ledger. A copy of the guest ledger dated as of the Proration Time showing all Guest Ledger Receivables and certified by Seller (a) to be a true, correct and complete copy of the guest ledger provided to Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.18 Closing Certificate. A certification by Seller to Seller's Knowledge that the representations and warranties set forth in Section 6.3 are true, correct and complete as of the Closing Date, except to the extent that any such representation or warranty is expressly made only as of the Execution Date subject to Seller's right to make revisions pursuant to Section 6.7 to such representations and warranties ("Seller's Closing Certificate"); 4.2.1.19 Schedule of Bookings. A schedule of all Bookings relating to periods after the Proration Time, certified by Seller (a) to be a true, correct and complete copy of the schedule of Bookings provided to Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.20 Title Requirements. Any and all certificates, affidavits and other instruments and documents which the Title Company shall reasonably require to permit it to issue the Title Policy in the condition required herein; provided, however, that, (a) Seller is given written notice by Title Company of the requirement of any such certificates, affidavits or other instruments and documents within a reasonably sufficient time in advance of the Scheduled Closing Date and (b) such incidental documents do not create any liability to Seller that is inconsistent with the liability retained by Seller under the terms of this Agreement; 4.2.1.21 Payoff Letters. A pay-off letter from the holder of any mortgage or deed of trust presently encumbering the Real Property indicating all sums required 15 23 to satisfy the debt secured by and permit the discharge of record the lien of such mortgage or deed of trust; 4.2.1.22 Notices to Tenants. Notices to Tenants of the assignment to Buyer of the Tenant Leases in form and substance satisfactory to Seller and Buyer; 4.2.1.23 Opinion of Seller's Counsel. An opinion of Seller's Counsel in a form to be agreed upon by the parties; and 4.2.1.24 Other. Any other incidental documents, not otherwise expressly provided for herein, reasonably required by Escrow Holder to consummate the purchase and sale of the Property; provided, however, that (a) Seller is given written notice by Escrow Holder of the requirement of any such incidental documents within a reasonably sufficient time in advance of the Scheduled Closing Date (subject to extension in accordance with the provisions of Section 7.1); and (b) such incidental documents do not create any liability to Seller that is inconsistent with the liability retained by Seller under the terms of the this Agreement. 4.3 Buyer's Deliveries to Escrow Holder. 4.3.1 Prior to the Scheduled Closing Date (subject to extension in accordance with the provisions of Section 7.1), and subject further to the provisions of Section 4.3.1.4 in the case of the Value Letter, Buyer shall deliver to Escrow Holder the following items and documents, which documents shall be duly executed and, where applicable, acknowledged by Buyer or its designee, as applicable, and undated, and the delivery of each of which shall be a condition precedent to the obligation of Seller to close hereunder: 4.3.1.1 The Cash Purchase Price. The Cash Purchase Price; 4.3.1.2 Stock Certificates. Paired Shares in the amount required to be delivered at the Closing in accordance with the provisions of this Agreement and in accordance with and subject to the provisions of the Stock Agreement; 4.3.1.3 Assignment and Assumption of Management Agreement. A counterpart of the Assignment and Assumption of Management Agreement, provided, however, the obligation to deliver the Assignment and Assumption of Management Agreement shall be irrevocably waived, if prior to the Close of Escrow, the Management Agreement shall have been terminated and the Interim Management Agreement shall have become effective in accordance with Section 17.20.; 4.3.1.4 Value Letter. A letter (the "Value Letter") to be obtained by Buyer at Buyer's expense with respect to the reasonableness of the allocation of the purchase price among the transactions being entered into as of the date hereof between Buyer and Seller and/or Seller's Affiliates issued by Bear Stearns; 16 24 4.3.1.5 Opinion of Buyer's Counsel. An opinion of Buyer's counsel in a form to be agreed upon by the parties; 4.3.1.6 Stock Agreement. A counterpart of the Stock Agreement; 4.3.1.7 [Intentionally Omitted] 4.3.1.8 Assignment and Assumption of Liquor-Related Agreements. A counterpart of the Assignment and Assumption of Liquor-Related Agreements; 4.3.1.9 [Intentionally Omitted] 4.3.1.10 Houston Master Lease. A counterpart of the Master Lease; 4.3.1.11 Houston Right of First Offer. A counterpart of the Houston Right of First Offer Agreement; 4.3.1.12 Closing Certificate. A certification by Buyer that the representations and warranties set forth in Section 6.1 and Section 6.2 are true, correct and complete as of the Closing Date; 4.3.1.13 The Assignment and Assumption of Tenant Leases. A counterpart of the Assignment and Assumption of Tenant Leases; 4.3.1.14 The General Assignment and Assumption Agreement. A counterpart of the General Assignment and Assumption Agreement; 4.3.1.15 Transfer Tax Forms. Any statements, such as a transfer or conveyance tax forms or returns required by applicable state or local law to be executed by Buyer in order to effect the closing; and 4.3.1.16 Other. Any other incidental documents, not otherwise expressly provided for herein, required by Escrow Holder to consummate the purchase and sale of the Property; provided, however, that (a) Buyer is given written notice by Escrow Holder of the requirement of such incidental documents within a reasonably sufficient time in advance of the Scheduled Closing Date; and (b) Buyer shall not be required to incur any liability, in connection with the delivery of such incidental documents inconsistent with the provisions of this Agreement. 4.4 Seller's Deliveries to Buyer. At or prior to the Close of Escrow, Seller shall deliver to Buyer or cause to be available to Buyer on-site at the Hotel, the following documents, to the extent the same have not already been delivered and to the extent in the possession or control of Seller: 4.4.1 Tenant Leases/Tenant Deposits. The original Tenant Leases (or if not available, the best available copies), and the originals of Tenant Security Deposits which are evidenced by letters of credit or escrow agreements, if any, and if necessary to enable Buyer to 17 25 realize or draw upon same, consents of the applicable Tenants and/or financial institutions or replacement letters of credit or escrow agreements in favor of Buyer; 4.4.2 Service Contracts. The originals, or, if not available, the best available copies, of the Approved Service Contracts; 4.4.3 Licenses and Permits. The originals, or, if not available, the best available copies of the Licenses and Permits; and 4.4.4 Records and Plans. The originals, or, if not available, the best available copies of the Records and Plans. 4.5 Possession. Seller shall deliver the keys and possession of the Property to Buyer at the Close of Escrow free and clear of all leases, tenancies and occupancies, except for the Management Agreement, the Bookings, the rights of guests in guest rooms, banquet facilities, conference rooms and meeting rooms, the rights of Tenants under the Tenant Leases (including their assignees, subtenants or licensees), and the other Permitted Encumbrances. 4.6 Evidence of Authorization. At the Close of Escrow, each party shall deliver to the other party evidence in form and content reasonably satisfactory to the other party and the Title Company that (a) the party is duly organized and validly existing under the laws of the state of its organization and has the power and authority to enter into this Agreement, (b) this Agreement and all documents delivered pursuant hereto have been duly executed and delivered by the party, and (c) the performance by the party of its obligations under this Agreement have been duly authorized by all necessary corporate, partnership or other action. 4.7 Close of Escrow. 4.7.1 The Escrow shall close on or before the Scheduled Closing Date. 4.7.2 Provided that Escrow Holder has not received from either party written notice of the failure of any condition precedent specified in Section 9 to the obligations of such party (or any previous such notice has been withdrawn), then when the parties have each deposited into the Escrow the documents and funds required by this Agreement and the Title Company is unconditionally prepared to issue the Title Policy at the Close of Escrow, Escrow Holder shall perform the following actions (collectively, "Close of Escrow" or "Closing"): 4.7.2.1 Prepare a closing statement for the transaction for approval by Seller and Buyer prior to the Close of Escrow; 4.7.2.2 Insert the Closing Date as the date of any undated document to be delivered through Escrow; 4.7.2.3 Cause the Deed to be recorded in the land records of the state and county where the Real Property is located; 18 26 4.7.2.4 Deliver to Buyer the documents deposited into the Escrow for delivery to Buyer at the Close of Escrow; 4.7.2.5 Deliver to Seller (a) all funds and Paired Shares to be received by Seller from Buyer through the Escrow at the Close of Escrow less (i) all amounts to be paid by Seller for Escrow Holder's fees and expenses and (ii) all amounts paid by Escrow Holder in satisfaction of liens and encumbrances on the Real Property or other matters pursuant to the written instruction of Seller, and (b) the documents deposited into the Escrow for delivery to Seller at the Close of Escrow; and 4.7.2.6 Cause the Title Policy to be issued by the Title Company and delivered to Buyer. 4.8 Costs of Escrow. Costs of the Escrow shall be allocated as follows: 4.8.1 Buyer and Seller shall each pay one-half (1/2) of the fees of Escrow Holder; 4.8.2 Buyer and Seller shall each pay one-half (1/2) of the cost of providing the Survey required to be delivered in accordance with the provisions of Section 7.1; provided, however, Buyer shall be responsible for the full cost of the Survey in the event the Closing does not occur hereunder other than on account of default of Seller; 4.8.3 Buyer and Seller shall each pay one-half (1/2) of all transfer taxes and recording fees payable in connection with the conveyance of each portion of the Real Property and/or the recording of the Deed and any other documents or instruments recorded pursuant to this Agreement; 4.8.4 Buyer and Seller shall each pay one-half (1/2) of all sales or other personal property taxes, levies, fees and charges payable as a result of the transfer of the Personal Property to Buyer and the consummation of the transactions contemplated hereby. Buyer shall be the reporting person for such purposes and shall prepare the necessary sales tax reports based upon the allocations set forth in Section 3.4. The parties acknowledge that additional sales tax may be assessed as a result of the transfer of the Personal Property to Buyer and the consummation of the transactions contemplated hereby after the Closing and that Buyer and Seller shall continue to each be responsible for one-half of any such additional taxes. The provisions of Section 4.8.3 and Section 4.8.4 shall survive the Closing; 4.8.5 Buyer and Seller shall each pay one-half (1/2) of the cost of obtaining the coverage under the Title Policy, except that the cost of any special endorsements shall be paid exclusively by Buyer; 4.8.6 At Closing or thereafter Buyer shall pay for the cost of the Value Letter; 4.8.7 [Intentionally Omitted] 19 27 4.8.8 If the Close of Escrow fails to occur other than as a result of a default hereunder by either party, including, without limitation, as a result of a failure of a condition precedent set forth in Section 9, the fees of the Escrow Holder and Title Company (including, without limitation, cancellation fees) shall be borne equally between Buyer and Seller; 4.8.9 If the Close of Escrow fails to occur as a result of a default hereunder by either party, the fees of the Escrow Holder and Title Company (including, without limitation, cancellation fees) shall be borne by the defaulting party; and 4.8.10 Pursuant to ss.6045 of the Internal Revenue and Taxation Code, the Title Company shall be designated the "Closing Agent" hereunder and shall be solely responsible for complying with the Tax Reform Act of 1986 with regard to the reporting of all settlement information to the Internal Revenue Service. 4.9 Other Costs. Except as set forth in Section 4.8.6, Section 11.1 and Section 15.1.6, each party shall pay all of its own legal, accounting and consulting fees and other costs and expenses incurred in connection with this Agreement. 4.10 Maintenance of Confidentiality by Escrow Holder. Escrow Holder shall maintain in strict confidence and not disclose to anyone the existence of the Escrow, the identity of the parties thereto, the amount of the Purchase Price, the existence or provisions of this Agreement or any other information concerning the Escrow or the transactions contemplated hereby, without the prior written consent of Buyer and Seller. SECTION 5 PRORATIONS AND ASSUMPTION OF OBLIGATIONS 5.1 General. All income, receivables, expenses (whether payable or prepaid) and payables of the Property shall be apportioned equitably between the parties as of the Proration Time in accordance with the provisions of this Section 5 (all prorations are to be based upon the number of days in a 365 day year). The obligation to make apportionments under Sections 5.1 and 5.2 shall, unless otherwise expressly provided in this Section 5, survive the Close of Escrow for a period of sixty (60) days at which time such apportionment shall be final unless disputed during such period. 5.2 General and Specific Prorations. Without limitation, the following items shall be apportioned: 5.2.1 At the Closing, Buyer shall assume all of the accounts payable relating to goods and services ordered or obtained in the ordinary course of operation of the business of the Hotel (including without limitation, payments under the Service Contracts and Equipment Leases) prior to the Proration Time. Seller shall be obligated to credit Buyer at the Close of Escrow with an amount mutually agreed upon by Buyer and Seller at the Closing, reflecting the 20 28 parties' good faith estimate of such accounts payable as of the Proration Time (which estimate shall deduct any discounts then available in the ordinary course of business for the prompt payment of such accounts payable), plus a further credit for any late fees then payable with respect to any identified accounts payable. Buyer shall be responsible for paying when due all accounts payable arising from the operation of the Property on or after the Proration Time, and Seller shall have no further liability for such payables or charges. As of the date which is sixty (60) days following the Closing Date, Buyer and Seller shall calculate the amount of all accounts payable relating to goods and services ordered or obtained in the ordinary course of operation of the business of the Hotel (including without limitation, payments under the Service Contracts and Equipment Leases) prior to the Proration Time. Seller shall reimburse Buyer for any payments made on account of any such accounts payable which were not reflected in the Parties' estimate of such amount credited to Buyer at Closing and which have been paid by Buyer or for which Buyer is obligated to pay in accordance with the provisions hereof, and if the amount of such credit exceeds the amounts so paid or for which Buyer is so obligated, Buyer shall pay such excess amount to Seller. 5.2.2 At the Closing, Seller shall assign to Buyer all of the Accounts Receivable, for which Seller shall receive a credit at the Close of Escrow in an amount equal to (a) the full, aggregate outstanding balance of the Cash Equivalent Receivables (without discount except for service charges due to charge card companies) plus (b) the full aggregate outstanding balance of the Invoiced Receivables and Other Accounts Receivable as of the Proration Time, provided, Buyer shall at its option accept or reject any Invoiced Receivables and Other Accounts Receivable over ninety (90) days and Seller shall not receive a credit for any Invoiced Receivables and Other Accounts Receivable over ninety (90) days rejected by Buyer; provided, that Buyer shall at its own expense use reasonable efforts to collect any such rejected Invoiced Receivables and Other Accounts Receivable on behalf of Seller for a period of sixty (60) days after the Closing Date and thereafter Seller shall have the right to collect same for its own account; provided, further, as of the date which is sixty (60) days following the Closing Date, Buyer and Seller shall make any adjustments required to reflect the collectibility of any Invoiced Receivables and Other Accounts Receivable (it being agreed that (a) any accounts receivable not listed on the schedule of accounts receivable of the Property as of the date which is sixty (60) days following the Closing Date shall be deemed paid as of such date and (b) except as provided in (a), any accounts receivable which are more than ninety (90) days past due as of the date which is sixty (60) days following the Closing Date shall be deemed uncollectable as of such date) and Seller and Buyer shall make a corresponding payment to the other as required to accurately reflect the collectibility of such Invoiced Receivables and Other Accounts Receivable and any accounts receivable deemed uncollectable as of such date in accordance with the terms hereof shall be the property of Seller and Seller shall be permitted (at its expense and for its own account) to collect the same; 5.2.3 In prorating the Accounts Receivable, Buyer and Seller shall each receive credit for one-half (1/2) of all Guest Ledger Receivables attributable to the room night during which the Proration Time occurs. Seller shall receive the income from all restaurant and bar facilities located at the Property through the Proration Time and Buyer shall receive such income thereafter; 21 29 5.2.4 [Intentionally Omitted] 5.2.5 All sales, use and occupancy taxes arising from the operation of the Property shall be prorated as of the Proration Time; 5.2.6 Fees for transferable annual permits, licenses, and/or inspection fees, if any, for periods during which the Proration Time occurs shall be prorated as of the Proration Time; 5.2.7 Utility charges with respect to the Property levied against Seller or the Property and the value of fuel stored on the Property shall be prorated at Seller's cost therefor as of the Proration Time. Seller shall notify all utilities, governmental agencies, suppliers and others providing services to the Property of the prospective change in ownership and operation of the Property, and Seller shall use its reasonable efforts to cause all utilities furnished to the Property, including, but not limited to, electricity, gas, water and sewer, along with any fuel storage tanks to be read the day prior to the Proration Time; 5.2.8 Permitted administrative charges, if any, on Tenant Security Deposits shall be prorated; 5.2.9 Buyer shall receive a credit for advance payments and/or deposits, if any, under Bookings to the extent the Bookings relate to a period after the Proration Time; 5.2.10 Vending machine monies will be removed by Seller as of the Proration Time for the benefit of Seller; 5.2.11 Buyer shall purchase and Seller shall sell to Buyer (or Seller shall receive a credit therefore) all petty cash funds and cash in the Property's house banks at 100% of face value at the Proration Time; 5.2.12 Wages, salaries and payroll taxes and other payroll deductions for all Hotel Employees shall be apportioned as of the Proration Time (i.e., the night shift shall be prorated 50/50 for the night preceding the Closing Date). Buyer shall assume all accrued vacation benefits and sick leave benefits due to such Hotel Employees which relate to any period prior to the Proration Time and shall receive a credit for the full amount of all such accrued benefits reasonably expected to be paid after the Closing Date; provided, that as of the date which is sixty (60) days following the Closing, Buyer and Seller shall adjust the amount of the credit if required to take into account the benefits actually required to be paid by Buyer or then reasonably expected to be paid following the Closing Date by Buyer. Buyer shall also assume all obligations of Seller and the Employer Corporation, under the Employment Agreements and/or the Management Agreement to pay all such wages, salaries, and compensation set forth above accruing subsequent to Proration Time; provided, however, that other than as set forth in Section 14.1 hereof, no provision contained in this Agreement shall be construed to prevent the Buyer from terminating or amending in any manner such Employment Agreements and Management Agreements subsequent to the Proration Time. The obligation to pay bonuses, if any, following the Closing shall be allocated as of the Proration Time and adjusted between Buyer and Seller. 22 30 5.2.13 Real and personal property taxes, assessments and special district levies shall be prorated for the tax fiscal year in which the Closing Date occurs on the basis of the then most current available tax bills, Seller being charged through the day prior to the Closing Date and Buyer with the Closing Date and thereafter; 5.3 Deposits. All rights to utility, assessment, and other cash deposits (including, without limitation, any Utility Deposits) held by others for Seller's account, and all certificates of deposit or other forms of cash collateral held by or otherwise pledged to others for Seller's account to secure obligations of Seller under Service Contracts, Equipment Leases or other obligations assumed by Buyer, shall be assigned or transferred to Buyer at the Close of Escrow; provided, that if any of such deposits are not transferable, Seller shall retain all rights with respect thereto and there shall be no debit made to Buyer on account thereof. 5.4 Tenant Leases. At the Close of Escrow, pursuant to the Assignment and Assumption of Tenant Leases, Buyer shall assume all of the obligations of Seller under the Tenant Leases as of the Proration Time, including, without limitation, tenant improvement obligations of landlord thereunder and obligations with respect to Tenant Security Deposits (to the extent received by Buyer or credited to Buyer hereunder). 5.5 Service Contracts and Other Intangible Property. At the Close of Escrow, Seller shall assign to Buyer pursuant to the terms of the General Assignment and Assumption Agreement, all right, title and interest of Seller in and to the Approved Service Contracts and other Intangible Property, and Buyer shall assume all of the obligations of Seller under the Approved Service Contracts arising from and after the Close of Escrow. Buyer shall protect, hold harmless, indemnify and defend Seller and its directors, officers, agents, affiliates, principals, partners, shareholders, representatives and controlling persons from any Losses attributable to the period beginning on and after the Closing Date with respect to the Approved Service Contracts. Seller shall be responsible for all obligations thereunder attributable to the period prior to the Closing Date with respect to Approved Service Contracts (except to the extent that Buyer shall have received a credit hereunder with respect to any such obligations). The provisions of this Section 5.5 shall survive the Close of Escrow. 5.6 Tax Refunds and Proceedings. Buyer shall have the exclusive right to commence or continue any proceeding to determine the assessed value of the Property, the real or personal property taxes payable with respect to the Property or any action to contest water charges, sewer charges, sales tax or use tax for the relevant taxable period during which the Proration Time occurs and to settle or compromise any claim thereof, and any refunds or proceeds resulting from such proceedings along with the costs (including reasonable legal and accounting fees) incurred by Buyer in obtaining the same, shall be prorated as of the Proration Time. In prosecuting any such action, Buyer shall utilize the services of Marvin Poer & Co. and Gilbert Bernal. Seller shall retain the right to continue, commence, prosecute, settle or compromise any proceedings relating exclusively to any relevant taxable period or periods prior to the period during which the Proration Time shall occur. Buyer and Seller agree to cooperate with each other and to execute any and all documents reasonably requested in furtherance of the foregoing. The provisions of Section 5.6 shall survive the Closing. 23 31 5.7 Guest Baggage. As of the Close of Escrow, Buyer shall indemnify and hold harmless Seller against all Losses with respect to all baggage of departed guests or guests who are still registered at the Hotel on the Closing Date which has been checked with the Hotel. As of the Close of Escrow, Seller shall assign to Buyer all claims and causes of action against the Manager with respect to any Losses with respect to such baggage. Seller agrees to submit to Seller's Insurance any claims for Losses with respect to such baggage which arose from acts or omissions prior to the Closing Date to the extent coverage is available under said insurance and provide Buyer with the proceeds therefrom provided Buyer is not in default under this Section 5.7. The provisions of this Section 5.7 shall survive the Closing. 5.8 Safe Deposit Boxes. As of the Close of Escrow, Buyer shall indemnify and hold harmless Seller against all Losses with respect to the contents of any safety deposit boxes in use at the Hotel. As of the Close of Escrow, Seller shall assign to Buyer all claims and causes of action against the Manager with respect to any Losses relating to said safety deposit boxes. Seller agrees to submit to Seller's insurance any claims for Losses which arose from acts or omissions prior to the Closing Date to the extent coverage is available under said insurance and provide Buyer with the proceeds therefrom provided Buyer is not in default under this Section 5.8. The provisions of this Section 5.8 shall survive the Closing. 5.9 Advance Bookings. Buyer shall assume and honor for its account all Bookings relating to dates after the Proration Time set forth on the Schedule of Advance Bookings delivered by Seller to Buyer at the Close of Escrow pursuant to Section 4.2.1.9. 5.10 Special Purchase Price Adjustment. In the event that the Closing Date is extended beyond January 30, 1998 for any reason other than on account of a default by Buyer hereunder, Buyer shall receive a credit at Closing against the Cash Purchase Price in an amount equal to interest on the Purchase Price calculated at the LIBOR Rate plus 2% per annum for the period from January 30, 1998 through the earlier of (a) the Closing Date and (b) sixty (60) days after January 30, 1998. Nothing in this Section 5.10 shall create a waiver of any other remedy of Buyer for a Seller default permitted under the provisions of this Agreement. SECTION 6 REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY 6.1 Of the Trust. As an inducement to Seller to enter into this Agreement, the Trust hereby represents, warrants and covenants to Seller as follows: 6.1.1 Power and Authority. The Trust is a real estate investment trust duly organized and validly existing under the laws of the State of Maryland. The Trust has the power and authority to carry on its present business, to enter into this Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement by the 24 32 Trust, nor the performance by the Trust of the Trust's obligations hereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Trust is a party or by which the Trust is bound and/or violate any applicable law, rule or regulation the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.1.2 Authorization; Valid Obligation. All proceedings required to be taken by or on behalf of the Trust to authorize the Trust to make, deliver and carry out the terms of this Agreement will be duly taken prior to the Closing Date. No consent to the execution, delivery and performance of this Agreement will be required from any partner, board of directors, shareholder, creditor, investor, judicial or administrative body, governmental authority or other person, other than any such consent which already has been (or prior to the Closing will have been unconditionally given. The individuals executing this Agreement and the documents referenced herein on behalf of the Trust have the legal power, right and actual authority to bind the Trust to the terms and conditions hereof. This Agreement is a valid and binding obligation of Trust, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 6.1.3 Capital Structure. The authorized and outstanding capital stock and units of the Trust and its operating partnership are as set forth in the Starwood Disclosure. All Paired Shares to be issued as the Equity Purchase Price at the Closing in accordance with this Agreement will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. 6.1.4 SEC Documents and Other Reports. The Trust has filed all required documents with the SEC since January 1, 1996 (such documents together with the Starwood Disclosure being referred to herein as the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Trust included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Trust and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Trust has not, since December 31, 25 33 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. Prior to the Closing Date, the Trust will file all required documents with the SEC, which documents will comply in all material respects with the requirements of the applicable law, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 6.1.5 Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed prior to the date of this Agreement, since December 31, 1996, (a) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole, or (b) there has not been any split, combination or reclassification of any of the capital stock or units of the Trust or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. 6.1.6 Actions and Proceedings. Except as set forth in the SEC Documents filed prior to the date of this Agreement, there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Trust or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Trust or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. Except as set forth in the SEC Documents, there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Trust, threatened against or involving the Trust or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits, labor disputes or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Trust, threatened against or affecting the Trust or any of their subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement. 26 34 6.1.7 REIT Status. The Trust is currently a "real estate investment trust" ("REIT") for federal income tax purposes and, to its knowledge, the Trust is and at all times during the testing period described in Code Section 897(h)(4)(D) has been a "domestically controlled REIT" (as defined in Section 897(h)(4)(D) of the Code). From and after January 1, 1995, neither the Internal Revenue Service nor any other taxing entity or authority has made any assertion that the Trust does not qualify as a REIT for income tax purposes, nor has there been any challenge to the REIT status of the Trust. From time to time upon request by the Seller or its assigns after the Closing Date, the Trust agrees to inform Seller or such assigns whether to its knowledge it complies with the representation and warranties set forth in this Section 6.1.7. 6.1.8 Partnership Status. Starwood Realty Partnership is classified and taxable as a partnership for U.S. federal income tax purposes. 6.1.9 Hart-Scott-Rodino Act. The provisions of the Hart-Scott-Rodino Act are not applicable to the transactions contemplated hereby and neither the Trust nor Seller is required to make any filings or submissions or obtain any approvals thereunder in connection herewith. 6.2 Of the Corporation. As an inducement to Seller to enter into this Agreement, the Corporation hereby represents, warrants and covenants to Seller as follows: 6.2.1 Power and Authority. The Corporation is a corporation duly organized and validly existing under the laws of the State of Maryland. The Corporation has the power and authority to carry on its present business, to enter into this Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement by the Corporation nor the performance by the Corporation of the Corporation's obligations hereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Corporation is a party or by which the Corporation is bound and/or violate any applicable law, rule or regulation the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.2.2 Authorization; Valid Obligation. All proceedings required to be taken by, or on behalf of the Corporation, to authorize the Corporation to make, deliver and carry out the terms of this Agreement will be duly taken prior to the Closing Date. No consent to the execution, delivery and performance of this Agreement will be required from any partner, board of directors, shareholder, creditor, investor, judicial or administrative body, governmental authority or other person, other than any such consent which already has been (or prior to the Closing will have been) unconditionally given. The individuals executing this Agreement and the documents referenced herein on behalf of the Corporation have the legal power, right and actual authority to bind the Corporation to the terms and conditions hereof. This Agreement is a valid and binding obligation of Corporation, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 6.2.3 Capital Structure. The authorized and outstanding capital stock and units of the Corporation and its operating partnership are as set forth in the Starwood Disclosure. All 27 35 Paired Shares to be issued as the Equity Purchase Price at the Closing in accordance with this Agreement will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. 6.2.4 SEC Documents and Other Reports. The Corporation has filed all required SEC Documents since January 1, 1996. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Corporation included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Corporation and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Corporation has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. Prior to the Closing Date, the Corporation will file all required documents with the SEC, which documents will comply in all material respects with the requirements of the applicable law, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 6.2.5 Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed prior to the date of this Agreement, since December 31, 1996, (a) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole, or (b) there has not been any split, combination or reclassification of any of the capital stock or units of the Corporation or its respective operating partnerships or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of such capital stock. 6.2.6 Actions and Proceedings. Except as set forth in the SEC Documents filed prior to the date of this Agreement, there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Corporation or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Corporation or any of its subsidiaries, as such, or any of its or their properties, assets or business 28 36 that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. Except as set forth in the SEC Documents, there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Corporation, threatened against or involving the Corporation or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits, labor disputes or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Corporation, threatened against or affecting the Corporation or any of their subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement. 6.2.7 Starwood Operating Partnership is classified and taxable as a partnership for U.S. Federal Income Tax purposes. 6.2.8 Hart-Scott-Rodino. The provisions of the Hart-Scott-Rodino Act are not applicable to the transactions contemplated hereby and neither the Corporation nor Seller is required to make any filings or submissions to obtain any approvals thereunder in connection herewith. 6.3 Of Seller. As an inducement to Buyer to enter into this Agreement, Seller, represents, warrants and covenants to Buyer as follows: 6.3.1 Regarding Seller's Authority. 6.3.1.1 Seller is a general partnership in dissolution under the laws of the State of Texas. Seller has the power and authority to enter into this Agreement and the Conveyance Documents and, to sell the Property on the terms set forth in this Agreement. The execution and delivery hereof and the performance by Seller of its obligations hereunder, will not violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which Seller is a party or by which Seller is bound and/or violate any applicable law, rule or regulation the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.3.1.2 The individuals executing this Agreement and the documents referenced herein on behalf of Seller have the legal power, right and actual authority to bind Seller to the terms and conditions hereof. This Agreement is a valid and binding obligation of Seller, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 29 37 6.3.2 Tenant Leases. There are no leases, licenses or concessions for space which will affect the Real Property or any portion thereof following the Close of Escrow other than as set forth on the Schedule of Tenant Leases. Seller has delivered to Buyer a true, correct and complete copy of each lease and agreement listed on the Schedule of Lease. Seller has not received written notice of any sublease and/or assignment of any Tenant Lease except as set forth on Schedule 6.3.2. No outstanding written notice of any Material default has been delivered by Seller or received by Seller with respect to any Tenant Lease, except as disclosed on the Schedule 6.3.2 annexed hereto and made a part hereof. To Seller's knowledge, all rent under the leases listed on the Schedule of Leases is being paid currently. All Material brokerage, leasing and other commissions due in connection with the Tenant Leases have been paid by Seller other than those payable with respect to the renewal or extension of such Tenant Leases or expansion of the leased premises thereunder after the Closing Date, each of which are payable under agreements described on Schedule 6.3.2. 6.3.3 Service Contracts. There are no Service Contracts which will affect the Property after the Closing Date except for the Approved Service Contracts. No outstanding written notice of any Material default has been delivered by Seller or received by Seller with respect to any Approved Service Contract, except as disclosed on Schedule 6.3.3 annexed hereto and made a part hereof. 6.3.4 Claims. There are no pending litigation or condemnation proceedings with respect to Seller or the Property which would result in an adverse effect on the ability of Buyer to operate the Property after the Closing, except as disclosed on Schedule 6.3.4 annexed hereto and made a part hereof. There is no pending litigation or to Seller's knowledge, other claims of Seller with respect to the Property attributable to the period prior to the date hereof which may result in a material judgment in favor of Seller except as disclosed on Schedule 6.3.4. 6.3.5 Employees. To Seller's Knowledge, Schedule 1.1.6 sets forth a true and complete list of all Hotel Employees as of the Execution Date together with their positions, salaries or hourly wages, as applicable, and years of service. Except for or pursuant to the Employment Agreements, the Collective Bargaining Agreements, the Management Agreement and the agreements related to the Ritz-Carlton management of the Hotel described on Schedule 6.3.5 hereto, neither Seller nor the Employer Corporation has relating to the Property (i) at any time maintained, contributed to or participated in, (ii) or had at any time obligation to maintain, contribute to, or participate in, or (iii) any liability or contingent liability, direct or indirect, with respect to: any employment agreement, oral or written retirement or deferred compensation plan, incentive compensation plan, stock plan, unemployment compensation plan, vacation pay plan, severance plan, bonus plan, stock compensation plan or any other type or form of employee-related (or independent contractor-related) arrangement, program, policy, plan or agreement. Except as set forth on Schedule 6.3.5, to Seller's knowledge there is no Material default under any of the Employment Agreements. 6.3.6 Compliance with Laws. During the past twelve (12) months, Seller has not received any written notice from any party, including, without limitation, from any municipal, state, federal or other governmental authority, of a Material violation of any zoning, 30 38 building, fire, water, use, health, or other similar statute, ordinance, or code bearing on the construction, operation or use of the Property or any part thereof (other than as to matters previously cured), except as disclosed on Schedule 6.3.6 annexed hereto and made a part hereof and except for violations of Environmental Laws, which are addressed in Section 6.3.7 below. 6.3.7 Hazardous Materials. Seller has not received any written notice from any municipal, state, federal or other governmental authority or from any other person during the last three (3) years of (a) any Material violation of applicable Environmental Laws or (b) any Environmental Condition requiring Material remediation under applicable Environmental Laws, in either case only to the extent relating to Environmental Conditions at or on the Real Property, except as disclosed on Schedule 6.3.7 annexed hereto and made a part hereof; 6.3.8 Records and Plans. Seller will have delivered to Buyer on the Closing Date true and correct copies of the Records and Plans. 6.3.9 Licenses and Permits. Seller has delivered to Buyer true and correct copies of the Liquor License and all other Material Licenses and Permits and such Licenses and Permits are identified on Schedule 6.3.9 annexed hereto and made a part hereof. 6.3.10 Management Agreements. There are no hotel management or property management agreements, which will be binding upon Buyer after the Closing Date, other than the Management Agreement, a true and complete copy of which will be delivered to Buyer on the Closing Date. Seller has not sent or received any notice of default or notice of termination under or with respect to the Management Agreement. 6.3.11 Personal Property. Seller owns the Tangible Personal Property (other than the Tangible Personal Property that is subject to the Equipment Leases) free and clear of any liens and/or encumbrances other than the Permitted Encumbrances. 6.3.12 Insurance. The Seller in respect of the Real Property is insured under those policies of casualty and general liability insurance ("Seller's Insurance") described on Schedule 6.3.12 annexed hereto, each of which is in full force and effect as of the date hereof and will remain in full force and effect through the Closing Date. Seller has received no notices of any Material default or demands to cure from any applicable insurer in respect of Seller's Insurance. 6.3.13 Real Estate Taxes. Except as set forth on Schedule 6.3.13 annexed hereto and made a part hereof, Seller has not commenced any proceedings which are pending for the reduction of the assessed valuation of the Real Property or any portion thereof, and other than the Permitted Encumbrances, to Seller's Knowledge, there are no special assessments affecting the Property. Nothing in this Section 6.3.13 or any other provision of this Agreement shall be construed to limit Seller's rights to initiate or prosecute after the Close of Escrow additional proceedings for property tax refunds for taxes relating to any relevant taxable period or periods prior to the taxable period during which the Proration Time occurs. 31 39 6.3.14 Liquor-Related Agreements. Except for that certain Notice dated December 1, 1977, from the Texas Comptroller of Public Accounts to Five Star Beverage, Inc., to Seller's Knowledge, Seller has not received written notice from the Texas Alcoholic Beverage Commission of any violation or threatened violation of any applicable laws, rules or ordinance with respect to (i) the agreements identified on Schedule 1 to the Assignment and Assumption of Liquor-Related Agreements (collectively, the "Liquor Agreements"), (ii) Five-Star Beverages, Inc. (the party thereto which holds the Liquor Licenses), or (iii) the Liquor Licenses. To Seller's Knowledge, each of the Liquor Agreements is in full force and effect, and Seller has received no written notice of any default by Seller thereunder. The rent payable to Seller under the "Liquor Lease" identified on Schedule 1 to the Assignment and Assumption of Liquor-Related Agreements has not been modified from the amount stated therein. 6.4 Buyer's Review of Records and Plans. 6.4.1 Access to Records and Plans; Specific Disclosures. Buyer acknowledges that prior to the Closing Date, Buyer has been provided with such access to the Records and Plans and such other information relating to the Hotel as Buyer has deemed relevant. Buyer acknowledges that it (a) has been made aware of and given an opportunity to inquire into the Specific Disclosure Matters described herein; (b) has been given access to the Property and the opportunity to conduct such inquiries and analyses as Buyer has deemed necessary or appropriate in order to evaluate the physical condition of the Property and any and all other matters concerning the current and future use, feasibility, or value, or any other matter or circumstance relevant to Buyer concerning the Property or its marketability; and (c) the Records and Plans and the other books and records of Seller with respect to the Hotel may not be complete. 6.4.2 Limitation on Access to Records and Plans. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and agrees that the Records and Plans or other information made available to or delivered to Buyer prior to, or at the Closing, shall not include any information which is privileged, confidential or proprietary to Seller or any of its constituent partners or affiliates, including without limitation, (i) Seller's internal financial analyses, any appraisals undertaken for Seller or other parties, income tax returns, financial statements, corporate or partnership governance records, investment advisory records, and other records concerning Seller's professional relationships, any Hotel Employee personnel files (prior to the Closing), or any other internal, proprietary, or confidential information, files, or records of Seller, (ii) the work papers, memoranda, analysis, correspondence, and similar materials prepared by or for Seller in connection with the negotiation and documentation of the transaction contemplated hereby or any other offer to purchase the Property received by Seller, and (iii) any documents or communications subject to the attorney/client privilege or attorney work product privilege. Buyer expressly agrees that its review of the Records and Plans, and any and all other information of any type or nature, whether oral or written, provided to Buyer by or on behalf of Seller and relating to the Property (collectively, the "Property Information") is for informational purposes only, and neither Seller nor any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller has verified either the accuracy of the Property Information, or the adequacy of any method used to compile the 32 40 Property Information or the qualifications of any person preparing the Property Information except that, in delivering or making available a copy of any document or papers to Buyer, Seller has delivered or made available copies of the originals of such documents or papers in Seller's possession or included in the Records and Files. Except as expressly set forth in this Section 6, neither Seller nor any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller is making or giving any representation or warranty about, or assuming any responsibility for, the accuracy or completeness of the Property Information. Reliance by Buyer upon any Property Information shall not create or give rise to any liability of or against Seller or any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller. Subject to Seller's express representations and warranties set forth herein, the consummation of the Closing shall constitute Buyer's unconditional approval of all aspects of the Property and Buyer's unconditional acknowledgment that Buyer has had the opportunity to request from Seller and review such documents and materials relating of the Property as Buyer deems appropriate. All copies of such documents delivered to Buyer shall be returned to Seller if the Closing fails to occur for any reason. 6.5 PURCHASE AS IS. BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER THAT BUYER HAS INDEPENDENTLY AND PERSONALLY INSPECTED THE PROPERTY AND THE PROPERTY INFORMATION AND THAT BUYER HAS ENTERED INTO THIS AGREEMENT BASED UPON SUCH PERSONAL EXAMINATION AND INSPECTION. BUYER ACCEPTS THE PROPERTY, IN ITS CONDITION ON THE CLOSE OF ESCROW AS-IS AND WITH ALL ITS FAULTS, INCLUDING WITHOUT LIMITATION, ANY FAULTS AND CONDITIONS SPECIFICALLY REFERENCED IN THIS AGREEMENT. NO PERSON ACTING ON BEHALF OF SELLER IS AUTHORIZED TO MAKE, AND BY EXECUTION HEREOF, BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO: (A) THE VALUE OF THE PROPERTY; (B) THE INCOME TO BE DERIVED FROM THE PROPERTY; (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON; (D) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (E) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; 33 41 (F) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY; (G) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (H) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY; (I) THE COMPLIANCE OF THE PROPERTY WITH ANY ENVIRONMENTAL LAWS OR THE AMERICANS WITH DISABILITIES ACT; (J) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR ADJACENT TO THE PROPERTY; (K) THE CONTENT, COMPLETENESS OR ACCURACY OF ANY OF THE RECORDS AND PLANS OR OTHER INFORMATION PROVIDED BY SELLER TO BUYER WITH RESPECT TO THE PROPERTY; (L) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER; (M) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE APPLICABLE ZONING OR BUILDING REQUIREMENTS; (N) DEFICIENCY OF ANY UNDER SHORING; (O) DEFICIENCY OF ANY DRAINAGE; (P) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; (Q) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE PROPERTY; (R) WITH RESPECT TO ANY OTHER MATTER CONCERNING THE PROPERTY (INCLUDING, WITHOUT LIMITATION, THE TENANT LEASES, THE EQUIPMENT LEASES, ANY FIXTURES AND EQUIPMENT, THE LICENSES AND PERMITS, THE PERSONAL PROPERTY, THE SERVICE CONTRACTS, THE EMPLOYMENT CONTRACTS, ANY EMPLOYEE BENEFIT PLANS AND THE LIQUOR LICENSE) EXCEPT AS MAY BE OTHERWISE EXPRESSLY STATED HEREIN; (S) [INTENTIONALLY OMITTED] (T) ANY OF THE SPECIFIC DISCLOSURE MATTERS; OR 34 42 (U) WITHOUT LIMITING THE OTHER DISCLAIMERS SET FORTH HEREIN BUT SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, THE ASSIGNMENTS AND CONVEYANCES OF THE PERSONAL PROPERTY AND THE MANAGEMENT AGREEMENT, ARE WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS OF ANY KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, (1) WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY OR ASSIGNABILITY OF THE MANAGEMENT AGREEMENT, (2) WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, (3) WARRANTIES RELATING TO THE DESIGN, CONDITION, QUALITY, WORKMANSHIP OR CAPACITY OF THE TANGIBLE PERSONAL PROPERTY, (4) REPRESENTATIONS OR WARRANTIES THAT THE TANGIBLE PERSONAL PROPERTY IS IN COMPLIANCE WITH ALL LAWS, STATUTES, ORDINANCES RULES, REGULATIONS, SPECIFICATIONS OR CONTRACTS PERTAINING THERETO, (5) WARRANTIES AGAINST PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, AND (6) WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY, OR COLLECTIBILITY OF ANY ITEM. 6.6 Limitation on Representations and Warranties of Seller. In no event shall Buyer be entitled to seek recovery against Seller for an alleged breach of any representation or warranty by Seller if the information, transaction, or occurrence alleged to give rise to such breach was disclosed to, made available to or discovered by Buyer, whether in the course of its review of the Records and Plans or otherwise, prior to the Close of Escrow (the sole adjustment with respect to same being as set forth in Section 6.7 below). Without limiting the foregoing, each of the representations and warranties by Seller set forth herein shall be deemed to be qualified in their entirety by the Specific Disclosure Matters in addition to any other qualifications of such representations and warranties. 6.7 Right to Supplement Disclosures. At any time prior to the Closing, Seller may add additional disclosures to the Specific Disclosure Matters and the Schedules referenced in this Section 6, and may make appropriate revisions thereto, provided, however, that any such revisions do not in the aggregate disclose any matter or matters which would reasonably be expected to have an impact upon the value of the Property in excess of the amount of the Deposit; and provided, further, that the receipt of any notice of termination under the Management Agreement shall not be deemed to create any diminution in value to the Property. In the event that Buyer or Seller discovers any matter or matters which would be expected to exceed the Threshold Amount, then, in such event, the provisions of Section 7.1.1 shall apply. 6.8 Basket. In no event will Seller be liable to Buyer for any breach of a representation or warranty hereunder unless and to the extent the Loss actually and directly incurred by Buyer as results of such breach together with the Loss actually and directly incurred by Buyer as results of any other breach(s) in the aggregate exceed the Threshold Amount, provided, that in no event shall Seller have any liability to Buyer for any consequential damages arising from a breach by Seller of any representation or warranty unless such breach results from the intentional concealment by Seller. 35 43 6.9 Survival. The Trust, the Corporation and Seller each hereby covenants and agrees with the other that the representations and warranties of the Trust, the Corporation and Seller (as the case may be) set forth in Sections 6.1.1 through 6.1.3, inclusive, Section 6.2.1 through Section 6.2.3, inclusive and Section 6.3.1 and Section 6.3.2 shall survive the Close of Escrow without limitation as to duration. The remaining warranties and representations set forth in Section 6 shall survive the Close of Escrow until the date which is one (1) year following the Closing Date, at which time such representations and warranties shall expire unless prior to such time Buyer or Seller, as the case may be, have duly commenced an action in a court of competent jurisdiction, alleging a breach of such representation or warranty. Notwithstanding anything herein to the contrary, in no event shall either Buyer or Seller have any right to make a claim after the Closing with respect to any representation or warranty, the breach of which such party shall have discovered prior to the Closing, unless such party shall have notified the other party of such breach prior to the Close of Escrow. Nothing contained in this Section 6.9 shall limit the right of Seller to any remedy otherwise available under Federal or other applicable securities law. SECTION 7 TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING 7.1 Buyer's Review of Title. Seller has caused to be delivered to Buyer and Buyer's Counsel a current preliminary title commitment for title insurance issued by the Title Company showing the condition of title to the Real Property (the "Preliminary Title Report") together with a copy of all documents evidencing or creating the exceptions to title referenced therein. 7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens. On or prior to the Close of Escrow, Seller shall be obligated (i) to cause to be insured over or removed of record all Monetary Liens affecting the Property as of the date hereof; and (ii) to remove or to bond over any Monetary Lien arising after the issuance of the Preliminary Title Report which (a) was created by or with the consent of Seller, or (b) is in an amount less than or equal to the Deposit. In the event that any Monetary Lien not reflected on the Preliminary Title Report exceeds the Deposit and was not created by or with the consent of Seller or any other title defect or other matters arise which requires Seller to supplement its disclosure pursuant to Section 6.7 and which in the aggregate may create a diminution in value to the Property in excess of the Deposit, (i) the Deposit shall be refunded by Escrow Holder to Buyer on February 28, 1998 if the Closing does not occur by such date in accordance with the provisions hereof; (ii) the Scheduled Closing Date shall be extended and Seller shall use all reasonable efforts, to remove or bond over or otherwise cause the Title Company to omit such Monetary Lien as an exception from coverage under the Title Policy and/or remove or cure as applicable such other defect or condition as applicable; and (iii) Buyer shall be permitted to record the Memorandum of Contract in the real property records of the state and county in which the Real Property is located. In the event that the Scheduled Closing Date is so extended and Seller is able to remove or cure such Monetary Lien, remove or cure as applicable the title defect or other condition the Close of 36 44 Escrow shall occur as soon as practicable following such removal or cure with time being of the essence as to the performance of both Buyer's and Seller's obligations hereunder. THE PARTIES ACKNOWLEDGE AND AGREE THAT DAMAGES WILL NOT BE AN ADEQUATE REMEDY TO SELLER IF BUYER SHALL DEFAULT IN ITS OBLIGATION TO CLOSE IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND CONSEQUENTLY THAT BUYER'S OBLIGATIONS UNDER THIS SECTION 7.1.1 SHALL BE SPECIFICALLY ENFORCEABLE AGAINST THE TRUST. IN CONSIDERATION FOR THE REFUND TO BUYER OF THE DEPOSIT PROVIDED FOR UNDER THIS SECTION 7.1.1, THE RIGHT OF BUYER TO RECORD THE MEMORANDUM OF CONTRACT PURSUANT TO THIS SECTION 7.1.1, SELLER'S AGREEMENT TO ENTER INTO THE INTERIM MANAGEMENT AGREEMENT PURSUANT TO THE PROVISIONS OF THIS SECTION 7.1.1 (UNDER WHICH AGREEMENT THE VALUE OF THE HOTEL MAY BE AFFECTED BY THE PERFORMANCE BY THE MANAGER OF ITS RESPONSIBILITIES THEREUNDER) AND TO ENCUMBER THE PROPERTY WITH THIS AGREEMENT FOR A PERIOD OF UP TO FIVE (5) YEARS IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 17.20 AND IN LIGHT OF THE RISKS WHICH SELLER WILL BE ASSUMING AS A RESULT IN RELATION TO THE VALUE OF THE EQUITY PURCHASE PRICE TO BE DELIVERED IF AND WHEN THE CLOSING OCCURS HEREUNDER, THE PARTIES HAVE AGREED THAT THE PROVISIONS OF THIS SECTION 7.1.1 ARE SPECIFICALLY ENFORCEABLE AGAINST THE TRUST AS AND TO THE EXTENT PROVIDED IN THE PRECEDING SENTENCE. In the event that a Monetary Lien cannot be removed or cured or a title defect or other condition cannot be removed or cured as required hereunder to close within five (5) years of the date of this Agreement, this Agreement shall terminate and the parties hereto shall have no further obligations. 7.1.2 [Intentionally Omitted] 7.2. Title Insurance Policy. Buyer's title to the Real Property shall be insured at Closing by an ALTA extended coverage owner's policy or policies of title insurance in the amount of the Purchase Price (the "Title Policy") issued by the Title Company, insuring title to the Real Property vested in Buyer, subject only to the Permitted Encumbrances, together with such customary endorsements or affirmative insurance as may be reasonably requested by Buyer and purchased at Buyer's sole cost and expense. 7.3 Title to Real Property. At the Close of Escrow, title to the Real Property will be conveyed to Buyer by Seller pursuant to the Deed, subject only to the matters of title respecting the Property shown on Schedule 7.3 annexed hereto and, if the Closing is delayed pursuant to Section 7.1.1, any additional easements, covenants, conditions, restrictions or other matters entered into with the prior written consent of Buyer which consent shall not be unreasonably withheld, delayed or conditioned (collectively, the "Permitted Encumbrances"); Buyer agrees to rely exclusively on the Title Policy for protection against any title defects except as set forth in Section 7.1.2. Buyer shall have no claim following the Closing against Seller on account of the Permitted Encumbrances. Buyer's agreement under this Section 7.1 shall survive the execution, delivery, and recordation of the Deed. 37 45 SECTION 8 INTERIM ACTIVITIES During the period from the Execution Date through the Close of Escrow, Seller shall (subject to the provisions of the Interim Management Agreement if entered into in accordance with the provisions of this Agreement) cause the Property to be continued to be operated in ordinary course as a hotel consistent with current operating practices during the period since Manager has been manager of the Hotel. Buyer shall have the right to enter onto and inspect the Property, from and after the date hereof, through the Closing Date to inspect the Property and otherwise perform its due diligence provided such inspections are performed upon prior notice to Seller and so as not to interfere with the operation of the Property or to disclose the pendency of the transaction contemplated hereby. All fees and expenses of any kind relating to the inspection of the Property by Buyer will be paid for by Buyer. Buyer agrees to keep the Property free from any liens arising out of or in connection with Buyer's or its agents entry or the Property. Buyer shall at its sole cost and expense, clean up and repair the Property as reasonably necessary after Buyer's or its agents entry thereon. Buyer shall hold harmless, indemnify and defend Seller from all Losses relating to any action by Buyer, its Affiliates and/or agents at or on the Property prior to Closing. Any of Buyer's agents shall be bound by the provisions of Section 17.19. SECTION 9 CONDITIONS PRECEDENT TO CLOSING 9.1 Conditions Precedent to Buyer's Obligations. The Close of Escrow and the obligation of Buyer to purchase the Property is subject to the satisfaction, not later than the Scheduled Closing Date, (subject to extensions as provided in Section 7.1) of the following conditions: 9.1.1 Seller's Deliveries. Seller shall have delivered the items described in Section 4.2 and shall be prepared to deliver the items described in Section 4.4; 9.1.2 Title Policy. The Title Company shall be unconditionally prepared (subject only to payment of all necessary title insurance premiums and other charges) to issue to Buyer the Title Policy insuring Buyer's title to the Real Property subject only to the Permitted Encumbrances; 9.1.3 Performance Under Related Agreement. All conditions precedent to the closing of the transactions contemplated by that certain Purchase and Sale Agreement and Joint Escrow Instructions (the "Related Agreement") dated as of the date hereof by and between Buyer and Savanah Limited Partnership, a District of Columbia limited Partnership, shall have been satisfied or waived and the Seller and Escrow Holder thereunder shall be ready, willing and able to perform thereunder, and there shall be no default of Seller under such agreement. 38 46 9.1.4 [Intentionally Omitted]. 9.1.5 Seller Performance. Seller shall have performed in all material respects all of the obligations of Seller under this Agreement, to the extent required to be performed at or prior to the Close of Escrow. 9.1.6 Representations and Warranties of Seller. The Seller's representations and warranties set forth in Section 6.3 shall be true, correct and complete, as of the Close of Escrow subject to modification thereof to the extent permitted under Section 6.7 and subject further to the applicable provisions of Section 7.1.1. The conditions set forth in this Section 9.1 are solely for the benefit of Buyer and may be waived only by Buyer. Buyer shall at all times have the right to waive any such condition. Any such waiver or waivers shall be in writing and shall be delivered to Seller and Escrow Holder. 9.2 Conditions Precedent to Seller's Obligations. The Close of Escrow and Seller's obligation with respect to the transactions contemplated by this Agreement are subject to the satisfaction, not later than the Scheduled Closing Date, of the following conditions: 9.2.1 Funds and Documents. Buyer shall have delivered to Escrow Holder, prior to the Closing Date, for disbursement as directed by Seller, the Paired Shares and all cash or other immediately available funds due from Buyer in accordance with Section 4 of this Agreement and the documents described in Section 4.3; 9.2.2 Representations and Warranties of Buyer. The Trust's representations and warranties set forth in Section 6.1 and the Corporation's representations and warranties set forth in Section 6.2 shall be true, correct and complete, as of the Close of Escrow; 9.2.3 No Material Changes. There shall have been no casualty or condemnation for which Buyer has elected to terminate this Agreement pursuant to Section 12 or Section 13 of this Agreement; 9.2.4 [Intentionally Omitted] 9.2.5 Performance Under Related Agreement. All conditions precedent to the closing of the transactions contemplated by the Related Agreement shall have been satisfied or waived and the Buyer and Escrow Holder thereunder shall be ready, willing and able to perform thereunder and there shall be no default of Buyer under such agreement. The conditions set forth in this Section 9.2 are solely for the benefit of Seller and may be waived only by Seller. Seller shall at all times have the right to waive any such condition. Any such waiver or waivers shall be in writing and shall be delivered to Buyer and Escrow Holder. 9.3 Failure of Condition. Except as otherwise provided in this Agreement, if the Escrow fails to close on the Outside Closing Date for any reason whatsoever, including, without limitation, a failure of a condition precedent set forth in this Section 9, either Buyer or Seller, if 39 47 not then in default under this Agreement, may terminate the Escrow and this Agreement upon notice to the other; and, thereupon: 9.3.1 This Agreement and the Escrow shall terminate; 9.3.2 The costs of the Escrow through the Scheduled Closing Date shall be governed by Section 4.8; 9.3.3 All monies paid into the Escrow and all documents deposited in the Escrow shall be returned to the party paying or depositing the same together with interest earned thereon; and 9.3.4 Each party shall be released from all obligations under this Agreement except for the obligations that are expressly stated to survive the termination of this Agreement. SECTION 10 BROKER Buyer and Seller each represent and warrant to the other that it has not dealt with any broker, finder or other middleman in connection with this Agreement, or the transactions contemplated hereby and that no broker, finder, middleman or other person has claimed, or has the right to claim a commission, finder's fee or other brokerage fee in connection with this Agreement or the transactions contemplated hereby. Each party shall indemnify, protect, defend and hold the other party harmless from and against any costs, claims or expenses (including actual attorneys' fees and expenses), arising out of the breach by the indemnifying party of any of its representations, warranties or agreements contained in this Section 10. The representations and obligations under this Section 10 shall survive the Close of Escrow, or, if the Close of Escrow does not occur, the termination of this Agreement. SECTION 11 REMEDIES FOR SELLER'S DEFAULT 11.1 Buyer's Remedies in General. If Buyer shall discover prior to the Close of Escrow any default in any of Seller's obligations under this Agreement (a "Seller Default"), Buyer shall notify Seller thereof, and Seller shall have a reasonable period of time (not in excess of thirty (30) days) unless extended by Buyer in its sole discretion in which to cure such default, in which case the Scheduled Closing Date shall be extended during the continuation of such cure period. If there shall be any Seller Default discovered by Buyer prior to the Close of Escrow and not cured by the Scheduled Closing Date, then Buyer's sole right and remedy other than with respect to a breach of a representation and warranty which shall be subject to the provisions of Section 6.7, shall be to compel specific performance of this Agreement; provided, however, that Buyer 40 48 shall only be entitled to compel specific performance of this Agreement if, as of the time of Seller's default, Buyer shall (a) not be in default hereunder, (b) shall be ready, willing and able to perform its obligations hereunder, and (c) shall have waived all contingencies to closing other than those relating to Seller's default. 11.2 MATERIAL INDUCEMENT. BUYER SPECIFICALLY ACKNOWLEDGES THAT THE LIMITATIONS ON DAMAGES AND SURVIVAL AND OTHER REMEDIES WHICH BUYER MAY RECOVER FROM AND ENFORCE AGAINST SELLER UNDER THIS AGREEMENT ARE A SPECIFIC AND MATERIAL INDUCEMENT TO SELLER TO ENTER INTO THIS TRANSACTION. SECTION 12 DAMAGE TO OR DESTRUCTION OF THE PROPERTY 12.1 Insured Casualty. 12.1.1 If, prior to the Close of Escrow, the Property is damaged or destroyed, whether by fire or other insured casualty, Seller shall promptly notify Buyer of such damage or destruction and of the good-faith estimate of a reputable licensed contractor selected by Seller and reasonably approved by Buyer of the cost to repair the damage and Seller's good-faith belief that such casualty is insured (the "Insured Casualty Notice"). If the Insured Casualty Notice indicates that such casualty is a Material Casualty, Buyer may elect to be released from its obligations hereunder (including its obligation to purchase the Property) by delivering to Seller written notice of Buyer's intent to do so within ten (10) days after the date Buyer receives the Insured Casualty Notice. In such event, the Deposit together with all interest accrued thereon shall be promptly returned to Buyer. 12.1.2 If the casualty is insured, and (i) it is not a Material Casualty, or (ii) it is a Material Casualty, but Buyer elects not to terminate this Agreement in accordance with this Section 12.1, then the Escrow and this Agreement shall remain in full force and effect, the Closing shall occur on or before the Outside Closing Date, and Seller shall assign to Buyer, as a condition precedent to the Close of Escrow, all of Seller's right, title and interest in and to any of the casualty insurance proceeds or claims therefor with respect to such damage or destruction, together with any and all rental loss or business interruption insurance of Seller, if any, payable with respect to the Property for any period after the Proration Time and any and all claims against other persons for such damage or destruction. Additionally, if the Escrow and this Agreement remain in full force and effect, Seller shall pay to Buyer, by way of a reduction in the Cash Portion of the Closing Payment, an amount equal to the deductible under the casualty insurance. Within twelve (12) months following the Close of Escrow, Buyer shall upon thirty (30) days written notice by Seller, present reasonably satisfactory evidence to Seller that Buyer applied the proceeds of such insurance to the Property. If Buyer fails to present such evidence or such evidence is not reasonably satisfactory to Seller, Buyer shall promptly, but in any event within thirty (30) days of demand therefor from Seller, pay to Seller the proceeds of the casualty 41 49 insurance assigned by Seller to Buyer as provided herein, together with an amount equal to the deductible under such insurance for which Buyer received a credit to the Purchase Price. 12.2 Uninsured Casualty. 12.2.1 If, prior to the Close of Escrow, all or any portion of the property is damaged or destroyed by an uninsured casualty (including, without limitation, a casualty as to which coverage has been disclaimed by Seller's insurers), Seller shall promptly notify Buyer of such damage or destruction and of the Seller's reasonable estimate of the cost to Seller to repair the same of a reputable licensed contractor selected by Seller and reasonably approved by Buyer (the "Uninsured Estimate to Repair") and Seller's reasonable belief that such casualty is uninsured (the "Uninsured Casualty Notice"). 12.2.2 If such Uninsured Estimate to Repair indicates the occurrence of a Material Casualty, either Seller or Buyer may elect to terminate this Agreement by giving to the other party written notice of its intent to do so within ten (10) days after the Seller delivers the Uninsured Casualty Notice to Buyer. If this Agreement is terminated pursuant to this Section 12.2.2, the Deposit together with interest accrued thereon shall be promptly returned to Buyer. 12.2.3 If the casualty is uninsured, and (i) it is not a Material Casualty, or (ii) it is a Material Casualty and Buyer and Seller have not elected to terminate this Agreement in accordance with Section 12.2.2, then the Escrow and this Agreement shall remain in full force and effect, the Closing shall occur on or before the Outside Closing Date, and Buyer shall be entitled to a reduction in the Purchase Price in an amount equal to the Uninsured Estimate to Repair. 12.2.4 If and to the extent that the Purchase Price is adjusted pursuant to this Section 12.2 as a result of a disclaimer of coverage by Seller's insurers, Buyer shall not be entitled to insurance proceeds due under Seller's policies, or to be assigned any claim under or with respect to Seller's policies, and Seller shall retain all rights thereunder or with respect thereto and to proceeds therefrom, it being the intent of this Section 12 that there be no double recovery by, or double compensation of, Buyer for the casualty. SECTION 13 CONDEMNATION If, prior to the Close of Escrow, a Material Taking has occurred or is pending, Seller shall immediately notify Buyer of such fact. In such event, Buyer may elect upon written notice to Seller given not later than fifteen (15) days after receipt of Seller's notice to terminate this Agreement. If Buyer does not exercise option which Buyer may have pursuant to this Section 13 to terminate this Agreement, or if any such taking is not a Material Taking, then neither party shall have the right to terminate this Agreement, but Seller shall assign and turn over, and Buyer shall be entitled to receive and keep, all awards for the taking of any of the Real Property by 42 50 eminent domain which accrue to Seller (other than those relating to loss of use prior to the Closing), and the parties shall proceed to the Close of Escrow pursuant to the terms hereof, without modification of the terms of this Agreement and without any reduction in the Purchase Price. SECTION 14 EMPLOYEES 14.1 Hiring of Hotel Employees; WARN Act Compliance. Buyer agrees to make an offer of employment to all existing Hotel Employees as of the Close of Escrow, on terms and conditions generally comparable to their existing terms and conditions of employment (to the extent such terms and conditions have been disclosed by Seller and/or its agents to Buyer) and to make all reasonable efforts to retain such employees for a reasonable period of time. Without limiting the foregoing, Buyer shall offer to maintain without loss of employment (as defined in the WARN Act) the employment at the Property (other than upon good cause for termination) of such number of Hotel Employees and on such terms and conditions as shall not result in, and only to the extent necessary to prevent, a plant closing or mass layoff as defined in the WARN Act. Buyer (i) shall also cause each of the health and medical benefit plans maintained for Hotel Employees to waive any preexisting condition in connection with employment at the Property that was not excluded under the applicable program as of the Closing Date, (ii) shall also cause each of such benefit plans to take into account any deductibles or coinsurance amounts incurred by each Hotel Employee for the year in which the Closing Date occurs, and (iii) shall also cause each of the health and medical benefit plans to deem each Hotel Employee to be eligible for participation in such plan as of the Close of Escrow. In the event that Buyer fails to comply with any of the foregoing covenants, Buyer agrees that Buyer shall be solely responsible for the payment of any and all costs, charges, penalties, compensation, severance pay, benefits and liabilities, arising under the WARN Act, and any other applicable law, rule or regulation on account thereof, and Buyer agrees to indemnify, defend and hold Seller and the Employer Corporation and their directors, officers, agents, affiliates, principals, partners, shareholders representatives and controlling persons harmless from and against any and all claims, causes of action, judgments, damages, penalties and liabilities asserted under the WARN Act or any other applicable law, rule or regulation, whether against Buyer or Seller, the Employer Corporation or any other such indemnified party and whether based on employment of any of the Hotel Employees prior to or following the Closing, arising from Buyer's failure to comply with the foregoing covenants (collectively, "Termination Charges"). Following the Closing, if Buyer desires to terminate the employment of any Hotel Employees other than for cause, Buyer shall be solely responsible for complying with all applicable provisions of the WARN Act and all other applicable laws, rules and regulations with respect to such termination, including without limitation, the payment of all costs and termination payments owing under the WARN Act and all other applicable laws, rules and regulations to any of such employees. Buyer shall assume all obligations under the Employment Agreement for the Director of Finance attributable to the 43 51 period from and after the Closing Date (it being agreed that the Director of Finance may resign thereunder at any time without penalty). 14.2 Collective Bargaining Agreements. Without limiting the provisions of Section 14.1, immediately upon the Close of Escrow, without the necessity of further action by Buyer, Buyer shall assume each collective bargaining agreement or other labor union contracts identified on Schedule 14.2 (the "Collective Bargaining Agreements"). Buyer further agrees to indemnify Seller and the Employer Corporation and their directors, officers, employees, agents, affiliates, principals, partners, shareholders, representatives and controlling persons for any and all liability to the bargaining agents or Hotel Employees, resulting from the failure of Buyer to comply with the terms and conditions of any of the Collective Bargaining Agreements with respect to periods beginning after the Close of Escrow. 14.3 Continuation of Benefits. 14.3.1 Except as provided in Section 14.3.2 , on and after the Closing Date, Seller (or any insurer at Seller's cost) shall continue to process and pay (or cause applicable insurers and third party administrators, including ITT Sheraton, to process and pay) in an expeditious manner and with respect to all covered Hotel Employees (and, to the extent applicable, their covered spouses, dependents and beneficiaries) all claims under the Employment Agreements that provide health and medical, or other welfare, benefits submitted for covered expenses with respect to occurrences commencing on or prior to the Closing Date, including, but not limited to: (A) covered hospital benefits for any confinements; (B) covered life and survivor income benefits, if any, for deaths which occur on or prior to the Closing Date; (C) workers' compensation benefits for disabilities resulting from a work-related accident which occurred on or prior to the Closing Date; (D) all covered benefits that are being, or that may be, paid to, or with respect to, any of such individuals who are on short or long term disability, or medical, personal or other leaves of absence as of the Closing Date; (E) covered benefits under any "spending account," or similar arrangement, under any "cafeteria plan" (as defined under Section 125 of the Internal Code) with respect to salary reduction elections made prior to the Closing Date; and (F) covered benefits under all other such Employment Agreements which accrue on or before the Closing Date; but, only in each instance, to the extent that Buyer shall not have received a credit against the Purchase Price on account of such item. 14.3.2 Buyer (or any plan maintained by Buyer) will provide continued health and medical coverage as required under Section 4980B of the Code, Part 6 of Title I of ERISA or any other applicable federal, state or local law or ordinance to all current and former Hotel Employees (and their spouses, dependents and beneficiaries) with respect to whom a "qualifying event" (as such term is defined under Sections 4980B(f)(3) of the Code or 603 of ERISA) or other triggering event described under the applicable federal, state or local laws or ordinances occurred on or before the Closing Date. 44 52 14.3.3 Buyer shall maintain supplies of claims forms necessary for Hotel Employees to make claims under Employment Agreements that provide health, medical or other welfare benefits with respect to occurrences commencing on or prior to the Closing Date, and shall furnish such forms to the Hotel Employees when needed and otherwise assist the Hotel Employees in presenting such claims. 14.4 Buyer and Seller intend by this Agreement to comply with Section 4204 of ERISA, so as to prevent Seller from incurring at the Closing Date a complete or partial withdrawal in respect of any employee benefit plans, if any, in which the Hotel Employees currently participate that are "multiemployer plans," as defined in Section 4001(a)(3) of ERISA (and which have been disclosed to Buyer on the Schedule of Employment Agreements), determined as if Buyer is the "buyer" referred to in such Section 4204. Accordingly, with respect to such multiemployer plans, Buyer agrees as follows: (A) For the first plan year of each such multiemployer plan commencing after the Close of Escrow, and for each of the succeeding four plan years for each such plan, Buyer shall assume the obligation to contribute to each such plan with respect to operations conducted with business assets acquired from Seller for substantially the same number of contribution base units (as defined in Section 4001(a)(11) of ERISA) for which Seller had an obligation to contribute to such plan. (B) Prior to each such multiemployer plan's first plan year beginning after the Close of Escrow, Buyer, shall apply to such plan for a variance from the requirement of Section 4204(a)(1)(b) of ERISA, that a bond be obtained or an amount be held in escrow as provided in said Section. In the event any such plan determines that the request does not qualify for a variance on it, Buyer shall obtain any required bond or establish any required escrow within thirty (30) days after the date on which it receives notice of the plan's decision, and shall maintain such bond or escrow until the earliest of: (i) the date a variance is obtained from the plan; (ii) the date a variance or exemption is obtained from the Pension Benefit Guaranty Corporation; or (iii) the last day of the fifth (5th) plan year commencing after the Close of Escrow; which bond or escrow shall be paid to such plan if Buyer withdraws therefrom or fails to make a contribution to such plan when due, at any time during the first (1st) five (5) plan years of such plan beginning after the Closing Date. In order to comply with subsection (a)(1)(C) of such Section 4204, if Buyer withdraws in a complete withdrawal or a partial withdrawal from any multiemployer plan with respect to which Buyer has assumed an obligation to contribute pursuant to this Agreement and such withdrawal or partial withdrawal occurs during the five (5) plan years commencing with the first (1st) plan year beginning after the date of the Close of Escrow, Seller shall be secondarily liable for any withdrawal liability it would have had to such multiemployer plan on the date of the Close of Escrow under Title IV of ERISA. Buyer agrees to provide Seller with reasonable advance notice of its anticipated failure to pay any withdrawal liability and to furnish Seller promptly with a copy of any notice of withdrawal liability it may receive with respect to such plans. 45 53 14.5 Indemnification. Buyer and Seller (as applicable, the "Indemnitor") agrees to indemnify, defend, protect and hold the other and, the Employer Corporation in the case of Seller, and their directors, officers, agents, affiliates, principals, partners, shareholders, representatives and controlling persons (as applicable, the "Indemnitee") harmless from and against any and all claims, damages, liabilities, losses, and expenses, (including attorneys' fees and costs) paid, suffered or incurred by the Indemnitee, arising out of or related to Indemnitor's failure to comply with any of the covenants, obligations, or duties contained in Section 14. 14.6 Survival. The provisions of this Section 14 shall survive the Close of Escrow. SECTION 15 COOPERATION 15.1 Seller has advised Buyer that it may be necessary after the Close of Escrow for Seller (or its representatives) to audit the Records and Plans with respect to the period prior to the Closing Date. In addition, Seller may require access to the such Books and Records in connection with any litigation by or against Seller and its Affiliates with respect to the Property, any tax audit, examination or challenge or similar proceeding, or any calculation of sums payable under Section 5. Accordingly, Buyer hereby: (i) agrees to retain the Records and Plans with respect to the period prior to the Closing Date at the Property for a period of seven (7) years after the Close of Escrow or such additional period as may reasonably be requested by Seller; (ii) grants Seller, its Affiliates and their respective representatives access to the such Records and Plans and the Property after the Close of Escrow, at reasonable times and upon reasonable prior notice, for such purposes; (iii) subject to the rights of guests in guest rooms, tenants under tenant leases, grants Seller, its Affiliates, and their respective representatives access to the Property after the Close of Escrow for the purpose of conducting such inspections and/or testing (including destructive testing) of the Property as may be necessary or advisable in connection with any litigation and other proceedings to which Seller is a party (provided that Seller shall give Buyer prior notice of the scope of such inspections and testing) which shall be scheduled for such periods as shall be reasonably agreeable to the parties; 15.1.1 All inspections fees, appraisal fees, engineering fees and other expenses of any kind relating to the inspection of the Property by Seller or Seller's Affiliate will paid for by Seller and/or Seller's Affiliate. 15.1.2 Prior to Seller or Seller's Affiliate's entry on the Property for the purpose of conducting inspections and/or tests, Seller or Seller's Affiliate shall provide Buyer with certificates of insurance from Seller's agents from an insurance carrier and for such risks and policy limits as Seller shall reasonably approve. 15.1.3 Seller agrees to keep the Property free from any liens arising out of or in connection with such testing and inspection. 46 54 15.1.4 Seller, shall, at its sole cost and expense, clean up and repair the Property as reasonably necessary, after Seller's or Seller's agents, entry thereon. 15.1.5 Seller shall hold harmless, indemnify and defend Buyer for all losses relating to any action by Seller, its Affiliates and/or agents at or on the Property after the Closing. 15.1.6 Buyer agrees to cooperate with Seller, its Affiliates and their respective representatives in connection with any such litigation or proceedings with respect to the Property, any such tax audit, examination or challenge or similar proceeding, or any such calculation of sums payable under Section 5, said cooperation to be at no material cost or expense to Buyer. 15.2 Seller shall cooperate with Buyer in connection with the assignment of all transferable Licenses and Permits to Buyer and the application for and procurement of replacements of any non-transferable Licenses and Permits. SECTION 16 NOTICES 16.1 Addresses. Whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be made in writing and shall be (a) sent via a nationally recognized overnight courier service fully prepaid, (b) deposited in the United States by mail, registered or certified, return receipt requested, postage prepaid, or (c) sent via telefacsimile, provided that the original of such notice, demand or request shall also be sent via one of the methods described in (a) and (b) above, in each case to the addressees (and individuals) set forth below: As to Seller: New Remington Partners c/o Al Anwa USA Incorporated 1925 Century Park East Suite 1900 Los Angeles, CA 90067 Attn: General Counsel Telefacsimile: (310) 229-2939 With a copy to Seller's Additional Addressees: Gordon Eng, Esq. 19191 S. Vermont Avenue Suite 420 Torrance, CA 90502 Telefacsimile: (310) 207-1006 47 55 Morrison & Foerster LLP 555 West Fifth Street, Suite 3500 Los Angeles, CA 90013-1024 Attn: Thomas R. Fileti, Esq. Telefacsimile: (213) 892-5454 As to Buyer: Starwood Lodging Corporation Starwood Lodging Trust 2231 E. Camelback Road Suite 400 Phoenix, AZ 85016 Attn: Steven R. Goldman Telefacsimile: (602) 852-0115 With a copy to Buyer's Additional Addressee: Greenberg Traurig Hoffman Lipoff Rosen & Quentel 153 East 53rd Street New York, NY 10022 Attn: Andrew E. Zobler, Esq. Telefacsimile: (212) 223-7161 As to Escrow Holder: Chicago Title Insurance Company 700 South Flower Street, Suite 900 Los Angeles, CA 90017 Attn: Maggie Watson Telefacsimile: (213) 488-4388 16.2 Receipt of Notices. Any notice, demand or request that shall be delivered to Buyer and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Buyer for all purposes hereunder, and any notice, demand or request that shall be delivered to Seller and its Additional Addresses in the manner aforesaid shall be deemed sufficiently given to and received by Seller for all purposes hereunder (i) the next business day following the day such notice, demand or request is delivered by a nationally recognized overnight courier service fully prepaid, to such party and its Additional Addressee, (ii) if sent via registered or certified mail, at the time of receipt by such party and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date and time stated upon confirmation reports generated 48 56 by the sending party's telefacsimile machine confirming the delivery of such notice, demand or request to such party and its Additional Addressee. 16.3 Refusal of Delivery. The inability to deliver any notice, demand or request because the individual to whom it is properly addressed in accordance with this Section 16 refused delivery thereof or no longer can be located at that address shall constitute delivery thereof to such individual. 16.4 Change of Address. Each party shall have the right from time to time to designate by written notice to the other parties hereto such other person or persons and such other place or places as said party may desire written notices to be delivered or sent in accordance herewith. SECTION 17 GENERAL PROVISIONS 17.1 Amendment. Except as provided in Section 4.1, no provision of this Agreement or of any documents or instrument entered into, given or made pursuant to this Agreement may be amended, changed, waived, discharged or terminated except by an instrument in writing, signed by the party against whom enforcement of the amendment, change, waiver, discharge or termination is sought. 17.2 Time of Essence. All times provided for in this Agreement for the performance of any act will be strictly construed, time being of the essence. 17.3 Entire Agreement. This Agreement and other documents delivered at Closing, set forth the entire agreement and understanding of the parties in respect of the transactions contemplated by this Agreement, and supersede all prior agreements, arrangements and understandings relating to the subject matter hereof and thereof. No representation, promise, inducement or statement of intention has been made by Seller or Buyer which is not embodied in this Agreement, or in the attached Exhibits or the written certificates, schedules or instruments of assignment or conveyance delivered pursuant to this Agreement, and neither Buyer nor Seller shall be bound by or liable for any alleged representations, promise, inducement or statement of intention not therein so set forth. 17.4 No Waiver. No failure of any party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder shall constitute a waiver of any party's right to demand strict compliance with the terms of this Agreement. 17.5 Counterparts. This Agreement, any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby, and any amendment or supplement thereto may be executed in two or more counterparts, and, when so executed, will have the same force and effect as though all signatures appeared on a single document. Any signature page of 49 57 this Agreement or of such an amendment, supplement, document or instrument may be detached from any counterpart without impairing the legal effect of any signatures thereon, and may be attached to another counterpart identical in form thereto but having attached to it one or more additional signature pages. 17.6 Costs and Attorneys' Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement or any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby or thereby (including, without limitation, the enforcement of any obligation to indemnify, defend or hold harmless provided for herein or therein), or because of an alleged dispute, default, or misrepresentation in connection with any of the provisions of this Agreement or of such document or instrument, or if Escrow Holder commences any action with respect to the Escrow(s), the successful or prevailing party shall be entitled to recover actual attorneys' fees, charges and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 17.7 Payments; Interests. Except as otherwise provided herein, payment of all amounts required by the terms of this Agreement shall be made in the United States and in immediately available funds of the United States of America which, at the time of payment, is accepted for the payment of all public and private obligations and debts. Unless the parties otherwise agree, payments shall be made through the Escrow Holder. If any payment due under this Agreement is not paid when due, it shall thereafter bear interest at a variable rate equal to the rate announced from time to time by Citibank, N.A. as its prime or reference rate, plus five percent (5%) per annum, but in no event more than the maximum rate, if any, allowed by law to be charged by the party receiving the interest on such type of indebtedness. 17.8 Transfer By Buyer. Buyer shall not have the right to assign this Agreement, but shall be permitted to designate an Affiliate or Affiliates to take title to the Property. In the event that Buyer elects to so designate any Affiliate or Affiliates to take title to the Property hereunder, (i) Buyer shall upon close of Escrow be released of all obligations hereunder other than pursuant to Section 6, Section 7.1, Section 10, Section 17.18, Section 17.19 and Section 17.20 or arising prior to the Close of Escrow, (ii) such Affiliate or Affiliates shall assume all of Buyer's obligations hereunder; and (iii) such Affiliate of Affiliates shall represent and warrant to Seller that such entities are duly organized and validly existing and otherwise as to the matters covered in Section 6.1.1 and Section 6.1.2 as applicable. 17.9 Parties in Interest. Subject to Section 17.8, the rights and obligations of the parties hereto shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs and the legal representatives of their respective estates. Nothing in this Agreement is intended to confer any right or remedy under this Agreement on any person other than the parties to this Agreement and their respective successors and permitted assigns, or to relieve or discharge the obligation or liability of any person to any party to this Agreement or to give any person any right of subrogation or action over or against any party to this Agreement. 50 58 17.10 Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the state in which the Real Property is located without giving effect to the conflict-of-law rules and principles of that state. 17.11 Incorporation of Recitals and Exhibits. The Recitals and Exhibits attached to this Agreement are incorporated into and made a part of this Agreement. 17.12 Construction of Agreement. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any of the parties hereto. Headings at the beginning of sections of this Agreement are solely for the convenience of the parties and are not a part of this Agreement. When required by the context, whenever the singular number is used in this Agreement, the same shall include the plural, and the plural shall include the singular, the masculine gender shall include the feminine and neuter genders, and vice versa. As used in this Agreement, the term "Seller" shall include the respective permitted successors and assigns of Seller, and the term "Buyer" shall include the permitted successors and assigns of Buyer, if any. 17.13 Severability. If any term or provision of this Agreement is determined to be illegal, unconscionable or unenforceable, all of the other terms, provisions and sections hereof will nevertheless remain effective and be in force to the fullest extent permitted by law. 17.14 Announcements. Seller and Buyer shall consult with each other and provide each other one (1) Business Day prior notice with regard to all press releases and other announcements issued at or prior to the Close of Escrow and during the one year period thereafter concerning the existence of this Agreement or the sale of the Property and, except as permitted under Section 17.19, neither Seller nor Buyer shall issue any such press release or other such publicity prior to the Close of Escrow without the prior written consent of the other party, which consent may be withheld in such other party's sole and absolute discretion. Buyer will not issue any public announcement with respect to Seller (other than to describe the transaction contemplated hereby to the extent permitted hereunder) without the prior written consent of Seller which may be withheld in its sole and absolute discretion. The agreements of the parties in this Section 17.14 shall survive the Close of Escrow or any termination of this Agreement. 17.15 Submission of Agreement. The submission of this Agreement to Buyer or its broker, agent or attorney for review or signature does not constitute an offer to sell the Property to Buyer or the granting of an option or other rights with respect to the Property to Buyer. No agreement with respect to the purchase and sale of the Property shall exist, and this writing shall have no binding force or effect, until this Agreement shall have been executed and delivered by Buyer and by Seller and Buyer shall have deposited the Deposit with Escrow Holder. 17.16 Further Assurances. Buyer and Seller agree to execute such instructions to the Escrow Holder and such other instruments and take such further actions either before or after the Close of Escrow as may be reasonably necessary to carry out the provisions of this Agreement provided that no material additional cost or liability shall be created thereby. 51 59 17.17 Cooperation. Buyer and Seller shall cooperate with the other to carry out the purpose of this Agreement (provided, such cooperation shall not require either party to expend any sum not otherwise required pursuant to the other provisions of this Agreement). This Section 17.17 shall survive the Close of Escrow. 17.18 Moratorium on Re-Sale. In the event Buyer does not consummate the proposed acquisition of ITT Corporation, substantially as such transaction is described in the Starwood Disclosure, the Buyer covenants and agrees that it will not sell the Property to any third-party for a period (the "Transfer Restriction Period") commencing upon the Close of Escrow and expiring upon the later of (a) five (5) years following the Close of Escrow, and (b) settlement of or the final non-appealable judgment is issued in connection with the existing litigation between Seller and the Ritz Carlton Hotel Company, LLC and their respective affiliates, provided, however, the foregoing prohibition shall not apply to a sale of all or substantially all of the assets of Buyer, the merger of Buyer into another entity or the transfer of the Property to a subsidiary and/or Affiliate of Buyer but shall be binding upon the party succeeding to all or substantially all of the assets of Buyer, the surviving entity in such merger, or such subsidiary or Affiliate. In the event Buyer does consummate the proposed acquisition of ITT Corporation described above, Buyer covenants and agrees that it will not sell the Property to Marriott International, Inc., Host Marriott, the Ritz Carlton Hotel Company, L.L.C. or any of their respective affiliates, successors and assigns, or any other party that Buyer reasonably believes will sell, and/or operate the Property pursuant to a franchise or operating agreement with any of the above-described entities, (collectively, "Excluded Parties") during the Transfer Restriction Period and shall cause any permitted purchaser of the Property during the Transfer Restriction Period to covenant and agree not to sell the Property to any Excluded Party for the balance of the Transfer Restriction Period. The provisions of this Section 17.18 shall be specifically enforceable. Buyer hereby waives any requirement for Seller to post a bond in order to seek or obtain any temporary restraining order or other injunctive relief pursuant to this Section 17.18. The parties acknowledge and agree that the provisions of this Section 17.18 form a material part of the consideration to Seller for entering into this Agreement. The parties agree that these provisions are reasonable in light of Seller's ongoing litigation with Ritz Carlton Hotel Company and its affiliates. 17.19 Confidentiality. Buyer shall hold as confidential all information concerning the transaction contemplated by this Agreement, Seller and the Property disclosed in connection with this transaction and Buyer shall not, prior to the Close of Escrow, release any such information relating to the transaction, Seller or the Property to any governmental agencies or third parties without Seller's prior written consent except as may be required by law and in such case subject to the provisions of Section 17.14. Seller hereby gives its consent to Buyer's disclosure of information relating to the transaction contemplated hereby to Buyer's Counsel and other consultants, in each instance to the extent reasonably necessary to verify information given to Buyer by Seller or otherwise to carry out the purposes of this Agreement and provided in each instance, such consultants agree in writing to be bound by the confidentiality provisions of this Section 17.19. If the Close of Escrow shall fail to occur for any reason, neither party shall issue any press release, publicity or other public announcement of the subject matter of this Agreement, or to make any other disclosure concerning the subject matter of this Agreement (except as may be required by law and in such case subject to the provisions of Section 17.14.), 52 60 without the prior written consent of the other party, which consent may be withheld in such other party's sole and absolute discretion. The agreements of the parties in this Section 17.19 shall survive any termination of this Agreement. 17.20 Interim Management Agreement. Seller shall provide Manager with a notice of termination of the Management Agreement on January 2, 1998 or as soon thereafter as Seller shall have obtained any required lender consent thereto. Seller shall on or prior to January 2, 1998 seek any required lender consent and use all reasonable commercial efforts to obtain same as promptly as possible. Buyer and Seller shall enter into a management agreement with respect to the Property in the form attached as Exhibit 17.20 hereto (the "Interim Management Agreement") which shall be effective (and the Interim Management Agreement shall be dated as of such effective date) on the earlier of (a) thirty days from the date of delivery to Manager of such termination notice and (b) the effective date of a written waiver of Manager of the notice of termination required under the Management Agreement. Buyer shall advance any fee payable to Manager under the Management Agreement on account of the termination thereof up to $80,620.00. Buyer shall be deemed to have waived delivery of all items under Sections 4.2.1.15, 4.2.1.16, 4.2.1.17 and 4.2.1.19 in the event the Management Agreement is terminated in accordance with the provisions of this Section 17.20 prior to the Closing Date. 17.21 Starwood Lodging Trust. The parties hereto understand and agree that the name "Starwood Lodging Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] 53 61 IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be executed as of the day and year first above written. "Seller" NEW REMINGTON PARTNERS, a Texas general partnership By: REMINGTON VENTURERS, INC., a Texas corporation, a General Partner By: /s/ Mansor Dalaan --------------------------- Name: Mansor Dalaan Title: President By: REMINGTON VENTURERS II, INC., a Texas corporation, a General Partner By: /s/ Mansor Dalaan --------------------------- Name: Mansor Dalaan Title: President "Buyer" STARWOOD LODGING TRUST, a Maryland real estate investment trust By: /s/ Steven R. Goldman --------------------------- Name: Steven R. Goldman Title: Senior Vice President STARWOOD LODGING CORPORATION, a Maryland corporation By: /s/ Michael C. Mueller --------------------------- Name: Michael C. Mueller Title: Vice President 54 62 "Escrow Agent" CHICAGO TITLE INSURANCE COMPANY, a Missouri corporation By: --------------------------- Name: Title: 55 EX-99.3 4 PURCHASE AND SALE AGREEMENT 1 NY EXECUTION PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS By And Between N.Y. OVERNIGHT PARTNERS, L.P., a New York Limited Partnership As Seller And STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust And STARWOOD LODGING CORPORATION, a Maryland Corporation, As Buyer. Dated As Of: December 30, 1997 Relating to the New York Luxury Collection Hotel, New York New York 2 TABLE OF CONTENTS SECTION 1 - DEFINITIONS......................................................1 1.1 Defined Terms....................................................1 1.2 Other Definitional Provisions...................................10 SECTION 2 - PURCHASE AND SALE OF PROPERTY...................................11 SECTION 3 - PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES....11 3.1 Purchase Price..................................................11 3.2 Payment.........................................................11 3.3 Investment of Escrowed Funds....................................11 3.4 Allocation of Purchase Price....................................12 3.5 Default by Buyer Prior to Closing; Liquidated Damages...........12 SECTION 4 - ESCROW; CLOSING; COSTS..........................................13 4.1 Escrow..........................................................13 4.2 Seller's Deliveries to Escrow Holder............................13 4.2.1.1 Deed..................................................13 4.2.1.2 Assignment and Assumption of Tenant Leases............13 4.2.1.3 General Assignment....................................14 4.2.1.4 Assignment and Assumption of Management Agreement.....14 4.2.1.5 Bill of Sale..........................................14 4.2.1.6 Stock Agreement.......................................14 4.2.1.7 Liquor Licenses Management Agreement..................14 4.2.1.8 Assignment and Assumption of Ground Lease.............14 4.2.1.9 Assignment of Mortgage................................14 4.2.1.10 [Intentionally Omitted]...............................14 4.2.1.11 [Intentionally Omitted]...............................14 4.2.1.12 [Intentionally Omitted]...............................15 4.2.1.13 Non-Foreign Person Certificate........................15 4.2.1.14 Transfer Tax Forms....................................15 4.2.1.15 Certified Rent Roll...................................15 4.2.1.16 Certified Operating Statement.........................15 4.2.1.17 Guest Ledger..........................................15 4.2.1.18 Closing Certificate...................................15 4.2.1.19 Schedule of Bookings..................................15 4.2.1.20 Title Requirements....................................15 4.2.1.21 Payoff Letters........................................16 4.2.1.22 Notices to Tenants....................................16 4.2.1.23 Opinion of Seller's Counsel...........................16 i 3 4.2.1.24 Other.................................................16 4.3 Buyer's Deliveries to Escrow Holder.............................16 4.3.1.1 The Cash Purchase Price...............................16 4.3.1.2 Stock Certificates....................................16 4.3.1.3 Assignment and Assumption of Management Agreement.....16 4.3.1.4 Value Letter..........................................16 4.3.1.5 Opinion of Buyer's Counsel............................17 4.3.1.6 Stock Agreement.......................................17 4.3.1.7 Assignment and Assumption of Ground Lease.............17 4.3.1.8 Liquor License Management Agreement...................17 4.3.1.9 [Intentionally Omitted]...............................17 4.3.1.10 [Intentionally Omitted]...............................17 4.3.1.11 [Intentionally Omitted]...............................17 4.3.1.12 Closing Certificate...................................17 4.3.1.13 The Assignment and Assumption of Tenant Leases........17 4.3.1.14 The General Assignment and Assumption Agreement.......17 4.3.1.15 Transfer Tax Forms....................................17 4.3.1.16 Other.................................................17 4.4 Seller's Deliveries to Buyer....................................17 4.4.1 Tenant Leases/Tenant Deposits.........................17 4.4.2 Service Contracts.....................................18 4.4.3 Licenses and Permits..................................18 4.4.4 Records and Plans.....................................18 4.5 Possession......................................................18 4.6 Evidence of Authorization.......................................18 4.7 Close of Escrow.................................................18 4.8 Costs of Escrow.................................................19 4.9 Other Costs.....................................................20 4.10 Maintenance of Confidentiality by Escrow Holder.................20 SECTION 5 - PRORATIONS AND ASSUMPTION OF OBLIGATIONS........................20 5.1 General.........................................................20 5.2 General and Specific Prorations.................................20 5.3 Deposits........................................................23 5.4 Tenant Leases...................................................23 5.5 Service Contracts and Other Intangible Property.................23 5.6 Tax Refunds and Proceedings.....................................23 5.7 Guest Baggage...................................................24 5.8 Safe Deposit Boxes..............................................24 5.9 Advance Bookings................................................24 SECTION 6 - REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY...........24 6.1 Of the Trust....................................................24 6.1.1 Power and Authority...................................24 ii 4 6.1.2 Authorization; Valid Obligation.......................25 6.1.3 Capital Structure.....................................25 6.1.4 SEC Documents and Other Reports.......................25 6.1.5 Absence of Certain Changes or Events..................26 6.1.6 Actions and Proceedings...............................26 6.1.7 REIT Status...........................................26 6.1.8 Partnership Status....................................27 6.1.9 Hart-Scott-Rodino Act.................................27 6.2 Of the Corporation..............................................27 6.2.1 Power and Authority...................................27 6.2.2 Authorization; Valid Obligation.......................27 6.2.3 Capital Structure.....................................27 6.2.4 SEC Documents and Other Reports.......................27 6.2.5 Absence of Certain Changes or Events..................28 6.2.6 Actions and Proceedings...............................28 6.2.8 Hart-Scott-Rodino.....................................29 6.3 Of Seller.......................................................29 6.3.1 Regarding Seller's Authority..........................29 6.3.2 Tenant Leases.........................................29 6.3.3 Service Contracts.....................................30 6.3.4 Claims................................................30 6.3.5 Employees.............................................30 6.3.6 Compliance with Laws..................................30 6.3.7 Hazardous Materials...................................30 6.3.8 Records and Plans.....................................31 6.3.9 Licenses and Permits..................................31 6.3.10 Management Agreements.................................31 6.3.11 Personal Property.....................................31 6.3.12 Insurance.............................................31 6.3.13 Real Estate Taxes.....................................31 6.3.14 Residential Apartments; Rent Regulations..............31 6.3.15 Regarding The Ground Lease............................31 6.4 Buyer's Review of Records and Plans.............................32 6.4.1 Access to Records and Plans; Specific Disclosures.....32 6.4.2 Limitation on Access to Records and Plans.............32 6.5 PURCHASE AS IS..................................................33 6.6 Limitation on Representations and Warranties of Seller..........35 6.7 Right to Supplement Disclosures.................................35 6.8 Basket..........................................................35 6.9 Survival........................................................35 SECTION 7 - TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING............36 7.1 Buyer's Review of Title.........................................36 7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens........................................36 iii 5 7.1.2 [Intentionally omitted]...............................37 7.2 Title Insurance Policy..........................................37 7.3 Title to Real Property..........................................37 SECTION 8 - INTERIM ACTIVITIES..............................................38 SECTION 9 - CONDITIONS PRECEDENT TO CLOSING.................................38 9.1 Conditions Precedent to Buyer's Obligations.....................38 9.1.1 Seller's Deliveries...................................38 9.1.2 Title Policy..........................................38 9.1.3 Performance Under Related Agreement...................39 9.1.4 Ground Lessor Estoppel................................39 9.1.5 Seller Performance....................................39 9.1.6 Representations and Warranties of Seller..............39 9.2 Conditions Precedent to Seller's Obligations....................39 9.2.1 Funds and Documents...................................39 9.2.2 Representations and Warranties of Buyer...............39 9.2.3 No Material Changes...................................39 9.2.4 Ground Lessor Estoppel................................40 9.2.5 Performance Under Related Agreement...................40 9.3 Failure of Condition............................................40 SECTION 10 - BROKER.........................................................40 SECTION 11 - REMEDIES FOR SELLER'S DEFAULT..................................41 11.1 Buyer's Remedies in General.....................................41 11.2 MATERIAL INDUCEMENT.............................................41 SECTION 12 - DAMAGE TO OR DESTRUCTION OF THE PROPERTY.......................41 12.1 Insured Casualty................................................41 12.2 Uninsured Casualty..............................................42 SECTION 13 - CONDEMNATION...................................................43 SECTION 14 -EMPLOYEES.......................................................43 14.1 Hiring of Hotel Employees; WARN Act Compliance..................43 14.2 Collective Bargaining Agreements; ERISA Compliance..............44 14.3 Continuation of Benefits........................................44 14.5 Indemnification.................................................46 14.6 Survival........................................................46 SECTION 15 - COOPERATION....................................................46 SECTION 16 - NOTICES........................................................47 16.1 Addresses.......................................................47 16.2 Receipt of Notices..............................................48 iv 6 16.3 Refusal of Delivery.............................................49 16.4 Change of Address...............................................49 SECTION 17 - GENERAL PROVISIONS.............................................49 17.1 Amendment.......................................................49 17.2 Time of Essence.................................................49 17.3 Entire Agreement................................................49 17.4 No Waiver.......................................................49 17.5 Counterparts....................................................50 17.6 Costs and Attorneys' Fees.......................................50 17.7 Payments; Interests.............................................50 17.8 Transfer By Buyer...............................................50 17.9 Parties in Interest.............................................50 17.10 Applicable Law..................................................51 17.11 Incorporation of Recitals and Exhibits..........................51 17.12 Construction of Agreement.......................................51 17.13 Severability....................................................51 17.14 Announcements...................................................51 17.15 Submission of Agreement.........................................51 17.16 Further Assurances..............................................52 17.17 Cooperation.....................................................52 17.18 Moratorium on Re-Sale...........................................52 17.19 Confidentiality.................................................52 17.20 Interim Management Agreement....................................53 v 7 EXHIBITS Exhibit A...........................................Legal Description Exhibit B......................................Memorandum of Contract Exhibit 4.2.1.1..................................................Deed Exhibit 4.2.1.2............Assignment and Assumption of Tenant Leases Exhibit 4.2.1.3...........General Assignment and Assumption Agreement Exhibit 4.2.1.4.....Assignment and Assumption of Management Agreement Exhibit 4.2.1.5(a).....Bill of Sale for Capitalized Tangible Property Exhibit 4.2.1.5(b)........Bill of Sale for Expensed Tangible Property Exhibit 4.2.1.6.......................................Stock Agreement Exhibit 4.2.1.7...................Liquor License Management Agreement Exhibit 4.2.1.8.............Assignment and Assumption of Ground Lease Exhibit 4.2.1.13.......................Non-Foreign Person Certificate Exhibit 17.20............................Interim Management Agreement SCHEDULES Schedule 1.1.1.............................Approved Service Contracts Schedule 1.1.2..................................Employment Agreements Schedule 1.1.3.......................................Equipment Leases Schedule 1.1.4......................................Excluded Property Schedule 1.1.5...........................................Ground Lease Schedule 1.1.6........................................Hotel Employees Schedule 1.1.7..............................Schedule of Tenant Leases Schedule 1.1.8......... Seller's Due Diligence and Seller's Knowledge Schedule 1.1.9............................Specific Disclosure Matters Schedule 3.4.............................Allocation of Purchase Price Schedule 6.3.2...................Material Defaults Under Tenant Lease Schedule 6.3.3.....Material Defaults Under Approved Service Contracts Schedule 6.3.4........................................Material Claims Schedule 6.3.5..........Material Defaults Under Employment Agreements Schedule 6.3.6....................................Material Violations Schedule 6.3.7......................Material Environmental Conditions Schedule 6.3.9...................................Licenses and Permits Schedule 6.3.12....................................Seller's Insurance Schedule 6.3.13..................................Pending Tax Protests Schedule 7.3...................................Permitted Encumbrances Schedule 14.2........................Collective Bargaining Agreements vi 8 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this "Agreement") is entered into as of the 30th day of December, 1997, by and between N.Y. OVERNIGHT PARTNERS, L.P., a New York limited partnership ("Seller"), and STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust (the "Trust"), and STARWOOD LODGING CORPORATION, a Maryland corporation (the "Corporation"; the Trust and the Corporation being referred to herein collectively as, "Buyer"). A. Seller owns that certain parcel of land described in EXHIBIT A attached hereto and made a part hereof, which is improved with a hotel building and certain related improvements, all as more particularly set forth in this Agreement. B. Seller desires to sell, and Buyer desires to purchase, the above described land and hotel together with the related improvements upon the terms and subject to the conditions set forth in this Agreement. A G R E E M E N T NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby mutually acknowledged, Buyer and Seller agree as follows: SECTION 1 DEFINITIONS 1.1 Defined Terms "Accounts Receivable" shall mean, collectively, all Cash Equivalent Receivables, all Invoiced Receivables and all Other Accounts Receivable. "Affiliate" shall have the meaning set forth in Rule 12b-2 of the regulations promulgated under the Exchange Act. "Approved Service Contracts" shall mean the Service Contracts identified on SCHEDULE 1.1.1 annexed hereto and made a part hereof and any other Service Contracts cancelable upon thirty (30) or fewer days notice without penalty, which Service Contracts Buyer shall assume as of the Closing pursuant to the General Assignment and Assumption Agreement. "Assignment and Assumption of Ground Lease" shall have the meaning set forth in SECTION 4.2.1.8. 9 "Assignment and Assumption of Management Agreement" shall have the meaning set forth in SECTION 4.2.1.4. "Assignment and Assumption of Tenant Leases" shall have the meaning set forth in SECTION 4.2.1.2. "Assignment of Mortgage" shall have the meaning set forth in SECTION 4.2.1.9. "Bill of Sale" shall have the meaning set forth in SECTION 4.2.1.5. "Business Day" shall mean any day other than Saturday or Sunday on which the New York Stock Exchange is open for business. "Booking" shall mean a contract or reservation for the use of guest rooms, banquet facilities, meeting rooms, and/or conference facilities at the Hotel. "Buyer's Counsel" shall mean the law firm of Greenberg Traurig Hoffman Lipoff Rosen & Quentel acting through Andrew E. Zobler, Esq. "Buyer Default" shall have the meaning set forth in SECTION 3.5.1. "Cash Equivalent Receivables" shall mean all Guest Ledger Receivables which are in the form of drafts or checks written on any bank or other financial institution, certified checks, money orders, amounts owed to Seller from credit card, debit card, travel and entertainment card or traveler's check companies, and are in such other forms which are considered to be cash equivalents under generally acceptable accounting principles, whether or not such Guest Ledger Receivables have been presented or billed to any such bank, financial institution or other company as of the Closing Date. "Cash Purchase Price" shall mean (a) Seventy-Six Million Eight Hundred Thousand Dollars ($76,800,000.00) plus (b) an additional Three Million Two Hundred Thousand Dollars ($3,200,000.00) if the Scheduled Closing Date does not occur prior to July 15, 1998 plus (c) the Overage Cash Payment, if any, as adjusted pursuant to SECTION 3.2.2. "Closing" or "Close of Escrow" shall have the meaning set forth in SECTION 4.7.2. "Closing Agent" shall have the meaning set forth in SECTION 4.8.10. "Closing Date" shall mean the day on which the Closing occurs hereunder. "Closing Payment" shall have the meaning set forth in SECTION 3.2.2. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. "Collective Bargaining Agreements" shall have the meaning set forth in SECTION 14.2. 2 10 "Conveyance Documents" shall mean the Deed, the Assignment and Assumption of Ground Lease, the Assignment and Assumption of Management Agreement, the Assignment and Assumption of Tenant Leases, the Bill of Sale and the General Assignment and Assumption Agreement. "Deed" shall have the meaning set forth in SECTION 4.2.1.1. "Deposit" shall mean an amount equal to $4,571,428.00 held in accordance with the provisions of SECTION 3 hereof together with all interest accrued thereon. "Employer Corporation" shall mean Luxury Holdings, Inc. (formerly known as TQM Inc.). "Employment Agreements" shall mean the Collective Bargaining Agreements and Employee Benefit Plans (as defined in Section 3(3) of ERISA), affecting Hotel Employees, including pension, profit sharing, employee benefit and similar plans, if any, and agreements with regard to any Hotel Employee each of which are identified on or expressly described in the materials identified on SCHEDULE 1.1.2 annexed hereto and made a part hereof. "Environmental Condition" shall mean any condition with respect to soil, surface waters, groundwater, land, stream sediments, surface or subsurface strata, ambient air and any environmental medium comprising or surrounding the Real Property, which results in any damage, loss, cost, expense, claim, demand, order or liability to or against Seller or Buyer by any third party (including, without limitation, any government entity) as a result of a violation of any applicable Environmental Laws. "Environmental Laws" shall mean all presently applicable statutes, regulations, rules, ordinances, codes, licenses, permits and orders of any and all governmental agencies, departments, commissions, boards, bureaus or instrumentalities of the United States, states and political subdivisions thereof, and all applicable judicial and administrative and regulatory decrees, judgments and orders relating to the protection of the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq.; and analogous state laws and regulations. "Equipment Leases" shall mean all leases of equipment, vehicles, furniture or other personal property leased by, or on behalf of, Seller and located at, or used in the operation of the Real Property, together with any and all amendments thereto, which are identified on SCHEDULE 1.1.3 annexed hereto. "Equity Purchase Price" shall mean the number of Paired Shares with a value as determined pursuant to the Stock Agreement equal to Two Million Nine Hundred Forty Two Thousand Four Hundred Dollars ($2,942,400.00) (provided, however, the Equity Purchase Price shall be reduced to Zero Dollars ($0.00) if the Scheduled Closing Date does not occur prior to 3 11 July 15, 1998) to be delivered in accordance with the applicable provisions of the Stock Agreement. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. "Escrow" shall mean an escrow opened with the Escrow Holder for the purchase and sale of the Property in accordance with the provisions of this Agreement. "Escrow Holder" shall mean the Title Company unless otherwise agreed in writing by Buyer and Seller. "Escrow Instructions" shall have the meaning set forth in SECTION 4.1. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Excluded Property" shall mean all Seller's right, title and interest in and to: (a) those claims of Seller attributable to the period prior to the Closing Date and described on SCHEDULE 1.1.4 annexed hereto and made a part hereof, or which Seller is entitled to assert under the express provisions of SECTION 5; (b) all insurance proceeds under Seller's Insurance and workers' compensation policies, including return premiums and dividends thereon and all claims thereunder in each case to the extent attributable to acts or occurrences prior to the Closing Date; (c) all accounts owned or maintained by Seller, or Manager on Seller's behalf, in connection with the Hotel, including all operating and reserve accounts; and (d) any books, records, files or papers specifically described in SECTION 6.3.2 as excluded from the Property Information. "Excluded Parties" shall have the meaning set forth in SECTION 17.18 "Execution Date" shall mean the date hereof. "General Assignment and Assumption Agreement" shall have the meaning set forth in SECTION 4.2.1.3. "Ground Lease" shall mean the Ground Lease entered into as of December 30, 1963 by and between the Massachusetts Mutual Life Insurance Company and Louis Berry & F.B.M. Manufacturing Company, Inc., as amended to date and described more fully on SCHEDULE 1.1.5 hereto. "Ground Lease Estoppel" shall have the meaning set forth in SECTION 9.1.4. "Ground Lease Transfer Requirement" shall have the meaning set forth in SECTION 7.1.1 "Guest Ledger Receivables" shall mean amounts, including, without limitation, room charges, accrued to the accounts of guests occupying rooms at the Hotel or group, conference or banquet customers of Seller at the Hotel. 4 12 "Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder, as the same has been amended from time to time. "Hotel" shall mean the hotel located on the Land and commonly known as the New York Luxury Collection Hotel. "Hotel Employees" shall mean all full-time, part-time or temporary employees of Seller and/or the Employer Corporation (but not employees of Manager or any of its affiliates) who are employed by Seller and/or the Employer Corporation exclusively at or in connection with the Hotel as of the Closing Date and who are listed on SCHEDULE 1.1.6 annexed hereto and made a part hereof. "Improvements" shall mean Seller's right, title and interest in and to the hotel building and other improvements now or hereafter located on the Land. "Insured Casualty Notice" shall have the meaning set forth in SECTION 12.1.1. "Intangible Property" shall mean all of Seller's right, title and interest in and to the following, in each case excluding any Excluded Property: (i) Licenses and Permits; (ii) trademark rights, and other intangible property, rights, titles, interests, privileges and appurtenances related to or used in connection with the Hotel or its operations; (iii) warranties and guaranties of architects, engineers, contractors, subcontractors, suppliers or materialmen involved in the repair, construction, maintenance, design, reconstruction or operation of the Hotel, or any equipment or systems constituting a part of the Hotel; (iv) Approved Service Contracts; (v) Equipment Leases; (vi) Bookings; and (vii) computer programs, software and documentation thereof (subject to the limitations of any applicable license agreements pertaining thereto), and including all electronic data processing systems, program specifications, source codes, logs, input data and report layouts and forms, record file layouts, diagrams, functional specifications and variable descriptions, flow charts and other related materials used in connection therewith; and (viii) any goodwill associated with the operation of the Hotel. "Interim Management Agreement" shall have the meaning set forth in SECTION 17.20 hereto. "Invoiced Receivables" shall mean all Guest Ledger Receivables other than Cash Equivalent Receivables whether or not such Guest Ledger Receivables have been invoiced by Seller as of the Closing Date. "Land" shall mean Seller's right, title and interest in and to the land described on EXHIBIT A annexed hereto and made a part hereof. "Licenses and Permits" shall mean all licenses, permits, registrations, certificates, authorizations and governmental approvals other than the Liquor License obtained in connection with the design, construction, rehabilitation, use and/or operation of the Hotel. 5 13 "Liquor License" shall mean all licenses, permits, registrations, certificates, authorizations and governmental approvals with respect to service of alcoholic beverages at the Hotel. "Liquor License Management Agreement" shall have the meaning set forth in SECTION 4.2.1.8. "Lock Price" shall have the meaning set forth in the Stock Agreement. "Losses" shall mean any and all losses, liabilities, obligations, damages, claim or expense, including without limitation, reasonable attorneys' and accountants' fees and disbursements related thereto. "Manager" means Sheraton Operating Corporation, a wholly-owned subsidiary of ITT Sheraton Corporation. "Management Agreement" shall mean that certain Management Agreement entered into as of August 13, 1997 between Seller and Manager. "Market Price" shall have the meaning set forth in the Stock Agreement. "Material" shall mean $5,000 for any single occurrence and $15,000 in the aggregate for any group of occurrences whether or not related. "Material Casualty" shall mean a casualty or casualties that, in the aggregate: (i) causes in excess of $10,000,000.00 worth of damage to the Hotel; or (ii) will take twelve (12) months or longer from the date of the casualty to fully remediate. "Material Taking" shall mean an exercise by an applicable governmental authority of the power of condemnation or eminent domain that results in: (a) the taking of more than twenty percent (20%) of the Real Property; (b) a material reduction or restriction in access to the Property; or (c) the inability to operate the Hotel in substantially the same manner (without material additional expense) as it was operated prior to such taking. "Memorandum of Contract" shall mean a memorandum of this Agreement in the form attached as EXHIBIT B hereto. "Monetary Lien" shall mean any monetary lien affecting the Seller's interest in the Real Property of an ascertainable amount, other than any lien for taxes or assessments which are not yet due and payable. "Non-Foreign Person Certificate" shall have the meaning set forth in SECTION 4.2.1.13. "Other Accounts Receivable" shall mean any and all rents, additional rent, deposits, and other sums and charges owing to Seller that are in any way attributable to the operation of the business at the Hotel, including, without limitation, all rents and/or license fees 6 14 due from Tenants under Tenant Leases, and including any such amounts which are past due, but excluding Guest Ledger Receivables. "Overage Cash Payment" shall mean the portion of the Equity Purchase Price which is payable in cash at Closing as provided in SECTION 3.2.2.1, if any. "Ownership Limitation" shall mean the limitations contained in the declaration of trust for the Trust and the Corporation's articles of incorporation prohibiting actual or constructive ownership by any one person or group of related persons of more than 8% of the issued and outstanding Paired Shares taking into account the attribution rules of Section 544(a) of the Code as modified by Section 856(h) of the Code or Section 318(a) of the Code as modified by Section 856(d)(5) of the Code. "Paired Shares" shall mean one share of beneficial interest, par value $.01 per share of the Trust, and one share of common stock, par value $.01 per share, of the Corporation that are subject to the Pairing Agreement, which shares shall be transferable as provided in the Stock Agreement and the Pairing Agreement. "Pairing Agreement" shall mean the Pairing Agreement dated as of June 25, 1980, as amended, between the Trust and the Corporation providing, in relevant part, for the pairing of all outstanding beneficial interests of the Trust and shares of the Corporation. "Permitted Encumbrances" shall have the meaning set forth in SECTION 7.3. "Person" shall mean any natural person, partnership, corporation, association, limited liability company, trust or any other legal entity. "Personal Property" shall mean collectively the Tangible Personal Property and the Intangible Property. "Preliminary Title Report" shall have the meaning set forth in SECTION 7.1. "Property" shall mean collectively the Real Property, the Personal Property, the Tenant Leases, and the Accounts Receivable, but shall exclude the Excluded Property. "Property Information" shall have the meaning set forth in SECTION 6.4.2. "Proration Time" shall mean 12:01 a.m. Eastern Time on the Closing Date. "Purchase Price" shall mean the sum of the Cash Purchase Price and the Equity Purchase Price. "Real Property" shall mean the Land and the Improvements, together with Seller's right, title and interest in and to all rights of way, easements, water or littoral rights, rights to any minerals, oil, gas and other hydrocarbon substances, or any portion thereof, relating to the Land, and Seller's right, title and interest in and to all streets, alleys, strips and gores abutting the Land, if any. 7 15 "Records and Plans" shall mean, all financial records showing the income and expenses of the Hotel for the prior three (3) calendar years and for the current year to date, certificates of occupancy, records of the Hotel's operations (including utility bills), building plans, specifications and drawings, lists of Personal Property, surveys, tax bills for the Real Property for the last three (3) years and for the current year to date, copies of the Service Contracts, Licenses and Permits and other documents related to the use, maintenance, repair, management, construction and/or operation of the Hotel, in each case, to the extent located on-site at the Hotel, or to Seller's Knowledge, otherwise under the control of Seller. "Related Agreement" shall have the meaning set forth in SECTION 9.1.3. "Schedule of Advance Bookings" means the Schedule of Advance Bookings delivered pursuant to SECTION 4.2.1.19. "Schedule of Tenant Leases" means the Schedule of Tenant Leases set forth in SCHEDULE 1.1.7 annexed hereto and made a part hereof. "Scheduled Closing Date" shall mean January 15, 1998, as such date may be extended in accordance with the provisions of SECTION 7.1 time being of the essence. "SEC" shall mean the United States Securities and Exchange Commission. "SEC Documents" shall have the meaning set forth in SECTION 6.1.4. "Securities Act" shall mean the Securities Act of 1933, as amended. "Seller Default" shall have the meaning set forth in SECTION 11.1. "Seller's Closing Certificate" shall have the meaning set forth in SECTION 4.2.1.18. "Seller's Counsel" shall mean Morrison & Foerster LLP acting through Thomas R. Fileti, Esq. "Seller's Due Diligence" shall mean the information gathering and review process described on SCHEDULE 1.1.8. "Seller's Insurance" shall have the meaning set forth in SECTION 6.3.12. "Seller's Knowledge" shall mean with respect to any representation or warranty so qualified, the knowledge of the person(s) identified on SCHEDULE 1.1.8 annexed hereto and made a part hereof, on the date on or as of which such representation or warranty is made, following the completion by such person(s) of Seller's Due Diligence, but without any other duty to investigate or inquire and without attribution to any such identified person(s) of facts and matters otherwise within the personal knowledge of any other officers, employees, or agents of Seller or any third parties (including, but not limited to, the Manager or any previous manager of the Hotel), but not within the actual current knowledge of such named person(s). It is understood 8 16 that none of the individuals identified on SCHEDULE 1.1.8 shall have any personal liability for any of Seller's representations, warranties and other obligations under this Agreement. "Service Contracts" shall mean any and all service contracts, landscaping contracts, maintenance agreements, open purchase orders and other contracts for the provision of services, materials or supplies to or for the benefit of the Property, except for the Management Agreement, together with any and all amendments thereto. "Specific Disclosure Matters" shall mean certain disclosures and information provided or disclosed by Seller to Buyer described on SCHEDULE 1.1.9 annexed hereto and made a part hereof. "Starwood Disclosure" shall mean collectively, the Form S-3 filed by the Corporation and the Trust with the SEC on November 12, 1997, and the Form S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as the same may be amended by any filing with the SEC made by the Trust or the Corporation as amended to date and from time to time thereafter. "Starwood Operating Partnership" shall mean SLC Operating Limited Partnership, a Delaware limited partnership. "Starwood Realty Partnership" shall mean SLT Realty Limited Partnership, a Delaware limited partnership. "State" shall mean the state in which the Hotel is located. "Stock Agreement" shall have the meaning set forth in SECTION 4.2.1.6. "Survey" shall mean an as-built customary survey of the Real Property certified to the Title Company meeting all State land survey requirements. "Tangible Personal Property" shall mean, in each case to the extent owned by Seller and excluding any and all of the Excluded Property: (i) all Records and Plans; (ii) all "Inventories", as such term is defined in the Uniform System of Accounts; (iii) all depreciable personal property; and (iv) all other tools, vehicles, supplies, artwork, furniture, furnishings, machinery, equipment, licensed software and personal computer based security systems, if any, specialized hotel equipment and other tangible personal property, used in connection with the ownership, operation or maintenance of the Property, including, without limitation, all china, glassware, silverware, linens, towels, curtains, uniforms, engineering, maintenance, and housekeeping supplies, draperies, materials and carpeting, used or intended for use, but not for sale, in connection with the operation of the Hotel, all equipment used in the operation of the kitchen, dining rooms, lounges, bars, laundry, dry cleaners, lobby, reservation desk and all merchandise, food and beverages held for sale in connection with the operation of the Hotel, which are on hand on the Closing Date; provided, however, that to the extent that any applicable law prohibits the transfer of alcoholic beverages from Seller to Buyer, such beverages shall not be considered a part of the Tangible Personal Property. 9 17 "Tenant" shall mean a tenant, licensee or concessionaire occupying space at any portion of the Property pursuant to a Tenant Lease. "Tenant Lease" shall mean a lease, concession agreement or license agreement entered into by or on behalf of Seller with a third party for the use of any part of the Real Property, including those leases, concession agreements and license agreements shown on the Schedule of Tenant Leases, together with any amendments thereto but excluding Bookings. "Tenant Security Deposits" shall mean all security deposits or other security of Tenants under the Tenant Leases, plus accrued interest, if any, payable thereon. "Termination Charges" shall have the meaning set forth in SECTION 14.1. "Termination Notice" shall have the meaning set forth in SECTION 3.5.1. "Threshold Amount" shall mean One Million Dollars ($1,000,000). "Title Company" shall mean Chicago Title Insurance Company. "Title Policy" shall have the meaning set forth in SECTION 7.2. "Transfer Restriction Period" shall have the meaning set forth in SECTION 17.18. "Uninsured Casualty Notice" shall have the meaning set forth in SECTION 12.2.1. "Uninsured Estimate to Repair" shall have the meaning set forth in SECTION 12.2.1. "Uniform System of Accounts" shall mean the Uniform System of Accounts for Hotels, prepared by The Hotel Association of New York City, Inc., in effect as of the date hereof. "Utility Deposits" shall mean Seller's right, title and interest in and to all deposits delivered by Seller to utilities, governmental agencies, suppliers or others pursuant to an Approved Service Contract or otherwise in connection with the Real Property. "Value Letter" shall have the meaning set forth in SECTION 4.3.1.4. "WARN Act" shall mean the Workers Adjustment and Retraining Notification Act and the Regulations promulgated thereunder, as the same has been amended. 1.2 Other Definitional Provisions. The terms "hereof," "hereto," "hereunder" and similar terms when used in this Agreement shall refer to this Agreement generally, rather than to the section in which such term is used, unless otherwise specifically provided. Unless the context otherwise requires, any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. 10 18 SECTION 2 PURCHASE AND SALE OF PROPERTY On the terms and subject to the conditions of this Agreement, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller all as hereinafter provided. Notwithstanding any other provision of this Agreement, there shall be excluded from the Property being conveyed hereunder the Excluded Property. SECTION 3 PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES 3.1 Purchase Price. The purchase price for the Property shall be the Purchase Price. 3.2 Payment. The Purchase Price shall be paid as follows: 3.2.1 Upon the execution hereof, Buyer shall deliver to Escrow Holder, in cash or other immediately available funds, the Deposit, to be held by Escrow Holder strictly in accordance with the provisions of this Agreement. If the Close of Escrow shall occur, Seller shall be entitled to receive the Deposit as a credit against the Purchase Price. 3.2.2 At least one (1) day prior to the Scheduled Closing Date (unless extended pursuant to SECTION 7.1), Buyer shall deliver to Escrow Holder an amount (the "Closing Payment") payable in the form specified in SECTIONS 3.2.2.1 and 3.2.2.2 below, equal to the Purchase Price less the amount of the Deposit. The Closing Payment shall be paid as follows: 3.2.2.1 The Equity Purchase Price, if any, shall be delivered in Paired Shares without adjustment for the pro-rations hereunder, which shares shall be delivered in accordance with and subject to and transferable in accordance with the provisions of the Stock Agreement and the Pairing Agreement. If any portion of the Equity Purchase Price cannot be paid in Paired Shares on account of the Ownership Limitation, a cash payment in an amount equal to the product of (a) the number of Paired Shares which are not delivered hereunder or under the Stock Agreement because of the Ownership Limitation and (b) the Market Price on the Closing Date (the "Overage Cash Payment") shall be paid in cash or other immediately available funds. 3.2.2.2 The balance of the Closing Payment shall be paid in cash or other immediately available funds adjusted for the pro-rations provided for expressly in this Agreement. 3.3 Investment of Escrowed Funds. Escrow Holder shall invest and reinvest any funds deposited by Buyer in the Escrow only in bonds, notes, Treasury bills or other securities 11 19 having maturities of thirty (30) days or less and constituting direct obligations of, or fully guaranteed by, the United States of America (and provided, further, that such direct obligations or guarantees, as the case may be, are entitled to the full faith and credit of the United States of America) or such other investments as Buyer may direct and Seller may approve, until Escrow Holder is required to deliver or use such funds or any interest earned thereon in accordance with the provisions of this Agreement. All interest accruing on the Deposit shall be paid to the party ultimately entitled to the Deposit. All risk of loss on funds held in Escrow shall be borne by Buyer or Escrow Holder. 3.4 Allocation of Purchase Price. The Purchase Price shall be allocated among the assets and property that comprise the Property as proposed by Seller prior to Closing subject to the reasonable approval of Buyer, and such allocation shall be used by Seller and Buyer in connection with the preparation of their respective income tax, sales tax, transfer tax, and any other applicable tax returns. Seller and Buyer shall not, nor shall they permit their respective Affiliates to, take a federal or state income tax position with any taxing or other public authorities in any jurisdiction which is materially inconsistent with the allocation so agreed upon by the parties. 3.5 Default by Buyer Prior to Closing; Liquidated Damages. 3.5.1 EXCEPT AS PROVIDED TO THE CONTRARY IN SECTION 7.1.1., IF BUYER BREACHES ITS OBLIGATION TO PURCHASE THE PROPERTY UNDER THIS AGREEMENT AND FAILS TO CURE SUCH BREACH ON OR BEFORE THE SCHEDULED CLOSING DATE (A "BUYER DEFAULT"), THEN UPON WRITTEN NOTICE OF TERMINATION (A "TERMINATION NOTICE") FROM SELLER TO BUYER AND ESCROW HOLDER, THE ESCROW AND THIS AGREEMENT SHALL TERMINATE AND ESCROW HOLDER SHALL DISBURSE FROM THE ESCROW THE DEPOSIT TO SELLER AS LIQUIDATED DAMAGES, WHICH SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR THE BUYER DEFAULT, AND THEREAFTER NEITHER PURCHASER NOR SELLER SHALL HAVE ANY FURTHER LIABILITY HEREUNDER, EXCEPT THAT BUYER SHALL REMAIN OBLIGATED FOR PERFORMANCE OF ITS OBLIGATIONS UNDER SECTIONS 8, 10, 17.14, 17.19 AND ANY OTHER PROVISION HEREOF WHICH BY ITS EXPRESS TERMS SURVIVES THE TERMINATION OF THIS AGREEMENT. NOTHING CONTAINED HEREIN SHALL LIMIT SELLER'S RIGHT TO OBTAIN SPECIFIC PERFORMANCE OF BUYER'S OBLIGATION TO CLOSE PURSUANT TO SECTION 7.1.1. 3.5.2 THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS SECTION 3.5.2 THAT IF A BUYER DEFAULT OCCURS ON OR PRIOR TO THE SCHEDULED CLOSING DATE AND IF, AS A RESULT OF SUCH BUYER DEFAULT, CLOSE OF ESCROW FAILS TO OCCUR, SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN; AND THE DEPOSIT BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW 12 20 TO OCCUR AND THAT SELLER'S RETENTION OF THE DEPOSIT IS FAIR AND REASONABLE COMPENSATION TO SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR. INITIALS: __________________________ _________________________ Seller Buyer SECTION 4 ESCROW; CLOSING; COSTS 4.1 Escrow. The purchase and sale of the Property shall be consummated through the Escrow. Immediately upon the execution of this Agreement, the parties shall deposit a copy of this Agreement with Escrow Holder. This Agreement, together with any general provisions agreed to in writing by Buyer and Seller for the benefit of Escrow Holder, shall constitute the escrow instructions for the transfer of the Property (the "Escrow Instructions"). In the event of any conflict between this Agreement and such general provisions, this Agreement shall control unless otherwise expressly agreed in writing by Buyer, Seller and Escrow Holder. If any requirements relating to the duties or obligations of Escrow Holder are not acceptable to Escrow Holder, or if Escrow Holder requires additional instructions, the parties shall make such deletions, substitutions and additions to the Escrow Instructions as Buyer's Counsel and Seller's Counsel shall mutually approve and which do not substantially alter this Agreement or its intent. Written instructions from Seller's Counsel, in the case of Seller, or from Buyer's Counsel, in the case of Buyer, shall be accepted by Escrow Holder and shall be binding upon the party whose counsel gave such instructions to Escrow Holder. 4.2 Seller's Deliveries to Escrow Holder. 4.2.1 Prior to the Scheduled Closing Date (subject to extension pursuant to SECTION 7.1), Seller shall deliver to Escrow Holder the following documents duly executed and, where applicable, acknowledged by Seller, each of which shall be undated and the delivery of each of which shall be a condition precedent to the obligation of Buyer to close hereunder. 4.2.1.1 Deed. A deed with respect to the Improvements in the form of EXHIBIT 4.2.1.1 annexed hereto and made a part hereof, sufficient to transfer all of Seller's right, title and interest in and to the Improvements, subject only to matters of record as of the Closing Date, from Seller to Buyer (the "Deed"); 4.2.1.2 Assignment and Assumption of Tenant Leases. An Assignment and Assumption of Tenant Leases in the form of EXHIBIT 4.2.1.2 annexed hereto and made a part hereof pursuant to which Seller shall assign the Tenant Leases to Buyer and Buyer shall assume all of Seller's obligations thereunder (the "Assignment and Assumption of Tenant Leases"); 13 21 4.2.1.3 General Assignment. A General Assignment and Assumption Agreement in the form of EXHIBIT 4.2.1.3 annexed hereto and made a part thereof pursuant to which Seller shall assign to Buyer all of Seller's right, title and interest in and to all of the Intangible Property and Buyer shall assume all obligations thereunder (the "General Assignment and Assumption Agreement"); 4.2.1.4 Assignment and Assumption of Management Agreement. An Assignment and Assumption of Management Agreement in the form of EXHIBIT 4.2.1.4 annexed hereto and made a part hereof pursuant to which Seller shall assign to Buyer the Management Agreement and Buyer shall assume the obligations of Seller thereunder, provided, however, the obligation to deliver the Assignment and Assumption of Management Agreement shall be irrevocably waived, if prior to the Close of Escrow, the Management Agreement shall have been terminated and the Interim Management Agreement shall have become effective in accordance with SECTION 17.20; 4.2.1.5 Bill of Sale. One or more Bills of Sale in the form of EXHIBITS 4.2.1.5A AND 4.2.1.5B annexed hereto and made a part hereof conveying to Buyer or designees of Buyer all of Seller's right, title and interest in and to the Tangible Personal Property (the "Bill of Sale"); 4.2.1.6 Stock Agreement. The Stock Agreement in the form of EXHIBIT 4.2.1.6 annexed hereto and made a part hereof (the "Stock Agreement"); 4.2.1.7 Liquor License Management Agreement. The Liquor License Management Agreement in the form of EXHIBIT 4.2.1.7 annexed hereto and made a part hereof (the "Liquor License Management Agreement"); 4.2.1.8 Assignment and Assumption of Ground Lease. An Assignment and Assumption of Ground Lease in the form of EXHIBIT 4.2.1.8 annexed hereto and made a part hereof pursuant to which Seller shall assign the Ground Lease to Buyer and Buyer shall assume all of Seller's obligations thereunder (the "Assignment and Assumption of Ground Lease"); 4.2.1.9 Assignment of Mortgage. Seller shall use reasonable efforts to obtain an assignment with covenant of the mortgages presently encumbering Seller's interest in the Ground Lease and Improvements (the "Assignment of Mortgage") fully executed and acknowledged by the holders of such mortgages pursuant to which the holders of such mortgage shall assign the same to a lender identified by Buyer and a release from the holders of such mortgages, pursuant to which Seller shall be released from any and all liability under said mortgages and under any related loan documents; it being understood that Seller has no obligation to deliver an affidavit pursuant to Section 275 of the Real Property Law of the State of New York; 4.2.1.10 [Intentionally Omitted] 4.2.1.11 [Intentionally Omitted] 14 22 4.2.1.12 [Intentionally Omitted] 4.2.1.13 Non-Foreign Person Certificate. A Non-Foreign Person Certificate in the form of EXHIBIT 4.2.1.13 annexed hereto and made a part hereof (the "Non-Foreign Person Certificate"); 4.2.1.14 Transfer Tax Forms. Any statements, such as a transfer or conveyance tax forms or returns required by applicable state or local law to be executed by Seller in order to effect the Closing; 4.2.1.15 Certified Rent Roll. A copy of the rent roll for the Property dated as of the Closing Date and certified by Seller to be (a) a true, correct and complete copy of the rent roll for the Property provided to Seller by the Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.16 Certified Operating Statement. An operating statement for the Property dated as of a date no more than thirty (30) days prior to the Closing Date and certified by Seller to be (a) a true, correct and complete copy of the operating statement for the Property provided to Seller by Manager for the period of Manager's employment at the Property; and (b) to Seller's Knowledge, to be, true, correct and complete; 4.2.1.17 Guest Ledger. A copy of the guest ledger dated as of the Proration Time showing all Guest Ledger Receivables and certified by Seller (a) to be a true, correct and complete copy of the guest ledger provided to Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.18 Closing Certificate. A certification by Seller to Seller's Knowledge that the representations and warranties set forth in SECTION 6.3 are true, correct and complete as of the Closing Date, except to the extent that any such representation or warranty is expressly made only as of the Execution Date subject to Seller's right to make revisions pursuant to SECTION 6.7 to such representations and warranties ("Seller's Closing Certificate"); 4.2.1.19 Schedule of Bookings. A schedule of all Bookings relating to periods after the Proration Time, certified by Seller (a) to be a true, correct and complete copy of the schedule of Bookings provided to Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.20 Title Requirements. Any and all certificates, affidavits and other instruments and documents which the Title Company shall reasonably require to permit it to issue the Title Policy in the condition required herein; provided, however, that (a) Seller is given written notice by Title Company of the requirement of any such certificates, affidavits or other instruments and documents within a reasonably sufficient time in advance of the Scheduled Closing Date and (b) such incidental documents do not create any liability to Seller that is inconsistent with the liability retained by Seller under the terms of this Agreement; 15 23 4.2.1.21 Payoff Letters. A pay-off letter from the holder of any mortgage or deed of trust presently encumbering the Real Property indicating all sums required to satisfy the debt secured by and permit the discharge of record the lien of such mortgage or deed of trust; 4.2.1.22 Notices to Tenants. Notices to Tenants of the assignment to Buyer of the Tenant Leases in form and substance satisfactory to Seller and Buyer; 4.2.1.23 Opinion of Seller's Counsel. An opinion of Seller's Counsel in a form to be agreed upon by the parties; and 4.2.1.24 Other. Any other incidental documents, not otherwise expressly provided for herein, reasonably required by Escrow Holder to consummate the purchase and sale of the Property; provided, however, that (a) Seller is given written notice by Escrow Holder of the requirement of any such incidental documents within a reasonably sufficient time in advance of the Scheduled Closing Date (subject to extension in accordance with the provisions of SECTION 7.1); and (b) such incidental documents do not create any liability to Seller that is inconsistent with the liability retained by Seller under the terms of the this Agreement. 4.3 Buyer's Deliveries to Escrow Holder. 4.3.1 Prior to the Scheduled Closing Date (subject to extension in accordance with the provisions of SECTION 7.1), and subject further to the provisions of SECTION 4.3.1.4 in the case of the Value Letter, Buyer shall deliver to Escrow Holder the following items and documents, which documents shall be duly executed and, where applicable, acknowledged by Buyer or its designee, as applicable, and undated, and the delivery of each of which shall be a condition precedent to the obligation of Seller to close hereunder: 4.3.1.1 The Cash Purchase Price. The Cash Purchase Price; 4.3.1.2 Stock Certificates. Paired Shares in the amount required to be delivered at the Closing in accordance with the provisions of this Agreement and in accordance with and subject to the provisions of the Stock Agreement; 4.3.1.3 Assignment and Assumption of Management Agreement. A counterpart of the Assignment and Assumption of Management Agreement, provided, however, the obligation to deliver the Assignment and Assumption of Management Agreement shall be irrevocably waived, if prior to the Close of Escrow, the Management Agreement shall have been terminated and the Interim Management Agreement shall have become effective in accordance with SECTION 17.20; 4.3.1.4 Value Letter. A letter (the "Value Letter") to be obtained by Buyer at Buyer's expense with respect to the reasonableness of the allocation of the purchase price among the transactions being entered into as of the date hereof between Buyer and Seller and/or Seller's Affiliates issued by Bear Stearns; 16 24 4.3.1.5 Opinion of Buyer's Counsel. An opinion of Buyer's counsel in a form to be agreed upon by the parties; 4.3.1.6 Stock Agreement. A counterpart of the Stock Agreement; 4.3.1.7 Assignment and Assumption of Ground Lease. A counterpart of the Assignment and Assumption of Ground Lease; 4.3.1.8 Liquor License Management Agreement. A counterpart of the Liquor License Management Agreement; 4.3.1.9 [Intentionally Omitted] 4.3.1.10 [Intentionally Omitted] 4.3.1.11 [Intentionally Omitted] 4.3.1.12 Closing Certificate. A certification by Buyer that the representations and warranties set forth in SECTION 6.1 and SECTION 6.2 are true, correct and complete as of the Closing Date; 4.3.1.13 The Assignment and Assumption of Tenant Leases. A counterpart of the Assignment and Assumption of Tenant Leases; 4.3.1.14 The General Assignment and Assumption Agreement. A counterpart of the General Assignment and Assumption Agreement; 4.3.1.15 Transfer Tax Forms. Any statements, such as a transfer or conveyance tax forms or returns required by applicable state or local law to be executed by Buyer in order to effect the closing; and 4.3.1.16 Other. Any other incidental documents, not otherwise expressly provided for herein, required by Escrow Holder to consummate the purchase and sale of the Property; provided, however, that (a) Buyer is given written notice by Escrow Holder of the requirement of such incidental documents within a reasonably sufficient time in advance of the Scheduled Closing Date; and (b) Buyer shall not be required to incur any liability, in connection with the delivery of such incidental documents inconsistent with the provisions of this Agreement. 4.4 Seller's Deliveries to Buyer. At or prior to the Close of Escrow, Seller shall deliver to Buyer or cause to be available to Buyer on-site at the Hotel, the following documents, to the extent the same have not already been delivered and to the extent in the possession or control of Seller: 4.4.1 Tenant Leases/Tenant Deposits. The original Tenant Leases (or if not available, the best available copies), and the originals of Tenant Security Deposits which are evidenced by letters of credit or escrow agreements, if any, and if necessary to enable Buyer to 17 25 realize or draw upon same, consents of the applicable Tenants and/or financial institutions or replacement letters of credit or escrow agreements in favor of Buyer; 4.4.2 Service Contracts. The originals, or, if not available, the best available copies, of the Approved Service Contracts; 4.4.3 Licenses and Permits. The originals, or, if not available, the best available copies of the Licenses and Permits; and 4.4.4 Records and Plans. The originals, or, if not available, the best available copies of the Records and Plans. 4.5 Possession. Seller shall deliver the keys and possession of the Property to Buyer at the Close of Escrow free and clear of all leases, tenancies and occupancies, except for the Management Agreement, the Bookings, the rights of guests in guest rooms, banquet facilities, conference rooms and meeting rooms, the rights of Tenants under the Tenant Leases (including their assignees, subtenants or licensees), and the other Permitted Encumbrances. 4.6 Evidence of Authorization. At the Close of Escrow, each party shall deliver to the other party evidence in form and content reasonably satisfactory to the other party and the Title Company that (a) the party is duly organized and validly existing under the laws of the state of its organization and has the power and authority to enter into this Agreement, (b) this Agreement and all documents delivered pursuant hereto have been duly executed and delivered by the party, and (c) the performance by the party of its obligations under this Agreement have been duly authorized by all necessary corporate, partnership or other action. 4.7 Close of Escrow. 4.7.1 The Escrow shall close on or before the Scheduled Closing Date. 4.7.2 Provided that Escrow Holder has not received from either party written notice of the failure of any condition precedent specified in SECTION 9 to the obligations of such party (or any previous such notice has been withdrawn), then when the parties have each deposited into the Escrow the documents and funds required by this Agreement and the Title Company is unconditionally prepared to issue the Title Policy at the Close of Escrow, Escrow Holder shall perform the following actions (collectively, "Close of Escrow" or "Closing"): 4.7.2.1 Prepare a closing statement for the transaction for approval by Seller and Buyer prior to the Close of Escrow; 4.7.2.2 Insert the Closing Date as the date of any undated document to be delivered through Escrow; 4.7.2.3 Cause the Deed, the Assignment and Assumption of Ground Lease, and the Assignment of Mortgage to be recorded in the land records of the state and county where the Real Property is located; 18 26 4.7.2.4 Deliver to Buyer the documents deposited into the Escrow for delivery to Buyer at the Close of Escrow; 4.7.2.5 Deliver to Seller (a) all funds and Paired Shares to be received by Seller from Buyer through the Escrow at the Close of Escrow less (i) all amounts to be paid by Seller for Escrow Holder's fees and expenses and (ii) all amounts paid by Escrow Holder in satisfaction of liens and encumbrances on the Real Property or other matters pursuant to the written instruction of Seller, and (b) the documents deposited into the Escrow for delivery to Seller at the Close of Escrow; and 4.7.2.6 Cause the Title Policy to be issued by the Title Company and delivered to Buyer. 4.8 Costs of Escrow. Costs of the Escrow shall be allocated as follows: 4.8.1 Buyer and Seller shall each pay one-half (1/2) of the fees of Escrow Holder; 4.8.2 Buyer and Seller shall each pay one-half (1/2) of the cost of providing the Survey required to be delivered in accordance with the provisions of SECTION 7.1; provided, however, Buyer shall be responsible for the full cost of the Survey in the event the Closing does not occur hereunder other than on account of default of Seller; 4.8.3 Buyer and Seller shall each pay one-half (1/2) of all transfer taxes and recording fees payable in connection with the conveyance of each portion of the Real Property and/or the recording of the Deed and any other documents or instruments recorded pursuant to this Agreement (other than the Assignment of Mortgage); 4.8.4 Buyer and Seller shall each pay one-half (1/2) of all sales or other personal property taxes, levies, fees and charges payable as a result of the transfer of the Personal Property to Buyer and the consummation of the transactions contemplated hereby. Buyer shall be the reporting person for such purposes and shall prepare the necessary sales tax reports based upon the allocations set forth in SECTION 3.4. The parties acknowledge that additional sales tax may be assessed as a result of the transfer of the Personal Property to Buyer and the consummation of the transactions contemplated hereby after the Closing and that Buyer and Seller shall continue to each be responsible for one-half of any such additional taxes. The provisions of Section 4.8.3 and Section 4.8.4 shall survive the Closing; 4.8.5 Buyer and Seller shall each pay one-half (1/2) of the cost of obtaining the coverage under the Title Policy, except that the cost of any special endorsements shall be paid exclusively by Buyer; 4.8.6 At Closing or thereafter Buyer shall pay for the cost of the Value Letter; 19 27 4.8.7 Buyer shall pay any legal and other fees to obtain, and any mortgage recording taxes payable in connection therewith, if any, in connection with the Assignment of Mortgage; 4.8.8 If the Close of Escrow fails to occur other than as a result of a default hereunder by either party, including, without limitation, as a result of a failure of a condition precedent set forth in SECTION 9, the fees of the Escrow Holder and Title Company (including, without limitation, cancellation fees) shall be borne equally between Buyer and Seller; 4.8.9 If the Close of Escrow fails to occur as a result of a default hereunder by either party, the fees of the Escrow Holder and Title Company (including, without limitation, cancellation fees) shall be borne by the defaulting party; and 4.8.10 Pursuant to Section 6045 of the Internal Revenue and Taxation Code, the Title Company shall be designated the "Closing Agent" hereunder and shall be solely responsible for complying with the Tax Reform Act of 1986 with regard to the reporting of all settlement information to the Internal Revenue Service. 4.9 Other Costs. Except as set forth in SECTION 4.8.6, SECTION 11.1 and SECTION 15.1.6, each party shall pay all of its own legal, accounting and consulting fees and other costs and expenses incurred in connection with this Agreement. 4.10 Maintenance of Confidentiality by Escrow Holder. Escrow Holder shall maintain in strict confidence and not disclose to anyone the existence of the Escrow, the identity of the parties thereto, the amount of the Purchase Price, the existence or provisions of this Agreement or any other information concerning the Escrow or the transactions contemplated hereby, without the prior written consent of Buyer and Seller. SECTION 5 PRORATIONS AND ASSUMPTION OF OBLIGATIONS 5.1 General. All income, receivables, expenses (whether payable or prepaid) and payables of the Property shall be apportioned equitably between the parties as of the Proration Time in accordance with the provisions of this SECTION 5 (all prorations are to be based upon the number of days in a 365 day year). The obligation to make apportionments under SECTIONS 5.1 AND 5.2 shall, unless otherwise expressly provided in this SECTION 5, survive the Close of Escrow for a period of sixty (60) days at which time such apportionment shall be final unless disputed during such period. 5.2 General and Specific Prorations. Without limitation, the following items shall be apportioned: 5.2.1 At the Closing, Buyer shall assume all of the accounts payable relating to goods and services ordered or obtained in the ordinary course of operation of the business of the 20 28 Hotel (including without limitation, payments under the Service Contracts and Equipment Leases) prior to the Proration Time. Seller shall be obligated to credit Buyer at the Close of Escrow with an amount mutually agreed upon by Buyer and Seller at the Closing, reflecting the parties' good faith estimate of such accounts payable as of the Proration Time (which estimate shall deduct any discounts then available in the ordinary course of business for the prompt payment of such accounts payable), plus a further credit for any late fees then payable with respect to any identified accounts payable. Buyer shall be responsible for paying when due all accounts payable arising from the operation of the Property on or after the Proration Time, and Seller shall have no further liability for such payables or charges. As of the date which is sixty (60) days following the Closing Date, Buyer and Seller shall calculate the amount of all accounts payable relating to goods and services ordered or obtained in the ordinary course of operation of the business of the Hotel (including without limitation, payments under the Service Contracts and Equipment Leases) prior to the Proration Time. Seller shall reimburse Buyer for any payments made on account of any such accounts payable which were not reflected in the Parties' estimate of such amount credited to Buyer at Closing and which have been paid by Buyer or for which Buyer is obligated to pay in accordance with the provisions hereof, and if the amount of such credit exceeds the amounts so paid or for which Buyer is so obligated, Buyer shall pay such excess amount to Seller; 5.2.2 At the Closing, Seller shall assign to Buyer all of the Accounts Receivable, for which Seller shall receive a credit at the Close of Escrow in an amount equal to (a) the full, aggregate outstanding balance of the Cash Equivalent Receivables (without discount except for service charges due to charge card companies) plus (b) the full aggregate outstanding balance of the Invoiced Receivables and Other Accounts Receivable as of the Proration Time, provided, Buyer shall at its option accept or reject any Invoiced Receivables and Other Accounts Receivable over ninety (90) days and Seller shall not receive a credit for any Invoiced Receivables and Other Accounts Receivable over ninety (90) days rejected by Buyer; provided, that Buyer shall at its own expense use reasonable efforts to collect any such rejected Invoiced Receivables and Other Accounts Receivable on behalf of Seller for a period of sixty (60) days after the Closing Date and thereafter Seller shall have the right to collect same for its own account; provided, further, as of the date which is sixty (60) days following the Closing Date, Buyer and Seller shall make any adjustments required to reflect the collectibility of any Invoiced Receivables and Other Accounts Receivable (it being agreed that (a) any accounts receivable not listed on the schedule of accounts receivable of the Property as of the date which is sixty (60) days following the Closing Date shall be deemed paid as of such date and (b) except as provided in (a), any accounts receivable which are more than ninety (90) days past due as of the date which is sixty (60) days following the Closing Date shall be deemed uncollectable as of such date) and Seller and Buyer shall make a corresponding payment to the other as required to accurately reflect the collectibility of such Invoiced Receivables and Other Accounts Receivable and any accounts receivable deemed uncollectable as of such date in accordance with the terms hereof shall be the property of Seller and Seller shall be permitted at its expense and for its own account to collect the same; 5.2.3 In prorating the Accounts Receivable, Buyer and Seller shall each receive credit for one-half (1/2) of all Guest Ledger Receivables attributable to the room night during 21 29 which the Proration Time occurs. Seller shall receive the income from all restaurant and bar facilities located at the Property through the Proration Time and Buyer shall receive such income thereafter; 5.2.4 [Intentionally Omitted] 5.2.5 All sales, use and occupancy taxes arising from the operation of the Property shall be prorated as of the Proration Time; 5.2.6 Fees for transferable annual permits, licenses, and/or inspection fees, if any, for periods during which the Proration Time occurs shall be prorated as of the Proration Time; 5.2.7 Utility charges with respect to the Property levied against Seller or the Property and the value of fuel stored on the Property shall be prorated at Seller's cost therefor as of the Proration Time. Seller shall notify all utilities, governmental agencies, suppliers and others providing services to the Property of the prospective change in ownership and operation of the Property, and Seller shall use its reasonable efforts to cause all utilities furnished to the Property, including, but not limited to, electricity, gas, water and sewer, along with any fuel storage tanks to be read the day prior to the Proration Time; 5.2.8 Permitted administrative charges, if any, on Tenant Security Deposits shall be prorated; 5.2.9 Buyer shall receive a credit for advance payments and/or deposits, if any, under Bookings to the extent the Bookings relate to a period after the Proration Time; 5.2.10 Vending machine monies will be removed by Seller as of the Proration Time for the benefit of Seller; 5.2.11 Buyer shall purchase and Seller shall sell to Buyer (or Seller shall receive a credit therefore) all petty cash funds and cash in the Property's house banks at 100% of face value at the Proration Time; 5.2.12 Wages, salaries and payroll taxes and other payroll deductions for all Hotel Employees shall be apportioned as of the Proration Time (i.e., the night shift shall be prorated 50/50 for the night preceding the Closing Date). Buyer shall assume all accrued vacation benefits and sick leave benefits due to such Hotel Employees which relate to any period prior to the Proration Time and shall receive a credit for the full amount of all such accrued benefits reasonably expected to be paid after the Closing Date; provided, that as of the date which is sixty (60) days following the Closing, Buyer and Seller shall adjust the amount of the credit if required to take into account the benefits actually required to be paid by Buyer or then reasonably expected to be paid following the Closing Date by Buyer. Buyer shall also assume all obligations of Seller and the Employer Corporation, under the Employment Agreements and/or the Management Agreement to pay all such wages, salaries, and compensation set forth above accruing subsequent to Proration Time; provided, however, that other than as set forth in SECTION 22 30 14.1 hereof, no provision contained in this Agreement shall be construed to prevent the Buyer from terminating or amending in any manner such Employment Agreements and Management Agreements subsequent to the Proration Time. The obligation to pay bonuses, if any, following the Closing shall be allocated as of the Proration Time and adjusted between Buyer and Seller; and 5.2.13 Real and personal property taxes, assessments and special district levies shall be prorated for the tax fiscal year in which the Closing Date occurs on the basis of the then most current available tax bills, Seller being charged through the day prior to the Closing Date and Buyer with the Closing Date and thereafter. 5.3 Deposits. All rights to utility, assessment, and other cash deposits (including, without limitation, any Utility Deposits) held by others for Seller's account, and all certificates of deposit or other forms of cash collateral held by or otherwise pledged to others for Seller's account to secure obligations of Seller under Service Contracts, Equipment Leases or other obligations assumed by Buyer, shall be assigned or transferred to Buyer at the Close of Escrow; provided, that if any of such deposits are not transferable, Seller shall retain all rights with respect thereto and there shall be no debit made to Buyer on account thereof. 5.4 Tenant Leases. At the Close of Escrow, pursuant to the Assignment and Assumption of Tenant Leases, Buyer shall assume all of the obligations of Seller under the Tenant Leases as of the Proration Time, including, without limitation, tenant improvement obligations of landlord thereunder and obligations with respect to Tenant Security Deposits (to the extent received by Buyer or credited to Buyer hereunder). 5.5 Service Contracts and Other Intangible Property. At the Close of Escrow, Seller shall assign to Buyer pursuant to the terms of the General Assignment and Assumption Agreement, all right, title and interest of Seller in and to the Approved Service Contracts and other Intangible Property, and Buyer shall assume all of the obligations of Seller under the Approved Service Contracts arising from and after the Close of Escrow. Buyer shall protect, hold harmless, indemnify and defend Seller and its directors, officers, agents, affiliates, principals, partners, shareholders, representatives and controlling persons from any Losses attributable to the period beginning on and after the Closing Date with respect to the Approved Service Contracts. Seller shall be responsible for all obligations thereunder attributable to the period prior to the Closing Date with respect to Approved Service Contracts (except to the extent that Buyer shall have received a credit hereunder with respect to any such obligations). The provisions of this SECTION 5.5 shall survive the Close of Escrow. 5.6 Tax Refunds and Proceedings. Buyer shall have the exclusive right to commence or continue any proceeding to determine the assessed value of the Property, the real or personal property taxes payable with respect to the Property or any action to contest water charges, sewer charges, sales tax or use tax for the relevant taxable period during which the Proration Time occurs and to settle or compromise any claim thereof, and any refunds or proceeds resulting from such proceedings along with the costs (including reasonable legal and accounting fees) incurred by Buyer in obtaining the same, shall be prorated as of the Proration Time. In prosecuting any 23 31 such action, Buyer shall utilize the services of Marvin Poer & Co. Seller shall retain the right to continue, commence, prosecute, settle or compromise any proceedings relating exclusively to any relevant taxable period or periods prior to the period during which the Proration Time shall occur. Buyer and Seller agree to cooperate with each other and to execute any and all documents reasonably requested in furtherance of the foregoing. The provisions of SECTION 5.6 shall survive the Closing. 5.7 Guest Baggage. As of the Close of Escrow, Buyer shall indemnify and hold harmless Seller against all Losses with respect to all baggage of departed guests or guests who are still registered at the Hotel on the Closing Date which has been checked with the Hotel. As of the Close of Escrow, Seller shall assign to Buyer all claims and causes of action against the Manager with respect to any Losses with respect to such baggage. Seller agrees to submit to Seller's Insurance any claims for Losses with respect to such baggage which arose from acts or omissions prior to the Closing Date to the extent coverage is available under said insurance and provide Buyer with the proceeds therefrom provided Buyer is not in default under this SECTION 5.7. The provisions of this SECTION 5.7 shall survive the Closing. 5.8 Safe Deposit Boxes. As of the Close of Escrow, Buyer shall indemnify and hold harmless Seller against all Losses with respect to the contents of any safety deposit boxes in use at the Hotel. As of the Close of Escrow, Seller shall assign to Buyer all claims and causes of action against the Manager with respect to any Losses relating to said safety deposit boxes. Seller agrees to submit to Seller's insurance any claims for Losses which arose from acts or omissions prior to the Closing Date to the extent coverage is available under said insurance and provide Buyer with the proceeds therefrom provided Buyer is not in default under this SECTION 5.8. The provisions of this SECTION 5.8 shall survive the Closing. 5.9 Advance Bookings. Buyer shall assume and honor for its account all Bookings relating to dates after the Proration Time set forth on the Schedule of Advance Bookings delivered by Seller to Buyer at the Close of Escrow pursuant to SECTION 4.2.1.9. SECTION 6 REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY 6.1 Of the Trust. As an inducement to Seller to enter into this Agreement, the Trust hereby represents, warrants and covenants to Seller as follows: 6.1.1 Power and Authority. The Trust is a real estate investment trust duly organized and validly existing under the laws of the State of Maryland. The Trust has the power and authority to carry on its present business, to enter into this Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement by the Trust, nor the performance by the Trust of the Trust's obligations hereunder will violate or 24 32 constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Trust is a party or by which the Trust is bound and/or violate any applicable law, rule or regulation, the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.1.2 Authorization; Valid Obligation. All proceedings required to be taken by or on behalf of the Trust to authorize the Trust to make, deliver and carry out the terms of this Agreement will be duly taken prior to the Closing Date. No consent to the execution, delivery and performance of this Agreement will be required from any partner, board of directors, shareholder, creditor, investor, judicial or administrative body, governmental authority or other person, other than any such consent which already has been (or prior to the Closing will have been unconditionally given. The individuals executing this Agreement and the documents referenced herein on behalf of the Trust have the legal power, right and actual authority to bind the Trust to the terms and conditions hereof. This Agreement is a valid and binding obligation of Trust, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 6.1.3 Capital Structure. The authorized and outstanding capital stock and units of the Trust and its operating partnership are as set forth in the Starwood Disclosure. All Paired Shares to be issued as the Equity Purchase Price at the Closing in accordance with this Agreement will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. 6.1.4 SEC Documents and Other Reports. The Trust has filed all required documents with the SEC since January 1, 1996 (such documents together with the Starwood Disclosure being referred to herein as the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Trust included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Trust and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Trust has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their 25 33 financial statements. Prior to the Closing Date, the Trust will file all required documents with the SEC, which documents will comply in all material respects with the requirements of the applicable law, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 6.1.5 Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed prior to the date of this Agreement, since December 31, 1996, (a) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole, or (b) there has not been any split, combination or reclassification of any of the capital stock or units of the Trust or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. 6.1.6 Actions and Proceedings. Except as set forth in the SEC Documents filed prior to the date of this Agreement, there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Trust or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Trust or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. Except as set forth in the SEC Documents, there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Trust, threatened against or involving the Trust or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits, labor disputes or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Trust, threatened against or affecting the Trust or any of their subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement. 6.1.7 REIT Status. The Trust is currently a "real estate investment trust" ("REIT") for federal income tax purposes and, to its knowledge, the Trust is and at all times during the testing period described in Code Section 897(h)(4)(D) has been a "domestically controlled REIT" (as defined in Section 897(h)(4)(D) of the Code). From and after January 1, 1995, neither the Internal Revenue Service nor any other taxing entity or authority has made any assertion that the Trust does not qualify as a REIT for income tax purposes, nor has there been any challenge to the REIT status of the Trust. From time to time upon request by the Seller or its assigns after the Closing Date, the Trust agrees to inform Seller or such assigns whether to its knowledge it complies with the representation and warranties set forth in this Section 6.1.7. 26 34 6.1.8 Partnership Status. Starwood Realty Partnership is classified and taxable as a partnership for U.S. federal income tax purposes. 6.1.9 Hart-Scott-Rodino Act. The provisions of the Hart-Scott-Rodino Act are not applicable to the transactions contemplated hereby and neither the Trust nor Seller is required to make any filings or submissions or obtain any approvals thereunder in connection herewith. 6.2 Of the Corporation. As an inducement to Seller to enter into this Agreement, the Corporation hereby represents, warrants and covenants to Seller as follows: 6.2.1 Power and Authority. The Corporation is a corporation duly organized and validly existing under the laws of the State of Maryland. The Corporation has the power and authority to carry on its present business, to enter into this Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement by the Corporation nor the performance by the Corporation of the Corporation's obligations hereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Corporation is a party or by which the Corporation is bound and/or violate any applicable law, rule or regulation, the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.2.2 Authorization; Valid Obligation. All proceedings required to be taken by, or on behalf of the Corporation, to authorize the Corporation to make, deliver and carry out the terms of this Agreement will be duly taken prior to the Closing Date. No consent to the execution, delivery and performance of this Agreement will be required from any partner, board of directors, shareholder, creditor, investor, judicial or administrative body, governmental authority or other person, other than any such consent which already has been (or prior to the Closing will have been) unconditionally given. The individuals executing this Agreement and the documents referenced herein on behalf of the Corporation have the legal power, right and actual authority to bind the Corporation to the terms and conditions hereof. This Agreement is a valid and binding obligation of Corporation, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 6.2.3 Capital Structure. The authorized and outstanding capital stock and units of the Corporation and its operating partnership are as set forth in the Starwood Disclosure. All Paired Shares to be issued as the Equity Purchase Price at the Closing in accordance with this Agreement will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. 6.2.4 SEC Documents and Other Reports. The Corporation has filed all required SEC Documents since January 1, 1996. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to 27 35 make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Corporation included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Corporation and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Corporation has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. Prior to the Closing Date, the Corporation will file all required documents with the SEC, which documents will comply in all material respects with the requirements of the applicable law, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 6.2.5 Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed prior to the date of this Agreement, since December 31, 1996, (a) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole, or (b) there has not been any split, combination or reclassification of any of the capital stock or units of the Corporation or its respective operating partnerships or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of such capital stock. 6.2.6 Actions and Proceedings. Except as set forth in the SEC Documents filed prior to the date of this Agreement, there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Corporation or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Corporation or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. Except as set forth in the SEC Documents, there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Corporation, threatened against or involving the Corporation or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. As of the date hereof, there 28 36 are no actions, suits, labor disputes or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Corporation, threatened against or affecting the Corporation or any of their subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement. 6.2.7 Starwood Operating Partnership is classified and taxable as a partnership for U.S. Federal Income Tax purposes. 6.2.8 Hart-Scott-Rodino. The provisions of the Hart-Scott-Rodino Act are not applicable to the transactions contemplated hereby and neither the Corporation nor Seller is required to make any filings or submissions to obtain any approvals thereunder in connection herewith. 6.3 Of Seller. As an inducement to Buyer to enter into this Agreement, Seller, represents, warrants and covenants to Buyer as follows: 6.3.1 Regarding Seller's Authority. 6.3.1.1 Seller is a limited partnership in dissolution under the laws of the State of New York. Seller has the power and authority to enter into this Agreement and the Conveyance Documents and, to sell the Property on the terms set forth in this Agreement. The execution and delivery hereof and the performance by Seller of its obligations hereunder, will not violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which Seller is a party or by which Seller is bound and/or violate any applicable law, rule or regulation, the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.3.1.2 The individuals executing this Agreement and the documents referenced herein on behalf of Seller have the legal power, right and actual authority to bind Seller to the terms and conditions hereof. This Agreement is a valid and binding obligation of Seller, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 6.3.2 Tenant Leases. There are no leases, licenses or concessions for space which will affect the Real Property or any portion thereof following the Close of Escrow other than as set forth on the Schedule of Tenant Leases. Seller has delivered to Buyer a true, correct and complete copy of each lease and agreement listed on the Schedule of Lease. Seller has not received written notice of any sublease and/or assignment of any Tenant Lease except as set forth on SCHEDULE 6.3.2. No outstanding written notice of any Material default has been delivered by Seller or received by Seller with respect to any Tenant Lease, except as disclosed on the SCHEDULE 6.3.2 annexed hereto and made a part hereof. To Seller's knowledge, all rent under the leases listed on the Schedule of Leases is being paid currently. All Material brokerage, leasing and other commissions due in connection with the Tenant Leases have been paid by Seller other 29 37 than those payable with respect to the renewal or extension of such Tenant Leases or expansion of the leased premises thereunder after the Closing Date, each of which are payable under agreements described on SCHEDULE 6.3.2. 6.3.3 Service Contracts. There are no Service Contracts which will affect the Property after the Closing Date except for the Approved Service Contracts. No outstanding written notice of any Material default has been delivered by Seller or received by Seller with respect to any Approved Service Contract, except as disclosed on SCHEDULE 6.3.3 annexed hereto and made a part hereof. 6.3.4 Claims. There are no pending litigation or condemnation proceedings with respect to Seller or the Property which would result in an adverse effect on the ability of Buyer to operate the Property after the Closing, except as disclosed on SCHEDULE 6.3.4 annexed hereto and made a part hereof. There is no pending litigation or to Seller's knowledge, other claims of Seller with respect to the Property attributable to the period prior to the date hereof which may result in a material judgment in favor of Seller except as disclosed on SCHEDULE 6.3.4. 6.3.5 Employees. To Seller's Knowledge, SCHEDULE 1.1.6 sets forth a true and complete list of all Hotel Employees as of the Execution Date together with their positions, salaries or hourly wages, as applicable, and years of service. Except for or pursuant to the Employment Agreements, the Collective Bargaining Agreements, the Management Agreement and the agreements related to the Ritz-Carlton management of the Hotel described on SCHEDULE 6.3.5 hereto, neither Seller nor the Employer Corporation has relating to the Property (i) at any time maintained, contributed to or participated in, (ii) or had at any time obligation to maintain, contribute to, or participate in, or (iii) any liability or contingent liability, direct or indirect, with respect to: any employment agreement, oral or written retirement or deferred compensation plan, incentive compensation plan, stock plan, unemployment compensation plan, vacation pay plan, severance plan, bonus plan, stock compensation plan or any other type or form of employee-related (or independent contractor-related) arrangement, program, policy, plan or agreement. Except as set forth on SCHEDULE 6.3.5, to Seller's knowledge there is no Material default under any of the Employment Agreements. 6.3.6 Compliance with Laws. During the past twelve (12) months, Seller has not received any written notice from any party, including, without limitation, from any municipal, state, federal or other governmental authority, of a Material violation of any zoning, building, fire, water, use, health, or other similar statute, ordinance, or code bearing on the construction, operation or use of the Property or any part thereof (other than as to matters previously cured), except as disclosed on SCHEDULE 6.3.6 annexed hereto and made a part hereof and except for violations of Environmental Laws, which are addressed in SECTION 6.3.7 below. 6.3.7 Hazardous Materials. Seller has not received any written notice from any municipal, state, federal or other governmental authority or from any other person during the last three (3) years of (a) any Material violation of applicable Environmental Laws or (b) any Environmental Condition requiring Material remediation under applicable Environmental Laws, 30 38 in either case only to the extent relating to Environmental Conditions at or on the Real Property, except as disclosed on SCHEDULE 6.3.7 annexed hereto and made a part hereof; 6.3.8 Records and Plans. Seller will have delivered to Buyer on the Closing Date true and correct copies of the Records and Plans. 6.3.9 Licenses and Permits. Seller has delivered to Buyer true and correct copies of the Liquor License and all other Material Licenses and Permits and such Licenses and Permits are identified on SCHEDULE 6.3.9 annexed hereto and made a part hereof. 6.3.10 Management Agreements. There are no hotel management or property management agreements, which will be binding upon Buyer after the Closing Date, other than the Management Agreement, a true and complete copy of which will be delivered to Buyer on the Closing Date. Seller has not sent or received any notice of default or notice of termination under or with respect to the Management Agreement. 6.3.11 Personal Property. Seller owns the Tangible Personal Property (other than the Tangible Personal Property that is subject to the Equipment Leases) free and clear of any liens and/or encumbrances other than the Permitted Encumbrances. 6.3.12 Insurance. The Seller in respect of the Real Property is insured under those policies of casualty and general liability insurance ("Seller's Insurance") described on SCHEDULE 6.3.12 annexed hereto, each of which is in full force and effect as of the date hereof and will remain in full force and effect through the Closing Date. Seller has received no notices of any Material default or demands to cure from any applicable insurer in respect of Seller's Insurance. 6.3.13 Real Estate Taxes. Except as set forth on SCHEDULE 6.3.13 annexed hereto and made a part hereof, Seller has not commenced any proceedings which are pending for the reduction of the assessed valuation of the Real Property or any portion thereof, and other than the Permitted Encumbrances, to Seller's Knowledge, there are no special assessments affecting the Property. Nothing in this SECTION 6.3.13 or any other provision of this Agreement shall be construed to limit Seller's rights to initiate or prosecute after the Close of Escrow additional proceedings for property tax refunds for taxes relating to any relevant taxable period or periods prior to the taxable period during which the Proration Time occurs. 6.3.14 Residential Apartments; Rent Regulations. Except for Apartment 1706, which is currently leased to Lenore Morse, there are no rooms at the Property that are leased to third parties as residential apartments whether through written or statutory leases. Except for Apartment 1706, there are no apartments at the Property that are subject to Rent Control, Rent Stabilization or any similar governmental rent regulation. 6.3.15 Regarding The Ground Lease. There is no outstanding default of lessee under the Ground Lease. Seller has not received any notice by or on behalf of lessor thereunder or otherwise claiming a default under the Ground Lease. The Ground Lease has not been 31 39 amended or modified whether by agreement of lessor and lessee, pursuant to the order of any court or otherwise except as set forth in SCHEDULE 1.1.5 hereto. 6.4 Buyer's Review of Records and Plans. 6.4.1 Access to Records and Plans; Specific Disclosures. Buyer acknowledges that prior to the Closing Date, Buyer has been provided with such access to the Records and Plans and such other information relating to the Hotel as Buyer has deemed relevant. Buyer acknowledges that it (a) has been made aware of and given an opportunity to inquire into the Specific Disclosure Matters described herein; (b) has been given access to the Property and the opportunity to conduct such inquiries and analyses as Buyer has deemed necessary or appropriate in order to evaluate the physical condition of the Property and any and all other matters concerning the current and future use, feasibility, or value, or any other matter or circumstance relevant to Buyer concerning the Property or its marketability; and (c) the Records and Plans and the other books and records of Seller with respect to the Hotel may not be complete. 6.4.2 Limitation on Access to Records and Plans. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and agrees that the Records and Plans or other information made available to or delivered to Buyer prior to, or at the Closing, shall not include any information which is privileged, confidential or proprietary to Seller or any of its constituent partners or affiliates, including without limitation, (i) Seller's internal financial analyses, any appraisals undertaken for Seller or other parties, income tax returns, financial statements, corporate or partnership governance records, investment advisory records, and other records concerning Seller's professional relationships, any Hotel Employee personnel files (prior to the Closing), or any other internal, proprietary, or confidential information, files, or records of Seller, (ii) the work papers, memoranda, analysis, correspondence, and similar materials prepared by or for Seller in connection with the negotiation and documentation of the transaction contemplated hereby or any other offer to purchase the Property received by Seller, and (iii) any documents or communications subject to the attorney/client privilege or attorney work product privilege. Buyer expressly agrees that its review of the Records and Plans, and any and all other information of any type or nature, whether oral or written, provided to Buyer by or on behalf of Seller and relating to the Property (collectively, the "PROPERTY INFORMATION") is for informational purposes only, and neither Seller nor any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller has verified either the accuracy of the Property Information, or the adequacy of any method used to compile the Property Information or the qualifications of any person preparing the Property Information except that, in delivering or making available a copy of any document or papers to Buyer, Seller has delivered or made available copies of the originals of such documents or papers in Seller's possession or included in the Records and Plans. Except as expressly set forth in this SECTION 6, neither Seller nor any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller is making or giving any representation or warranty about, or assuming any responsibility for, the accuracy or completeness of the Property Information. Reliance by Buyer upon any Property Information shall not create or give rise to any liability of or against Seller or any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller. Subject to Seller's express representations and warranties 32 40 set forth herein, the consummation of the Closing shall constitute Buyer's unconditional approval of all aspects of the Property and Buyer's unconditional acknowledgment that Buyer has had the opportunity to request from Seller and review such documents and materials relating of the Property as Buyer deems appropriate. All copies of such documents delivered to Buyer shall be returned to Seller if the Closing fails to occur for any reason. 6.5 PURCHASE AS IS. BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER THAT BUYER HAS INDEPENDENTLY AND PERSONALLY INSPECTED THE PROPERTY AND THE PROPERTY INFORMATION AND THAT BUYER HAS ENTERED INTO THIS AGREEMENT BASED UPON SUCH PERSONAL EXAMINATION AND INSPECTION. BUYER ACCEPTS THE PROPERTY, IN ITS CONDITION ON THE CLOSE OF ESCROW AS-IS AND WITH ALL ITS FAULTS, INCLUDING WITHOUT LIMITATION, ANY FAULTS AND CONDITIONS SPECIFICALLY REFERENCED IN THIS AGREEMENT. NO PERSON ACTING ON BEHALF OF SELLER IS AUTHORIZED TO MAKE, AND BY EXECUTION HEREOF, BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO: (A) THE VALUE OF THE PROPERTY; (B) THE INCOME TO BE DERIVED FROM THE PROPERTY; (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON; (D) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (E) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (F) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY; (G) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (H) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY; 33 41 (I) THE COMPLIANCE OF THE PROPERTY WITH ANY ENVIRONMENTAL LAWS OR THE AMERICANS WITH DISABILITIES ACT; (J) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR ADJACENT TO THE PROPERTY; (K) THE CONTENT, COMPLETENESS OR ACCURACY OF ANY OF THE RECORDS AND PLANS OR OTHER INFORMATION PROVIDED BY SELLER TO BUYER WITH RESPECT TO THE PROPERTY; (L) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER; (M) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE APPLICABLE ZONING OR BUILDING REQUIREMENTS; (N) DEFICIENCY OF ANY UNDER SHORING; (O) DEFICIENCY OF ANY DRAINAGE; (P) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; (Q) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE PROPERTY; (R) WITH RESPECT TO ANY OTHER MATTER CONCERNING THE PROPERTY (INCLUDING, WITHOUT LIMITATION, THE TENANT LEASES, THE EQUIPMENT LEASES, ANY FIXTURES AND EQUIPMENT, THE LICENSES AND PERMITS, THE PERSONAL PROPERTY, THE SERVICE CONTRACTS, THE EMPLOYMENT CONTRACTS, ANY EMPLOYEE BENEFIT PLANS AND THE LIQUOR LICENSE) EXCEPT AS MAY BE OTHERWISE EXPRESSLY STATED HEREIN; (S) THE GROUND LEASE; (T) ANY OF THE SPECIFIC DISCLOSURE MATTERS; OR (U) WITHOUT LIMITING THE OTHER DISCLAIMERS SET FORTH HEREIN BUT SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, THE ASSIGNMENTS AND CONVEYANCES OF THE PERSONAL PROPERTY, THE MANAGEMENT AGREEMENT AND THE GROUND LEASE, ARE WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS OF ANY KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, (1) WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY OR ASSIGNABILITY OF THE MANAGEMENT AGREEMENT, (2) WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, (3) 34 42 WARRANTIES RELATING TO THE DESIGN, CONDITION, QUALITY, WORKMANSHIP OR CAPACITY OF THE TANGIBLE PERSONAL PROPERTY, (4) REPRESENTATIONS OR WARRANTIES THAT THE TANGIBLE PERSONAL PROPERTY IS IN COMPLIANCE WITH ALL LAWS, STATUTES, ORDINANCES RULES, REGULATIONS, SPECIFICATIONS OR CONTRACTS PERTAINING THERETO, (5) WARRANTIES AGAINST PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, AND (F) WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY, OR COLLECTIBILITY OF ANY ITEM. 6.6 Limitation on Representations and Warranties of Seller. In no event shall Buyer be entitled to seek recovery against Seller for an alleged breach of any representation or warranty by Seller if the information, transaction, or occurrence alleged to give rise to such breach was disclosed to, made available to or discovered by Buyer, whether in the course of its review of the Records and Plans or otherwise, prior to the Close of Escrow (the sole adjustment with respect to same being as set forth in SECTION 6.7 below). Without limiting the foregoing, each of the representations and warranties by Seller set forth herein shall be deemed to be qualified in their entirety by the Specific Disclosure Matters in addition to any other qualifications of such representations and warranties. 6.7 Right to Supplement Disclosures. At any time prior to the Closing, Seller may add additional disclosures to the Specific Disclosure Matters and the Schedules referenced in this SECTION 6, and may make appropriate revisions thereto, provided, however, that any such revisions do not in the aggregate disclose any matter or matters which would reasonably be expected to have an impact upon the value of the Property in excess of the amount of the Deposit; and provided, further, that the receipt of any notice of termination under the Management Agreement shall not be deemed to create any diminution in value to the Property. In the event that Buyer or Seller discovers any matter or matters which would be expected to exceed the Threshold Amount, then, in such event, the provisions of SECTION 7.1.1 shall apply. 6.8 Basket. In no event will Seller be liable to Buyer for any breach of a representation or warranty hereunder unless and to the extent the Loss actually and directly incurred by Buyer as results of such breach together with the Loss actually and directly incurred by Buyer as results of any other breach(s) in the aggregate exceed the Threshold Amount, provided, that in no event shall Seller have any liability to Buyer for any consequential damages arising from a breach by Seller of any representation or warranty unless such breach results from the intentional concealment by Seller. 6.9 Survival. The Trust, the Corporation and Seller each hereby covenants and agrees with the other that the representations and warranties of the Trust, the Corporation and Seller (as the case may be) set forth in SECTIONS 6.1.1 through 6.1.3, inclusive, SECTION 6.2.1 through SECTION 6.2.3, inclusive and SECTION 6.3.1 and SECTION 6.3.2 shall survive the Close of Escrow without limitation as to duration. The remaining warranties and representations set forth in SECTION 6 shall survive the Close of Escrow until the date which is one (1) year following the Closing Date, at which time such representations and warranties shall expire unless prior to such time Buyer or Seller, as the case may be, have duly commenced an action in a court of competent 35 43 jurisdiction, alleging a breach of such representation or warranty. Notwithstanding anything herein to the contrary, in no event shall either Buyer or Seller have any right to make a claim after the Closing with respect to any representation or warranty, the breach of which such party shall have discovered prior to the Closing, unless such party shall have notified the other party of such breach prior to the Close of Escrow. Nothing contained in this SECTION 6.9 shall limit the right of Seller to any remedy otherwise available under Federal or other applicable securities law. SECTION 7 TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING 7.1 Buyer's Review of Title. Seller has caused to be delivered to Buyer and Buyer's Counsel a current preliminary title commitment for title insurance issued by the Title Company showing the condition of title to the Real Property (the "Preliminary Title Report") together with a copy of all documents evidencing or creating the exceptions to title referenced therein. 7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens. On or prior to the Close of Escrow, Seller shall be obligated (i) to cause to be insured over or removed of record all Monetary Liens affecting the Seller's interest in the Real Property as of the date hereof; and (ii) to remove or to bond over any Monetary Lien arising after the issuance of the Preliminary Title Report which (a) was created by or with the consent of Seller, or (b) is in an amount less than or equal to the Deposit. In the event that any Monetary Lien not reflected on the Preliminary Title Report exceeds the Deposit and was not created by or with the consent of Seller or any other title defect or other matters arise which requires Seller to supplement its disclosure pursuant to SECTION 6.7 and which in the aggregate may create a diminution in value to the Property in excess of the Deposit, and/or the Ground Lease Estoppel has not been obtained on or prior to the Closing Date in the form required pursuant to SECTION 9.1.4. (i) the Deposit shall be refunded by Escrow Holder to Buyer on February 28, 1998 if the Closing does not occur by such date in accordance with the provisions hereof; (ii) the Scheduled Closing Date shall be extended and Seller shall use all reasonable efforts, to remove or bond over or otherwise cause the Title Company to omit such Monetary Lien as an exception from coverage under the Title Policy and/or remove or cure as applicable such other defect or condition or obtain the Ground Lease Estoppel as applicable; and (iii) Buyer shall be permitted to record the Memorandum of Contract in the real property records of the state and county in which the Real Property is located. In the event that the Scheduled Closing Date is so extended and Seller is able to remove or cure such Monetary Lien, remove or cure as applicable the title defect or other condition and/or the Ground Lease Estoppel is delivered as is required, a consent to the transfer of the Ground Lease is obtained in form reasonably acceptable to Buyer and Seller or a judicial determination that no default exists is obtained as provided below, the Close of Escrow shall occur as soon as practicable following such removal, cure, or delivery with time being of the essence as to the performance of both Buyer's and Seller's obligations hereunder. THE PARTIES ACKNOWLEDGE AND AGREE THAT DAMAGES WILL NOT BE AN ADEQUATE REMEDY TO SELLER IF BUYER SHALL DEFAULT IN ITS OBLIGATION 36 44 TO CLOSE IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND CONSEQUENTLY THAT BUYER'S OBLIGATIONS UNDER THIS SECTION 7.1.1 SHALL BE SPECIFICALLY ENFORCEABLE AGAINST THE TRUST. IN CONSIDERATION FOR THE REFUND TO BUYER OF THE DEPOSIT PROVIDED FOR UNDER THIS SECTION 7.1.1, THE RIGHT OF BUYER TO RECORD THE MEMORANDUM OF CONTRACT PURSUANT TO THIS SECTION 7.1.1, SELLER'S AGREEMENT TO ENTER INTO THE INTERIM MANAGEMENT AGREEMENT PURSUANT TO THE PROVISIONS OF THIS SECTION 17.20 (UNDER WHICH AGREEMENT THE VALUE OF THE HOTEL MAY BE AFFECTED BY THE PERFORMANCE BY THE MANAGER OF ITS RESPONSIBILITIES THEREUNDER) AND TO ENCUMBER THE PROPERTY WITH THIS AGREEMENT FOR A PERIOD OF UP TO FIVE (5) YEARS IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND IN LIGHT OF THE RISKS WHICH SELLER WILL BE ASSUMING AS A RESULT IN RELATION TO THE VALUE OF THE EQUITY PURCHASE PRICE TO BE DELIVERED IF AND WHEN THE CLOSING OCCURS HEREUNDER, THE PARTIES HAVE AGREED THAT THE PROVISIONS OF THIS SECTION 7.1.1 ARE SPECIFICALLY ENFORCEABLE AGAINST THE TRUST AS AND TO THE EXTENT PROVIDED IN THE PRECEDING SENTENCE. In the event that a Monetary Lien cannot be removed or cured or a title defect or other condition cannot be removed or cured as required hereunder to close within five (5) years of the date of this Agreement, this Agreement shall terminate and the parties hereto shall have no further obligations. In the event that the Ground Lease Estoppel is not obtained by April 15, 1998, then, in such event, Seller shall, upon written request of Buyer at any time thereafter, at its expense and with the full cooperation and support of Buyer at its expense, commence and prosecute to completion a lawsuit against lessor under the Ground Lease to obtain the delivery of the Ground Lease Estoppel or, in the alternative, a consent to the transfer of the Ground Lease in form reasonably acceptable to Buyer or a judicial determination that no default then exists under the Ground Lease and the Scheduled Closing Date shall be extended until such time as such Ground Lease Estoppel is obtained, a consent is given or a judicial determination is so made. (The satisfaction of one or more of the foregoing conditions being referred to herein as the "Ground Lease Transfer Requirement"). 7.1.2 [Intentionally omitted] 7.2 Title Insurance Policy. Buyer's title to the Real Property shall be insured at Closing by an ALTA extended coverage owner's policy or policies of title insurance in the amount of the Purchase Price (the "Title Policy") issued by the Title Company, insuring title to the Improvements and the lessee's interest under the Ground Lease vested in Buyer, subject only to the Permitted Encumbrances, together with such customary endorsements or affirmative insurance as may be reasonably requested by Buyer and purchased at Buyer's sole cost and expense. 7.3 Title to Real Property. At the Close of Escrow, title to the Improvements and the lessee's interest under the Ground Lease will be conveyed to Buyer by Seller pursuant to the Deed and the Assignment of Ground Lease, subject only to the matters of title respecting the Property shown on SCHEDULE 7.3 annexed hereto and, if the Closing is delayed pursuant to 37 45 SECTION 7.1.1, any additional easements, covenants, conditions, restrictions or other matters entered into with the prior written consent of Buyer which consent shall not be unreasonably withheld, delayed or conditioned (collectively, the "Permitted Encumbrances"); Buyer agrees to rely exclusively on the Title Policy for protection against any title defects except as set forth in SECTION 7.1.2. Buyer shall have no claim following the Closing against Seller on account of the Permitted Encumbrances. Buyer's agreement under this SECTION 7.1 shall survive the execution, delivery, and recordation of the Deed and the Assignment of Ground Lease. SECTION 8 INTERIM ACTIVITIES During the period from the Execution Date through the Close of Escrow, Seller shall (subject to the provisions of the Interim Management Agreement if entered into in accordance with the provisions of this Agreement) cause the Property to be continued to be operated in ordinary course as a hotel consistent with current operating practices during the period since Manager has been manager of the Hotel. Buyer shall have the right to enter onto and inspect the Property, from and after the date hereof, through the Closing Date to inspect the Property and otherwise perform its due diligence provided such inspections are performed upon prior notice to Seller and so as not to interfere with the operation of the Property or to disclose the pendency of the transaction contemplated hereby. All fees and expenses of any kind relating to the inspection of the Property by Buyer will be paid for by Buyer. Buyer agrees to keep the Property free from any liens arising out of or in connection with Buyer's or its agents entry or the Property. Buyer shall at its sole cost and expense, clean up and repair the Property as reasonably necessary after Buyer's or its agents entry thereon. Buyer shall hold harmless, indemnify and defend Seller from all Losses relating to any action by Buyer, its Affiliates and/or agents at or on the Property prior to Closing. Any of Buyer's agents shall be bound by the provisions of SECTION 17.19. SECTION 9 CONDITIONS PRECEDENT TO CLOSING 9.1 Conditions Precedent to Buyer's Obligations. The Close of Escrow and the obligation of Buyer to purchase the Property is subject to the satisfaction, not later than the Scheduled Closing Date, (subject to extensions as provided in Section 7.1) of the following conditions: 9.1.1 Seller's Deliveries. Seller shall have delivered the items described in SECTION 4.2 and shall be prepared to deliver the items described in SECTION 4.4; 9.1.2 Title Policy. The Title Company shall be unconditionally prepared (subject only to payment of all necessary title insurance premiums and other charges) to issue to 38 46 Buyer the Title Policy insuring Buyer's title to the Real Property subject only to the Permitted Encumbrances; 9.1.3 Performance Under Related Agreement. All conditions precedent to the closing of the transactions contemplated by that certain Purchase and Sale Agreement and Joint Escrow Instructions (the "Related Agreement") dated as of the date hereof by and between D.C. Overnight Partners, L.P. and Buyer shall have been satisfied or waived and the Seller and Escrow Holder thereunder shall be ready, willing and able to perform thereunder, and there shall be no default of Seller under such agreement; 9.1.4 Ground Lessor Estoppel. The lessor (or its agent) under the Ground Lease shall have delivered a certificate in form and substance satisfactory to the Title Company, confirming that there are no defaults thereunder as of the Closing Date and otherwise sufficient to allow the Title Company to issue the Title Policy in the form required pursuant to this Agreement (the "Ground Lease Estoppel") and/or the Ground Lease Transfer Requirement shall have otherwise been satisfied; and 9.1.5 Seller Performance. Seller shall have performed in all material respects all of the obligations of Seller under this Agreement, to the extent required to be performed at or prior to the Close of Escrow. 9.1.6 Representations and Warranties of Seller. The Seller's representations and warranties set forth in SECTION 6.3 shall be true, correct and complete, as of the Close of Escrow subject to modification thereof to the extent permitted under SECTION 6.7 and subject further to the applicable provisions of SECTION 7.1.1. The conditions set forth in this SECTION 9.1 are solely for the benefit of Buyer and may be waived only by Buyer. Buyer shall at all times have the right to waive any such condition. Any such waiver or waivers shall be in writing and shall be delivered to Seller and Escrow Holder. 9.2 Conditions Precedent to Seller's Obligations. The Close of Escrow and Seller's obligation with respect to the transactions contemplated by this Agreement are subject to the satisfaction, not later than the Scheduled Closing Date, of the following conditions: 9.2.1 Funds and Documents. Buyer shall have delivered to Escrow Holder, prior to the Closing Date, for disbursement as directed by Seller, the Paired Shares and all cash or other immediately available funds due from Buyer in accordance with SECTION 4 of this Agreement and the documents described in SECTION 4.3; 9.2.2 Representations and Warranties of Buyer. The Trust's representations and warranties set forth in SECTION 6.1 and the Corporation's representations and warranties set forth in SECTION 6.2 shall be true, correct and complete, as of the Close of Escrow; 9.2.3 No Material Changes. There shall have been no casualty or condemnation for which Buyer has elected to terminate this Agreement pursuant to SECTION 12 or SECTION 13 of this Agreement; 39 47 9.2.4 Ground Lessor Estoppel . The lessor (or its agent) under the Ground Lease shall have delivered the Ground Lease Estoppel or the Ground Lease Transfer Requirement shall have otherwise been satisfied; and 9.2.5 Performance Under Related Agreement. All conditions precedent to the closing of the transactions contemplated by the Related Agreement shall have been satisfied or waived and the Buyer and Escrow Holder thereunder shall be ready, willing and able to perform thereunder and there shall be no default of Buyer under such agreement. The conditions set forth in this SECTION 9.2 are solely for the benefit of Seller and may be waived only by Seller. Seller shall at all times have the right to waive any such condition. Any such waiver or waivers shall be in writing and shall be delivered to Buyer and Escrow Holder. 9.3 Failure of Condition. Except as otherwise provided in this Agreement, if the Escrow fails to close on the Outside Closing Date for any reason whatsoever, including, without limitation, a failure of a condition precedent set forth in this SECTION 9, either Buyer or Seller, if not then in default under this Agreement, may terminate the Escrow and this Agreement upon notice to the other; and, thereupon: 9.3.1 This Agreement and the Escrow shall terminate; 9.3.2 The costs of the Escrow through the Scheduled Closing Date shall be governed by SECTION 4.8; 9.3.3 All monies paid into the Escrow and all documents deposited in the Escrow shall be returned to the party paying or depositing the same together with interest earned thereon; and 9.3.4 Each party shall be released from all obligations under this Agreement except for the obligations that are expressly stated to survive the termination of this Agreement. SECTION 10 BROKER Buyer and Seller each represent and warrant to the other that it has not dealt with any broker, finder or other middleman in connection with this Agreement, or the transactions contemplated hereby and that no broker, finder, middleman or other person has claimed, or has the right to claim a commission, finder's fee or other brokerage fee in connection with this Agreement or the transactions contemplated hereby. Each party shall indemnify, protect, defend and hold the other party harmless from and against any costs, claims or expenses (including actual attorneys' fees and expenses), arising out of the breach by the indemnifying party of any of its representations, warranties or agreements contained in this SECTION 10. The representations and obligations under this SECTION 10 shall survive the Close of Escrow, or, if the Close of Escrow does not occur, the termination of this Agreement. 40 48 SECTION 11 REMEDIES FOR SELLER'S DEFAULT 11.1 Buyer's Remedies in General. If Buyer shall discover prior to the Close of Escrow any default in any of Seller's obligations under this Agreement (a "Seller Default"), Buyer shall notify Seller thereof, and Seller shall have a reasonable period of time (not in excess of thirty (30) days) unless extended by Buyer in its sole discretion in which to cure such default, in which case the Scheduled Closing Date shall be extended during the continuation of such cure period. If there shall be any Seller Default discovered by Buyer prior to the Close of Escrow and not cured by the Scheduled Closing Date, then Buyer's sole right and remedy other than with respect to a breach of a representation and warranty which shall be subject to the provisions of SECTION 6.7, shall be to compel specific performance of this Agreement; provided, however, that Buyer shall only be entitled to compel specific performance of this Agreement if, as of the time of Seller's default, Buyer shall (a) not be in default hereunder, (b) shall be ready, willing and able to perform its obligations hereunder, and (c) shall have waived all contingencies to closing other than those relating to Seller's default. 11.2 MATERIAL INDUCEMENT. BUYER SPECIFICALLY ACKNOWLEDGES THAT THE LIMITATIONS ON DAMAGES AND SURVIVAL AND OTHER REMEDIES WHICH BUYER MAY RECOVER FROM AND ENFORCE AGAINST SELLER UNDER THIS AGREEMENT ARE A SPECIFIC AND MATERIAL INDUCEMENT TO SELLER TO ENTER INTO THIS TRANSACTION. SECTION 12 DAMAGE TO OR DESTRUCTION OF THE PROPERTY 12.1 Insured Casualty. 12.1.1 If, prior to the Close of Escrow, the Property is damaged or destroyed, whether by fire or other insured casualty, Seller shall promptly notify Buyer of such damage or destruction and of the good-faith estimate of a reputable licensed contractor selected by Seller and reasonably approved by Buyer of the cost to repair the damage and Seller's good-faith belief that such casualty is insured (the "Insured Casualty Notice"). If the Insured Casualty Notice indicates that such casualty is a Material Casualty, Buyer may elect to be released from its obligations hereunder (including its obligation to purchase the Property) by delivering to Seller written notice of Buyer's intent to do so within ten (10) days after the date Buyer receives the Insured Casualty Notice. In such event, the Deposit together with all interest accrued thereon shall be promptly returned to Buyer. 12.1.2 If the casualty is insured, and (i) it is not a Material Casualty, or (ii) it is a Material Casualty, but Buyer elects not to terminate this Agreement in accordance with this SECTION 12.1, then the Escrow and this Agreement shall remain in full force and effect, the 41 49 Closing shall occur on or before the Outside Closing Date, and Seller shall assign to Buyer, as a condition precedent to the Close of Escrow, all of Seller's right, title and interest in and to any of the casualty insurance proceeds or claims therefor with respect to such damage or destruction, together with any and all rental loss or business interruption insurance of Seller, if any, payable with respect to the Property for any period after the Proration Time and any and all claims against other persons for such damage or destruction. Additionally, if the Escrow and this Agreement remain in full force and effect, Seller shall pay to Buyer, by way of a reduction in the Cash Portion of the Closing Payment, an amount equal to the deductible under the casualty insurance. Within twelve (12) months following the Close of Escrow, Buyer shall upon thirty (30) days written notice by Seller, present reasonably satisfactory evidence to Seller that Buyer applied the proceeds of such insurance to the Property. If Buyer fails to present such evidence or such evidence is not reasonably satisfactory to Seller, Buyer shall promptly, but in any event within thirty (30) days of demand therefor from Seller, pay to Seller the proceeds of the casualty insurance assigned by Seller to Buyer as provided herein, together with an amount equal to the deductible under such insurance for which Buyer received a credit to the Purchase Price. 12.2 Uninsured Casualty. 12.2.1 If, prior to the Close of Escrow, all or any portion of the property is damaged or destroyed by an uninsured casualty (including, without limitation, a casualty as to which coverage has been disclaimed by Seller's insurers), Seller shall promptly notify Buyer of such damage or destruction and of the Seller's reasonable estimate of the cost to Seller to repair the same of a reputable licensed contractor selected by Seller and reasonably approved by Buyer (the "Uninsured Estimate to Repair") and Seller's reasonable belief that such casualty is uninsured (the "Uninsured Casualty Notice"). 12.2.2 If such Uninsured Estimate to Repair indicates the occurrence of a Material Casualty, either Seller or Buyer may elect to terminate this Agreement by giving to the other party written notice of its intent to do so within ten (10) days after the Seller delivers the Uninsured Casualty Notice to Buyer. If this Agreement is terminated pursuant to this SECTION 12.2.2, the Deposit together with interest accrued thereon shall be promptly returned to Buyer. 12.2.3 If the casualty is uninsured, and (i) it is not a Material Casualty, or (ii) it is a Material Casualty and Buyer and Seller have not elected to terminate this Agreement in accordance with SECTION 12.2.2, then the Escrow and this Agreement shall remain in full force and effect, the Closing shall occur on or before the Outside Closing Date, and Buyer shall be entitled to a reduction in the Purchase Price in an amount equal to the Uninsured Estimate to Repair. 12.2.4 If and to the extent that the Purchase Price is adjusted pursuant to this SECTION 12.2 as a result of a disclaimer of coverage by Seller's insurers, Buyer shall not be entitled to insurance proceeds due under Seller's policies, or to be assigned any claim under or with respect to Seller's policies, and Seller shall retain all rights thereunder or with respect thereto and to proceeds therefrom, it being the intent of this SECTION 12 that there be no double recovery by, or double compensation of, Buyer for the casualty. 42 50 SECTION 13 CONDEMNATION If, prior to the Close of Escrow, a Material Taking has occurred or is pending, Seller shall immediately notify Buyer of such fact. In such event, Buyer may elect upon written notice to Seller given not later than fifteen (15) days after receipt of Seller's notice to terminate this Agreement. If Buyer does not exercise option which Buyer may have pursuant to this SECTION 13 to terminate this Agreement, or if any such taking is not a Material Taking, then neither party shall have the right to terminate this Agreement, but Seller shall assign and turn over, and Buyer shall be entitled to receive and keep, all awards for the taking of any of the Real Property by eminent domain which accrue to Seller (other than those relating to loss of use prior to the Closing), and the parties shall proceed to the Close of Escrow pursuant to the terms hereof, without modification of the terms of this Agreement and without any reduction in the Purchase Price. SECTION 14 EMPLOYEES 14.1 Hiring of Hotel Employees; WARN Act Compliance. Buyer agrees to make an offer of employment to all existing Hotel Employees as of the Close of Escrow, on terms and conditions generally comparable to their existing terms and conditions of employment (to the extent such terms and conditions have been disclosed by Seller and/or its agents to Buyer) and to make all reasonable efforts to retain such employees for a reasonable period of time. Without limiting the foregoing, Buyer shall offer to maintain without loss of employment (as defined in the WARN Act) the employment at the Property (other than upon good cause for termination) of such number of Hotel Employees and on such terms and conditions as shall not result in, and only to the extent necessary to prevent, a plant closing or mass layoff as defined in the WARN Act. Buyer (i) shall also cause each of the health and medical benefit plans maintained for Hotel Employees to waive any preexisting condition in connection with employment at the Property that was not excluded under the applicable program as of the Closing Date, (ii) shall also cause each of such benefit plans to take into account any deductibles or coinsurance amounts incurred by each Hotel Employee for the year in which the Closing Date occurs, and (iii) shall also cause each of the health and medical benefit plans to deem each Hotel Employee to be eligible for participation in such Plan as of the Close of Escrow. In the event that Buyer fails to comply with any of the foregoing covenants, Buyer agrees that Buyer shall be solely responsible for the payment of any and all costs, charges, penalties, compensation, severance pay, benefits and liabilities, arising under the WARN Act, and any other applicable law, rule or regulation on account thereof, and Buyer agrees to indemnify, defend and hold Seller and the Employer Corporation and their directors, officers, agents, affiliates, principals, partners, shareholders representatives and controlling persons harmless from and against any and all claims, causes of action, judgments, damages, penalties and liabilities asserted under the WARN Act or any other applicable law, rule or regulation, whether against Buyer or Seller, the Employer Corporation or 43 51 any other such indemnified party and whether based on employment of any of the Hotel Employees prior to or following the Closing, arising from Buyer's failure to comply with the foregoing covenants (collectively, "Termination Charges"). Following the Closing, if Buyer desires to terminate the employment of any Hotel Employees other than for cause, Buyer shall be solely responsible for complying with all applicable provisions of the WARN Act and all other applicable laws, rules and regulations with respect to such termination, including without limitation, the payment of all costs and termination payments owing under the WARN Act and all other applicable laws, rules and regulations to any of such employees. Buyer shall assume all obligations under the Employment Agreement for the Director of Finance attributable to the period from and after the Closing Date (it being agreed that the Director of Finance may resign thereunder at any time without penalty). 14.2 Collective Bargaining Agreements. Without limiting the provisions of SECTION 14.1, immediately upon the Close of Escrow, without the necessity of further action by Buyer, Buyer shall assume each collective bargaining agreement or other labor union contracts identified on SCHEDULE 14.2 (the "Collective Bargaining Agreements"). Buyer further agrees to indemnify Seller and the Employer Corporation and their directors, officers, employees, agents, affiliates, principals, partners, shareholders, representatives and controlling persons for any and all liability to the bargaining agents or Hotel Employees, resulting from the failure of Buyer to comply with the terms and conditions of any of the Collective Bargaining Agreements with respect to periods beginning after the Close of Escrow. 14.3 Continuation of Benefits. 14.3.1 Except as provided in SECTION 14.3.2 , on and after the Closing Date, Seller (or any insurer at Seller's cost) shall continue to process and pay (or cause applicable insurers and third party administrators, including ITT Sheraton, to process and pay) in an expeditious manner and with respect to all covered Hotel Employees (and, to the extent applicable, their covered spouses, dependents and beneficiaries) all claims under the Employment Agreements that provide health and medical, or other welfare, benefits submitted for covered expenses with respect to occurrences commencing on or prior to the Closing Date, including, but not limited to: (A) covered hospital benefits for any confinements; (B) covered life and survivor income benefits, if any, for deaths which occur on or prior to the Closing Date; (C) workers' compensation benefits for disabilities resulting from a work-related accident which occurred on or prior to the Closing Date; (D) all covered benefits that are being, or that may be, paid to, or with respect to, any of such individuals who are on short or long term disability, or medical, personal or other leaves of absence as of the Closing Date; (E) covered benefits under any "spending account," or similar arrangement, under any "cafeteria plan" (as defined under Section 125 of the Internal Code) with respect to salary reduction elections made prior to the Closing Date; and (F) covered benefits under all other such Employment Agreements which accrue on or before the Closing Date; but, only in each instance, to the extent that Buyer shall not have received a credit against the Purchase Price on account of such item. 14.3.2 Buyer (or any plan maintained by Buyer) will provide continued health and medical coverage as required under Section 4980B of the Code, Part 6 of Title I of ERISA or 44 52 any other applicable federal, state or local law or ordinance to all current and former Hotel Employees (and their spouses, dependents and beneficiaries) with respect to whom a "qualifying event" (as such term is defined under Sections 4980B(f)(3) of the Code or 603 of ERISA) or other triggering event described under the applicable federal, state or local laws or ordinances occurred on or before the Closing Date. 14.3.3 Buyer shall maintain supplies of claims forms necessary for Hotel Employees to make claims under Employment Agreements that provide health, medical or other welfare benefits with respect to occurrences commencing on or prior to the Closing Date, and shall furnish such forms to the Hotel Employees when needed and otherwise assist the Hotel Employees in presenting such claims. 14.4 Buyer and Seller intend by this Agreement to comply with Section 4204 of ERISA, so as to prevent Seller from incurring at the Closing Date a complete or partial withdrawal in respect of any employee benefit plans, if any, in which the Hotel Employees currently participate that are "multiemployer plans," as defined in Section 4001(a)(3) of ERISA (and which have been disclosed to Buyer on the Schedule of Employment Agreements), determined as if Buyer is the "buyer" referred to in such Section 4204. Accordingly, with respect to such multiemployer plans, Buyer agrees as follows: (A) For the first plan year of each such multiemployer plan commencing after the Close of Escrow, and for each of the succeeding four plan years for each such plan, Buyer shall assume the obligation to contribute to each such plan with respect to operations conducted with business assets acquired from Seller for substantially the same number of contribution base units (as defined in Section 4001(a)(11) of ERISA) for which Seller had an obligation to contribute to such plan. (B) Prior to each such multiemployer plan's first plan year beginning after the Close of Escrow, Buyer shall apply to such plan for a variance from the requirement of Section 4204(a)(1)(b) of ERISA, that a bond be obtained or an amount be held in escrow as provided in said Section. In the event any such plan determines that the request does not qualify for a variance on it, Buyer shall obtain any required bond or establish any required escrow within thirty (30) days after the date on which it receives notice of the plan's decision, and shall maintain such bond or escrow until the earliest of: (i) the date a variance is obtained from the plan; (ii) the date a variance or exemption is obtained from the Pension Benefit Guaranty Corporation; or (iii) the last day of the fifth (5th) plan year commencing after the Close of Escrow; which bond or escrow shall be paid to such plan if Buyer withdraws therefrom or fails to make a contribution to such plan when due, at any time during the first (1st) five (5) plan years of such plan beginning after the Closing Date. In order to comply with subsection (a)(1)(C) of such Section 4204, if Buyer withdraws in a complete withdrawal or a partial withdrawal from any multiemployer plan with respect to which Buyer has assumed an obligation to contribute pursuant to this Agreement and such withdrawal or partial withdrawal occurs during the five (5) plan years commencing with the first (1st) plan year beginning after the date of the Close of Escrow, Seller shall be secondarily liable for any withdrawal liability it would have had to such 45 53 multiemployer plan on the date of the Close of Escrow under Title IV of ERISA. Buyer agrees to provide Seller with reasonable advance notice of its anticipated failure to pay any withdrawal liability and to furnish Seller promptly with a copy of any notice of withdrawal liability it may receive with respect to such plans. 14.5 Indemnification. Buyer and Seller (as applicable, the "Indemnitor") agrees to indemnify, defend, protect and hold the other and, the Employer Corporation in the case of Seller, and their directors, officers, agents, affiliates, principals, partners, shareholders, representatives and controlling persons (as applicable, the "Indemnitee") harmless from and against any and all claims, damages, liabilities, losses, and expenses, (including attorneys' fees and costs) paid, suffered or incurred by the Indemnitee, arising out of or related to Indemnitor's failure to comply with any of the covenants, obligations, or duties contained in SECTION 14. 14.6 Survival. The provisions of this SECTION 14 shall survive the Close of Escrow. SECTION 15 COOPERATION 15.1 Seller has advised Buyer that it may be necessary after the Close of Escrow for Seller (or its representatives) to audit the Records and Plans with respect to the period prior to the Closing Date. In addition, Seller may require access to the such Books and Records in connection with any litigation by or against Seller and its Affiliates with respect to the Property, any tax audit, examination or challenge or similar proceeding, or any calculation of sums payable under SECTION 5. Accordingly, Buyer hereby: (i) agrees to retain the Records and Plans with respect to the period prior to the Closing Date at the Property for a period of seven (7) years after the Close of Escrow or such additional period as may reasonably be requested by Seller; (ii) grants Seller, its Affiliates and their respective representatives access to the such Records and Plans and the Property after the Close of Escrow, at reasonable times and upon reasonable prior notice, for such purposes; (iii) subject to the rights of guests in guest rooms, tenants under tenant leases, grants Seller, its Affiliates, and their respective representatives access to the Property after the Close of Escrow for the purpose of conducting such inspections and/or testing (including destructive testing) of the Property as may be necessary or advisable in connection with any litigation and other proceedings to which Seller is a party (provided that Seller shall give Buyer prior notice of the scope of such inspections and testing) which shall be scheduled for such periods as shall be reasonably agreeable to the parties. 15.1.1 All inspections fees, appraisal fees, engineering fees and other expenses of any kind relating to the inspection of the Property by Seller or Seller's Affiliate will paid for by Seller and/or Seller's Affiliate. 15.1.2 Prior to Seller or Seller's Affiliate's entry on the Property for the purpose of conducting inspections and/or tests, Seller or Seller's Affiliate shall provide Buyer with 46 54 certificates of insurance from Seller's agents from an insurance carrier and for such risks and policy limits as Seller shall reasonably approve. 15.1.3 Seller agrees to keep the Property free from any liens arising out of or in connection with such testing and inspection. 15.1.4 Seller, shall, at its sole cost and expense, clean up and repair the Property as reasonably necessary, after Seller's or Seller's agents, entry thereon. 15.1.5 Seller shall hold harmless, indemnify and defend Buyer for all losses relating to any action by Seller, its Affiliates and/or agents at or on the Property after the Closing. 15.1.6 Buyer agrees to cooperate with Seller, its Affiliates and their respective representatives in connection with any such litigation or proceedings with respect to the Property, any such tax audit, examination or challenge or similar proceeding, or any such calculation of sums payable under SECTION 5, said cooperation to be at no material cost or expense to Buyer. 15.2 Seller shall cooperate with Buyer in connection with the assignment of all transferable Licenses and Permits to Buyer and the application for and procurement of replacements of any non-transferable Licenses and Permits. SECTION 16 NOTICES 16.1 Addresses. Whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be made in writing and shall be (a) sent via a nationally recognized overnight courier service fully prepaid, (b) deposited in the United States by mail, registered or certified, return receipt requested, postage prepaid, or (c) sent via telefacsimile, provided that the original of such notice, demand or request shall also be sent via one of the methods described in (a) and (b) above, in each case to the addressees (and individuals) set forth below: As to Seller: N.Y. Overnight Partners, L.P. c/o Al Anwa USA Incorporated 1925 Century Park East Suite 1900 Los Angeles, CA 90067 Attn: General Counsel Telefacsimile: (310) 229-2939 47 55 With a copy to Seller's Additional Addressees: Gordon Eng, Esq. 19191 S. Vermont Avenue Suite 420 Torrance, CA 90502 Telefacsimile: (310) 207-1006 Morrison & Foerster LLP 555 West Fifth Street, Suite 3500 Los Angeles, CA 90013-1024 Attn: Thomas R. Fileti, Esq. Telefacsimile: (213) 892-5454 As to Buyer: Starwood Lodging Corporation Starwood Lodging Trust 2231 E. Camelback Road Suite 400 Phoenix, AZ 85016 Attn: Steven R. Goldman Telefacsimile: (602) 852-0115 With a copy to Buyer's Additional Addressee: Greenberg Traurig Hoffman Lipoff Rosen & Quentel 153 East 53rd Street New York, NY 10022 Attn: Andrew E. Zobler, Esq. Telefacsimile: (212) 223-7161 As to Escrow Holder: Chicago Title Insurance Company 700 South Flower Street, Suite 900 Los Angeles, CA 90017 Attn: Maggie Watson Telefacsimile: (213) 488-4388 16.2 Receipt of Notices. Any notice, demand or request that shall be delivered to Buyer and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Buyer for all purposes hereunder, and any notice, demand or request that shall be 48 56 delivered to Seller and its Additional Addresses in the manner aforesaid shall be deemed sufficiently given to and received by Seller for all purposes hereunder (i) the next business day following the day such notice, demand or request is delivered by a nationally recognized overnight courier service fully prepaid, to such party and its Additional Addressee, (ii) if sent via registered or certified mail, at the time of receipt by such party and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date and time stated upon confirmation reports generated by the sending party's telefacsimile machine confirming the delivery of such notice, demand or request to such party and its Additional Addressee. 16.3 Refusal of Delivery. The inability to deliver any notice, demand or request because the individual to whom it is properly addressed in accordance with this SECTION 16 refused delivery thereof or no longer can be located at that address shall constitute delivery thereof to such individual. 16.4 Change of Address. Each party shall have the right from time to time to designate by written notice to the other parties hereto such other person or persons and such other place or places as said party may desire written notices to be delivered or sent in accordance herewith. SECTION 17 GENERAL PROVISIONS 17.1 Amendment. Except as provided in SECTION 4.1, no provision of this Agreement or of any documents or instrument entered into, given or made pursuant to this Agreement may be amended, changed, waived, discharged or terminated except by an instrument in writing, signed by the party against whom enforcement of the amendment, change, waiver, discharge or termination is sought. 17.2 Time of Essence. All times provided for in this Agreement for the performance of any act will be strictly construed, time being of the essence. 17.3 Entire Agreement. This Agreement and other documents delivered at Closing, set forth the entire agreement and understanding of the parties in respect of the transactions contemplated by this Agreement, and supersede all prior agreements, arrangements and understandings relating to the subject matter hereof and thereof. No representation, promise, inducement or statement of intention has been made by Seller or Buyer which is not embodied in this Agreement, or in the attached Exhibits or the written certificates, schedules or instruments of assignment or conveyance delivered pursuant to this Agreement, and neither Buyer nor Seller shall be bound by or liable for any alleged representations, promise, inducement or statement of intention not therein so set forth. 17.4 No Waiver. No failure of any party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder 49 57 shall constitute a waiver of any party's right to demand strict compliance with the terms of this Agreement. 17.5 Counterparts. This Agreement, any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby, and any amendment or supplement thereto may be executed in two or more counterparts, and, when so executed, will have the same force and effect as though all signatures appeared on a single document. Any signature page of this Agreement or of such an amendment, supplement, document or instrument may be detached from any counterpart without impairing the legal effect of any signatures thereon, and may be attached to another counterpart identical in form thereto but having attached to it one or more additional signature pages. 17.6 Costs and Attorneys' Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement or any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby or thereby (including, without limitation, the enforcement of any obligation to indemnify, defend or hold harmless provided for herein or therein), or because of an alleged dispute, default, or misrepresentation in connection with any of the provisions of this Agreement or of such document or instrument, or if Escrow Holder commences any action with respect to the Escrow(s), the successful or prevailing party shall be entitled to recover actual attorneys' fees, charges and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 17.7 Payments; Interests. Except as otherwise provided herein, payment of all amounts required by the terms of this Agreement shall be made in the United States and in immediately available funds of the United States of America which, at the time of payment, is accepted for the payment of all public and private obligations and debts. Unless the parties otherwise agree, payments shall be made through the Escrow Holder. If any payment due under this Agreement is not paid when due, it shall thereafter bear interest at a variable rate equal to the rate announced from time to time by Citibank, N.A. as its prime or reference rate, plus five percent (5%) per annum, but in no event more than the maximum rate, if any, allowed by law to be charged by the party receiving the interest on such type of indebtedness. 17.8 Transfer By Buyer. Buyer shall not have the right to assign this Agreement, but shall be permitted to designate an Affiliate or Affiliates to take title to the Property. In the event that Buyer elects to so designate any Affiliate or Affiliates to take title to the Property hereunder, (i) Buyer shall upon close of Escrow be released of all obligations hereunder other than pursuant to SECTION 6, SECTION 7.1, SECTION 10, SECTION 17.18, SECTION 17.19 and SECTION 17.20 or arising prior to the Close of Escrow, (ii) such Affiliate or Affiliates shall assume all of Buyer's obligations hereunder; and (iii) such Affiliate of Affiliates shall represent and warrant to Seller that such entities are duly organized and validly existing and otherwise as to the matters covered in SECTION 6.1.1 and SECTION 6.1.2 as applicable. 17.9 Parties in Interest. Subject to SECTION 17.8, the rights and obligations of the parties hereto shall be binding upon and shall inure to the benefit of the parties hereto and their 50 58 respective successors, assigns, heirs and the legal representatives of their respective estates. Nothing in this Agreement is intended to confer any right or remedy under this Agreement on any person other than the parties to this Agreement and their respective successors and permitted assigns, or to relieve or discharge the obligation or liability of any person to any party to this Agreement or to give any person any right of subrogation or action over or against any party to this Agreement. 17.10 Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the state in which the Real Property is located without giving effect to the conflict-of-law rules and principles of that state. 17.11 Incorporation of Recitals and Exhibits. The Recitals and Exhibits attached to this Agreement are incorporated into and made a part of this Agreement. 17.12 Construction of Agreement. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any of the parties hereto. Headings at the beginning of sections of this Agreement are solely for the convenience of the parties and are not a part of this Agreement. When required by the context, whenever the singular number is used in this Agreement, the same shall include the plural, and the plural shall include the singular, the masculine gender shall include the feminine and neuter genders, and vice versa. As used in this Agreement, the term "Seller" shall include the respective permitted successors and assigns of Seller, and the term "Buyer" shall include the permitted successors and assigns of Buyer, if any. 17.13 Severability. If any term or provision of this Agreement is determined to be illegal, unconscionable or unenforceable, all of the other terms, provisions and sections hereof will nevertheless remain effective and be in force to the fullest extent permitted by law. 17.14 Announcements. Seller and Buyer shall consult with each other and provide each other one (1) Business Day prior notice with regard to all press releases and other announcements issued at or prior to the Close of Escrow and during the one year period thereafter concerning the existence of this Agreement or the sale of the Property and, except as permitted under SECTION 17.19, neither Seller nor Buyer shall issue any such press release or other such publicity prior to the Close of Escrow without the prior written consent of the other party, which consent may be withheld in such other party's sole and absolute discretion. Buyer will not issue any public announcement with respect to Seller (other than to describe the transaction contemplated hereby to the extent permitted hereunder) without the prior written consent of Seller which may be withheld in its sole and absolute discretion. The agreements of the parties in this SECTION 17.14 shall survive the Close of Escrow or any termination of this Agreement. 17.15 Submission of Agreement. The submission of this Agreement to Buyer or its broker, agent or attorney for review or signature does not constitute an offer to sell the Property to Buyer or the granting of an option or other rights with respect to the Property to Buyer. No agreement with respect to the purchase and sale of the Property shall exist, and this writing shall have no binding force or effect, until this Agreement shall have been executed and delivered by Buyer and by Seller and Buyer shall have deposited the Deposit with Escrow Holder. 51 59 17.16 Further Assurances. Buyer and Seller agree to execute such instructions to the Escrow Holder and such other instruments and take such further actions either before or after the Close of Escrow as may be reasonably necessary to carry out the provisions of this Agreement provided that no material additional cost or liability shall be created thereby. 17.17 Cooperation. Buyer and Seller shall cooperate with the other to carry out the purpose of this Agreement (provided, such cooperation shall not require either party to expend any sum not otherwise required pursuant to the other provisions of this Agreement). This SECTION 17.17 shall survive the Close of Escrow. 17.18 Moratorium on Re-Sale. Buyer covenants and agrees that it will not sell the Property to any third-party for a period (the "Transfer Restriction Period") commencing upon the Close of Escrow and expiring upon the later of (a) five (5) years following the Close of Escrow and (b) settlement of or the final non-appealable judgment is issued in connection with the existing litigation between Seller and the Ritz Carlton Hotel Company, LLC and their respective affiliates, provided, however, the foregoing prohibition shall not apply to a sale of all or substantially all of the assets of Buyer, the merger of Buyer into another entity or the transfer of the Property to a subsidiary and/or Affiliate of Buyer but shall be binding upon the party succeeding to all or substantially all of the assets of Buyer, the surviving entity in such merger, or such subsidiary or Affiliate. The provisions of this SECTION 17.18 shall be specifically enforceable. Buyer hereby waives any requirement for Seller to post a bond in order to seek or obtain any temporary restraining order or other injunctive relief pursuant to this SECTION 17.18. The parties acknowledge and agree that the provisions of this SECTION 17.18 form a material part of the consideration to Seller for entering into this Agreement. The parties agree that these provisions are reasonable in light of Seller's ongoing litigation with Ritz Carlton Hotel Company, LLC and its affiliates. 17.19 Confidentiality. Buyer shall hold as confidential all information concerning the transaction contemplated by this Agreement, Seller and the Property disclosed in connection with this transaction and Buyer shall not, prior to the Close of Escrow, release any such information relating to the transaction, Seller or the Property to any governmental agencies or third parties without Seller's prior written consent except as may be required by law and in such case subject to the provisions of SECTION 17.14. Seller hereby gives its consent to Buyer's disclosure of information relating to the transaction contemplated hereby to Buyer's Counsel and other consultants, in each instance to the extent reasonably necessary to verify information given to Buyer by Seller or otherwise to carry out the purposes of this Agreement and provided in each instance, such consultants agree in writing to be bound by the confidentiality provisions of this SECTION 17.19. If the Close of Escrow shall fail to occur for any reason, neither party shall issue any press release, publicity or other public announcement of the subject matter of this Agreement, or to make any other disclosure concerning the subject matter of this Agreement (except as may be required by law and in such case subject to the provisions of SECTION 17.14.), without the prior written consent of the other party, which consent may be withheld in such other party's sole and absolute discretion. The agreements of the parties in this SECTION 17.19 shall survive any termination of this Agreement. 52 60 17.20 Interim Management Agreement. Seller shall provide Manager with a notice of termination of the Management Agreement on January 2, 1998 or as soon thereafter as Seller shall have obtained any required lender consent thereto. Seller shall, on or prior to January 2,1998, seek any required lender contents and use all reasonable commercial efforts to obtain the same as promptly as possible. Buyer and Seller shall enter into a management agreement with respect to the Property in the form attached as EXHIBIT 17.20 hereto (the "Interim Management Agreement") which shall be effective (and the Interim Management Agreement shall be dated as of such effective date) on the earlier of (a) thirty days from the date of that et delivery to Manager of such Termination Notice, and (b) the effective date of a written waiver of Manager of the notice of termination required under the Management Agreement. Buyer shall advance any fee payable to Manager under the Management Agreement on account of the termination thereof up to $69,767.00. Buyer shall be deemed to have waived delivery of all items under SECTIONS 4.2.1.15, 4.2.1.16, 4.2.1.17 and 4.2.1.19 in the event the Management Agreement is terminated in accordance with the provisions of this SECTION 17.20 prior to the Closing Date. 17.21 Starwood Lodging Trust. The parties hereto understand and agree that the name "Starwood Lodging Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. [BALANCE OF PAGE INTENTIONALLY BLANK] 53 61 IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be executed as of the day and year first above written. "Seller" N.Y. OVERNIGHT PARTNERS, L.P., a New York limited partnership By: N.Y. OVERNIGHT, INC. a New York corporation, its sole General Partner By: /s/ Tarek Ayoubi --------------------------------- Name: Tarek Ayoubi Its: President "Buyer" STARWOOD LODGING TRUST, a Maryland real estate investment trust By: /s/ Steven R. Goldman -------------------------------- Name: Steven R. Goldman Title: Senior Vice President STARWOOD LODGING CORPORATION, a Maryland corporation By: /s/ Michael C. Mueller -------------------------------- Name: Michael C. Mueller Title: Vice President "Escrow Agent" CHICAGO TITLE INSURANCE COMPANY, a Missouri corporation By: /s/ Maggie G. Watsu* -------------------------------- Name: Maggie G. Watsu Title: Authorized Signatory * Subject to receiving mutual instruction in the event Paragraph 3.5 becomes operative. 54 EX-99.4 5 PURCHASE AND SALE AGREEMENT 1 D.C. Execution PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS By And Between D.C. OVERNIGHT PARTNERS, L.P., a District of Columbia Limited Partnership, As Seller And STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust And STARWOOD LODGING CORPORATION, a Maryland Corporation, As Buyer. Dated As Of: December 30, 1997 Relating to the D.C. Luxury Collection Hotel Washington, D.C. 2 TABLE OF CONTENTS SECTION 1 - DEFINITIONS......................................................1 1.1 Defined Terms....................................................1 1.2 Other Definitional Provisions...................................10 SECTION 2 - PURCHASE AND SALE OF PROPERTY...................................10 SECTION 3 - PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES....11 3.1 Purchase Price..................................................11 3.2 Payment.........................................................11 3.3 Investment of Escrowed Funds....................................11 3.4 Allocation of Purchase Price....................................12 3.5 Default by Buyer Prior to Closing; Liquidated Damages...........12 SECTION 4 - ESCROW; CLOSING; COSTS..........................................13 4.1 Escrow..........................................................13 4.2 Seller's Deliveries to Escrow Holder............................13 4.2.1.1 Deed...................................................13 4.2.1.2 Assignment and Assumption of Tenant Leases.............13 4.2.1.3 General Assignment.....................................13 4.2.1.4 Assignment and Assumption of Management Agreement......13 4.2.1.5 Bill of Sale...........................................14 4.2.1.6 Stock Agreement........................................14 4.2.1.7 Liquor Licenses Management Agreement...................14 4.2.1.8 [Intentionally Omitted]................................14 4.2.1.9 [Intentionally Omitted]................................14 4.2.1.10 [Intentionally Omitted]................................14 4.2.1.11 [Intentionally Omitted]................................14 4.2.1.12 [Intentionally Omitted]................................14 4.2.1.13 Non-Foreign Person Certificate.........................14 4.2.1.14 Transfer Tax Forms.....................................14 4.2.1.15 Certified Rent Roll....................................14 4.2.1.16 Certified Operating Statement..........................14 4.2.1.17 Guest Ledger...........................................15 4.2.1.18 Closing Certificate....................................15 4.2.1.19 Schedule of Bookings...................................15 4.2.1.20 Title Requirements.....................................15 4.2.1.21 Payoff Letters.........................................15 4.2.1.22 Notices to Tenants.....................................15 4.2.1.23 Opinion of Seller's Counsel............................15 i 3 4.2.1.24 Other..................................................15 4.3 Buyer's Deliveries to Escrow Holder.............................16 4.3.1.1 The Cash Purchase Price................................16 4.3.1.2 Stock Certificates.....................................16 4.3.1.3 Assignment and Assumption of Management Agreement......16 4.3.1.4 Value Letter...........................................16 4.3.1.5 Opinion of Buyer's Counsel.............................16 4.3.1.6 Stock Agreement........................................16 4.3.1.7 [Intentionally Omitted]................................16 4.3.1.8 Liquor License Management Agreement....................16 4.3.1.9 [Intentionally Omitted]................................16 4.3.1.10 [Intentionally Omitted]................................16 4.3.1.11 [Intentionally Omitted]................................16 4.3.1.12 Closing Certificate....................................16 4.3.1.13 The Assignment and Assumption of Tenant Leases.........17 4.3.1.14 The General Assignment and Assumption Agreement........17 4.3.1.15 Transfer Tax Forms.....................................17 4.3.1.16 Other..................................................17 4.4 Seller's Deliveries to Buyer....................................17 4.4.1 Tenant Leases/Tenant Deposits..........................17 4.4.2 Service Contracts......................................17 4.4.3 Licenses and Permits...................................17 4.4.4 Records and Plans......................................17 4.5 Possession......................................................17 4.6 Evidence of Authorization.......................................17 4.7 Close of Escrow.................................................18 4.8 Costs of Escrow.................................................18 4.9 Other Costs.....................................................19 4.10 Maintenance of Confidentiality by Escrow Holder.................19 SECTION 5 - PRORATIONS AND ASSUMPTION OF OBLIGATIONS........................20 5.1 General.........................................................20 5.2 General and Specific Prorations.................................20 5.3 Deposits........................................................22 5.4 Tenant Leases...................................................22 5.5 Service Contracts and Other Intangible Property.................23 5.6 Tax Refunds and Proceedings.....................................23 5.7 Guest Baggage...................................................23 5.8 Safe Deposit Boxes..............................................23 5.9 Advance Bookings................................................24 5.10 [Intentionally Omitted].........................................24 SECTION 6 - REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY...........24 6.1 Of the Trust....................................................24 ii 4 6.1.1 Power and Authority....................................24 6.1.2 Authorization; Valid Obligation........................24 6.1.3 Capital Structure......................................24 6.1.4 SEC Documents and Other Reports........................25 6.1.5 Absence of Certain Changes or Events...................25 6.1.6 Actions and Proceedings................................25 6.1.7 REIT Status............................................26 6.1.8 Partnership Status.....................................26 6.1.9 Hart-Scott-Rodino Act..................................26 6.2 Of the Corporation..............................................26 6.2.1 Power and Authority....................................26 6.2.2 Authorization; Valid Obligation........................26 6.2.3 Capital Structure......................................27 6.2.4 SEC Documents and Other Reports........................27 6.2.5 Absence of Certain Changes or Events...................27 6.2.6 Actions and Proceedings................................28 6.2.8 Hart-Scott-Rodino......................................28 6.3 Of Seller.......................................................28 6.3.1 Regarding Seller's Authority...........................28 6.3.2 Tenant Leases..........................................29 6.3.3 Service Contracts......................................29 6.3.4 Claims.................................................29 6.3.5 Employees..............................................29 6.3.6 Compliance with Laws...................................30 6.3.7 Hazardous Materials....................................30 6.3.8 Records and Plans......................................30 6.3.9 Licenses and Permits...................................30 6.3.10 Management Agreements..................................30 6.3.11 Personal Property......................................30 6.3.12 Insurance..............................................30 6.3.13 Real Estate Taxes......................................31 6.3.14 [Intentionally Omitted]................................31 6.3.15 [Intentionally Omitted]................................31 6.3.16 District of Columbia Underground Storage Tank Disclosure Notice......................................31 6.4 Buyer's Review of Records and Plans.............................31 6.4.1 Access to Records and Plans; Specific Disclosures......31 6.4.2 Limitation on Access to Records and Plans..............31 6.5 PURCHASE AS IS..................................................32 6.6 Limitation on Representations and Warranties of Seller..........34 6.7 Right to Supplement Disclosures.................................34 6.8 Basket..........................................................35 6.9 Survival........................................................35 6.10 Soil Disclosure.................................................35 iii 5 SECTION 7 - TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING............35 7.1 Buyer's Review of Title.........................................35 7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens.........................................36 7.1.2 [Intentionally Omitted]................................36 7.2 Title Insurance Policy..........................................37 7.3 Title to Real Property..........................................37 SECTION 8 - INTERIM ACTIVITIES..............................................37 SECTION 9 - CONDITIONS PRECEDENT TO CLOSING.................................38 9.1 Conditions Precedent to Buyer's Obligations.....................38 9.1.1 Seller's Deliveries....................................38 9.1.2 Title Policy...........................................38 9.1.3 Performance Under Related Agreements...................38 9.1.4 [Intentionally Omitted]................................38 9.1.5 Seller Performance.....................................38 9.1.6 Representations and Warranties of Seller...............38 9.2 Conditions Precedent to Seller's Obligations....................38 9.2.1 Funds and Documents....................................38 9.2.2 Representations and Warranties of Buyer................39 9.2.3 No Material Changes....................................39 9.2.4 [Intentionally Omitted]................................39 9.2.5 Performance Under Related Agreements...................39 9.3 Failure of Condition............................................39 SECTION 10 - BROKER.........................................................40 SECTION 11 - REMEDIES FOR SELLER'S DEFAULT..................................40 11.1 Buyer's Remedies in General.....................................40 11.2 MATERIAL INDUCEMENT.............................................40 SECTION 12 - DAMAGE TO OR DESTRUCTION OF THE PROPERTY.......................41 12.1 Insured Casualty................................................41 12.2 Uninsured Casualty..............................................41 SECTION 13 - CONDEMNATION...................................................42 SECTION 14 -EMPLOYEES.......................................................42 14.1 Hiring of Hotel Employees; WARN Act Compliance..................42 14.2 Collective Bargaining Agreements................................43 14.3 Continuation of Benefits........................................44 14.5 Indemnification.................................................45 14.6 Survival........................................................45 SECTION 15 - COOPERATION....................................................46 iv 6 SECTION 16 - NOTICES........................................................47 16.1 Addresses.......................................................47 16.2 Receipt of Notices..............................................48 16.3 Refusal of Delivery.............................................48 16.4 Change of Address...............................................49 SECTION 17 - GENERAL PROVISIONS.............................................49 17.1 Amendment.......................................................49 17.2 Time of Essence.................................................49 17.3 Entire Agreement................................................49 17.4 No Waiver.......................................................49 17.5 Counterparts....................................................49 17.6 Costs and Attorneys' Fees.......................................49 17.7 Payments; Interests.............................................50 17.8 Transfer By Buyer...............................................50 17.9 Parties in Interest.............................................50 17.10 Applicable Law..................................................50 17.11 Incorporation of Recitals and Exhibits..........................50 17.12 Construction of Agreement.......................................50 17.13 Severability....................................................51 17.14 Announcements...................................................51 17.15 Submission of Agreement.........................................51 17.16 Further Assurances..............................................51 17.17 Cooperation.....................................................51 17.18 Moratorium on Re-Sale...........................................51 17.19 Confidentiality.................................................52 17.20 Interim Management Agreement....................................52 v 7 EXHIBITS Exhibit A.................................................Legal Description Exhibit B............................................Memorandum of Contract Exhibit 4.2.1.1........................................................Deed Exhibit 4.2.1.2..................Assignment and Assumption of Tenant Leases Exhibit 4.2.1.3.................General Assignment and Assumption Agreement Exhibit 4.2.1.4...........Assignment and Assumption of Management Agreement Exhibit 4.2.1.5(a)...........Bill of Sale for Capitalized Tangible Property Exhibit 4.2.1.5(b)..............Bill of Sale for Expensed Tangible Property Exhibit 4.2.1.6.............................................Stock Agreement Exhibit 4.2.1.7.........................Liquor License Management Agreement Exhibit 4.2.1.13.............................Non-Foreign Person Certificate Exhibit 6.3.16.................District of Columbia Storage Tank Disclosure Exhibit 17.20..................................Interim Management Agreement SCHEDULES Schedule 1.1.1...................................Approved Service Contracts Schedule 1.1.2........................................Employment Agreements Schedule 1.1.3.............................................Equipment Leases Schedule 1.1.4............................................Excluded Property Schedule 1.1.5......................................[Intentionally Omitted] Schedule 1.1.6..............................................Hotel Employees Schedule 1.1.7....................................Schedule of Tenant Leases Schedule 1.1.8............... Seller's Due Diligence and Seller's Knowledge Schedule 1.1.9..................................Specific Disclosure Matters Schedule 6.3.2.........................Material Defaults Under Tenant Lease Schedule 6.3.3...........Material Defaults Under Approved Service Contracts Schedule 6.3.4..............................................Material Claims Schedule 6.3.5................Material Defaults Under Employment Agreements Schedule 6.3.6..........................................Material Violations Schedule 6.3.7............................Material Environmental Conditions Schedule 6.3.9.........................................Licenses and Permits Schedule 6.3.12..........................................Seller's Insurance Schedule 6.3.13........................................Pending Tax Protests Schedule 7.3.........................................Permitted Encumbrances Schedule 14.2..............................Collective Bargaining Agreements vi 8 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this "Agreement") is entered into as of the 30th day of December, 1997, by and between D.C. OVERNIGHT PARTNERS, L.P., a District of Columbia limited partnership ("Seller"), and STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust (the "Trust"), and STARWOOD LODGING CORPORATION, a Maryland corporation (the "Corporation"; the Trust and the Corporation being referred to herein collectively as, "Buyer"). A. Seller owns that certain parcel of land described in Exhibit A attached hereto and made a part hereof, which is improved with a hotel building and certain related improvements, all as more particularly set forth in this Agreement. B. Seller desires to sell, and Buyer desires to purchase, the above described land and hotel together with the related improvements upon the terms and subject to the conditions set forth in this Agreement. A G R E E M E N T NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby mutually acknowledged, Buyer and Seller agree as follows: SECTION 1 DEFINITIONS 1.1 Defined Terms "Accounts Receivable" shall mean, collectively, all Cash Equivalent Receivables, all Invoiced Receivables and all Other Accounts Receivable. "Affiliate" shall have the meaning set forth in Rule 12b-2 of the regulations promulgated under the Exchange Act. "Approved Service Contracts" shall mean the Service Contracts identified on Schedule 1.1.1 annexed hereto and made a part hereof and any other Service Contracts cancelable upon thirty (30) or fewer days notice without penalty, which Service Contracts Buyer shall assume as of the Closing pursuant to the General Assignment and Assumption Agreement. "Assignment and Assumption of Management Agreement" shall have the meaning set forth in Section 4.2.1.4. 9 "Assignment and Assumption of Tenant Leases" shall have the meaning set forth in Section 4.2.1.2. "Bill of Sale" shall have the meaning set forth in Section 4.2.1.5. "Business Day" shall mean any day other than Saturday or Sunday on which the New York Stock Exchange is open for business. "Booking" shall mean a contract or reservation for the use of guest rooms, banquet facilities, meeting rooms, and/or conference facilities at the Hotel. "Buyer's Counsel" shall mean the law firm of Greenberg Traurig Hoffman Lipoff Rosen & Quentel acting through Andrew E. Zobler, Esq. "Buyer Default" shall have the meaning set forth in Section 3.5.1. "Cash Equivalent Receivables" shall mean all Guest Ledger Receivables which are in the form of drafts or checks written on any bank or other financial institution, certified checks, money orders, amounts owed to Seller from credit card, debit card, travel and entertainment card or traveler's check companies, and are in such other forms which are considered to be cash equivalents under generally acceptable accounting principles, whether or not such Guest Ledger Receivables have been presented or billed to any such bank, financial institution or other company as of the Closing Date. "Cash Purchase Price" shall mean (a) Forty Three Million Two Hundred Thousand Dollars ($43,200,000) plus (b) an additional One Million Eight Hundred Thousand Dollars ($1,800,000) if the Scheduled Closing Date does not occur prior to July 15, 1998 plus (c) the Overage Cash Payment, if any, as adjusted pursuant to Section 3.2.2. "Closing" or "Close of Escrow" shall have the meaning set forth in Section 4.7.2. "Closing Agent" shall have the meaning set forth in Section 4.8.10. "Closing Date" shall mean the day on which the Closing occurs hereunder. "Closing Payment" shall have the meaning set forth in Section 3.2.2. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. "Collective Bargaining Agreements" shall have the meaning set forth in Section 14.2. "Conveyance Documents" shall mean the Deed, the Assignment and Assumption of Management Agreement, the Assignment and Assumption of Tenant Leases, the Bill of Sale and the General Assignment and Assumption Agreement. 2 10 "Deed" shall have the meaning set forth in Section 4.2.1.1. "Deposit" shall mean an amount equal to $2,571,429.00, held in accordance with the provisions of Section 3 hereof together with all interest accrued thereon. "Employer Corporation" shall mean Luxury Holdings, Inc. (formerly known as TQM Inc.). "Employment Agreements" shall mean the Collective Bargaining Agreements and Employee Benefit Plans (as defined in Section 3(3) of ERISA), affecting Hotel Employees, including pension, profit sharing, employee benefit and similar plans, if any, and agreements with regard to any Hotel Employee each of which are identified on or expressly described in the materials identified on Schedule 1.1.2 annexed hereto and made a part hereof. "Environmental Condition" shall mean any condition with respect to soil, surface waters, groundwater, land, stream sediments, surface or subsurface strata, ambient air and any environmental medium comprising or surrounding the Real Property, which results in any damage, loss, cost, expense, claim, demand, order or liability to or against Seller or Buyer by any third party (including, without limitation, any government entity) as a result of a violation of any applicable Environmental Laws. "Environmental Laws" shall mean all presently applicable statutes, regulations, rules, ordinances, codes, licenses, permits and orders of any and all governmental agencies, departments, commissions, boards, bureaus or instrumentalities of the United States, states and political subdivisions thereof, and all applicable judicial and administrative and regulatory decrees, judgments and orders relating to the protection of the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq.; and analogous state laws and regulations. "Equipment Leases" shall mean all leases of equipment, vehicles, furniture or other personal property leased by, or on behalf of, Seller and located at, or used in the operation of the Real Property, together with any and all amendments thereto, which are identified on Schedule 1.1.3 annexed hereto. "Equity Purchase Price" shall mean the number of Paired Shares with a value as determined pursuant to the Stock Agreement equal to One Million Six Hundred Fifty Five Thousand One Hundred Dollars ($1,655,100.00) provided, however, the Equity Purchase Price shall be reduced to Zero Dollars ($0.00) if the Scheduled Closing Date does not occur prior to July 15, 1998 to be delivered in accordance with the applicable provisions of the Stock Agreement. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. 3 11 "Escrow" shall mean an escrow opened with the Escrow Holder for the purchase and sale of the Property in accordance with the provisions of this Agreement. "Escrow Holder" shall mean the Title Company unless otherwise agreed in writing by Buyer and Seller. "Escrow Instructions" shall have the meaning set forth in Section 4.1. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Excluded Property" shall mean all Seller's right, title and interest in and to: (a) those claims of Seller attributable to the period prior to the Closing Date and described on Schedule 1.1.4 annexed hereto and made a part hereof, or which Seller is entitled to assert under the express provisions of Section 5; (b) all insurance proceeds under Seller's Insurance and workers' compensation policies, including return premiums and dividends thereon and all claims thereunder in each case to the extent attributable to acts or occurrences prior to the Closing Date; (c) all accounts owned or maintained by Seller, or Manager on Seller's behalf, in connection with the Hotel, including all operating and reserve accounts; and (d) any books, records, files or papers specifically described in Section 6.3.2 as excluded from the Property Information. "Excluded Parties" shall have the meaning set forth in Section 17.18 "Execution Date" shall mean the date hereof. "General Assignment and Assumption Agreement" shall have the meaning set forth in Section 4.2.1.3. "Guest Ledger Receivables" shall mean amounts, including, without limitation, room charges, accrued to the accounts of guests occupying rooms at the Hotel or group, conference or banquet customers of Seller at the Hotel. "Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder, as the same has been amended from time to time. "Hotel" shall mean the hotel located on the Land and commonly known as the D.C. Luxury Collection Hotel. "Hotel Employees" shall mean all full-time, part-time or temporary employees of Seller and/or the Employer Corporation (but not employees of Manager or any of its affiliates) who are employed by Seller and/or the Employer Corporation exclusively at or in connection with the Hotel as of the Closing Date and who are listed on Schedule 1.1.6 annexed hereto and made a part hereof. "Improvements" shall mean Seller's right, title and interest in and to the hotel building and other improvements now or hereafter located on the Land. 4 12 "Insured Casualty Notice" shall have the meaning set forth in Section 12.1.1. "Intangible Property" shall mean all of Seller's right, title and interest in and to the following, in each case excluding any Excluded Property: (i) Licenses and Permits; (ii) trademark rights, and other intangible property, rights, titles, interests, privileges and appurtenances related to or used in connection with the Hotel or its operations; (iii) warranties and guaranties of architects, engineers, contractors, subcontractors, suppliers or materialmen involved in the repair, construction, maintenance, design, reconstruction or operation of the Hotel, or any equipment or systems constituting a part of the Hotel; (iv) Approved Service Contracts; (v) Equipment Leases; (vi) Bookings; and (vii) computer programs, software and documentation thereof (subject to the limitations of any applicable license agreements pertaining thereto), and including all electronic data processing systems, program specifications, source codes, logs, input data and report layouts and forms, record file layouts, diagrams, functional specifications and variable descriptions, flow charts and other related materials used in connection therewith; and (viii) any goodwill associated with the operation of the Hotel. "Interim Management Agreement" shall have the meaning set forth in Section 17.20 hereto. "Invoiced Receivables" shall mean all Guest Ledger Receivables other than Cash Equivalent Receivables whether or not such Guest Ledger Receivables have been invoiced by Seller as of the Closing Date. "Land" shall mean Seller's right, title and interest in and to the land described on Exhibit A annexed hereto and made a part hereof. "Licenses and Permits" shall mean all licenses, permits, registrations, certificates, authorizations and governmental approvals other than the Liquor License obtained in connection with the design, construction, rehabilitation, use and/or operation of the Hotel. "Liquor License" shall mean all licenses, permits, registrations, certificates, authorizations and governmental approvals with respect to service of alcoholic beverages at the Hotel. "Liquor License Management Agreement" shall have the meaning set forth in Section 4.2.1.8. "Lock Price" shall have the meaning set forth in the Stock Agreement. "Losses" shall mean any and all losses, liabilities, obligations, damages, claim or expense, including without limitation, reasonable attorneys' and accountants' fees and disbursements related thereto. "Manager" means Sheraton Operating Corporation, a wholly-owned subsidiary of ITT Sheraton Corporation. 5 13 "Management Agreement" shall mean that certain Management Agreement entered into as of August 13, 1997 between Seller and Manager. "Market Price" shall have the meaning set forth in the Stock Agreement. "Material" shall mean $5,000 for any single occurrence and $15,000 in the aggregate for any group of occurrences whether or not related. "Material Casualty" shall mean a casualty or casualties that, in the aggregate: (i) causes in excess of $10,000,000.00 worth of damage to the Hotel; or (ii) will take twelve (12) months or longer from the date of the casualty to fully remediate. "Material Taking" shall mean an exercise by an applicable governmental authority of the power of condemnation or eminent domain that results in: (a) the taking of more than twenty percent (20%) of the Real Property; (b) a material reduction or restriction in access to the Property; or (c) the inability to operate the Hotel in substantially the same manner (without material additional expense) as it was operated prior to such taking. "Memorandum of Contract" shall mean a memorandum of this Agreement in the form attached as Exhibit B hereto. "Monetary Lien" shall mean any monetary lien affecting the Real Property of an ascertainable amount, other than any lien for taxes or assessments which are not yet due and payable. "Non-Foreign Person Certificate" shall have the meaning set forth in Section 4.2.1.13. "Other Accounts Receivable" shall mean any and all rents, additional rent, deposits, and other sums and charges owing to Seller that are in any way attributable to the operation of the business at the Hotel, including, without limitation, all rents and/or license fees due from Tenants under Tenant Leases, and including any such amounts which are past due, but excluding Guest Ledger Receivables. "Overage Cash Payment" shall mean the portion of the Equity Purchase Price which is payable in cash at Closing as provided in Section 3.2.2.1, if any. "Ownership Limitation" shall mean the limitations contained in the declaration of trust for the Trust and the Corporation's articles of incorporation prohibiting actual or constructive ownership by any one person or group of related persons of more than 8% of the issued and outstanding Paired Shares taking into account the attribution rules of Section 544(a) of the Code as modified by Section 856(h) of the Code or Section 318(a) of the Code as modified by Section 856(d)(5) of the Code. "Paired Shares" shall mean one share of beneficial interest, par value $.01 per share of the Trust, and one share of common stock, par value $.01 per share, of the Corporation 6 14 that are subject to the Pairing Agreement, which shares shall be transferable as provided in the Stock Agreement and the Pairing Agreement. "Pairing Agreement" shall mean the Pairing Agreement dated as of June 25, 1980, as amended, between the Trust and the Corporation providing, in relevant part, for the pairing of all outstanding beneficial interests of the Trust and shares of the Corporation. "Permitted Encumbrances" shall have the meaning set forth in Section 7.3. "Person" shall mean any natural person, partnership, corporation, association, limited liability company, trust or any other legal entity. "Personal Property" shall mean collectively the Tangible Personal Property and the Intangible Property. "Preliminary Title Report" shall have the meaning set forth in Section 7.1. "Property" shall mean collectively the Real Property, the Personal Property, the Tenant Leases, and the Accounts Receivable, but shall exclude the Excluded Property. "Property Information" shall have the meaning set forth in Section 6.4.2. "Proration Time" shall mean 12:01 a.m. Eastern Time on the Closing Date. "Purchase Price" shall mean the sum of the Cash Purchase Price and the Equity Purchase Price. "Real Property" shall mean the Land and the Improvements, together with Seller's right, title and interest in and to all rights of way, easements, water or littoral rights, rights to any minerals, oil, gas and other hydrocarbon substances, or any portion thereof, relating to the Land, and Seller's right, title and interest in and to all streets, alleys, strips and gores abutting the Land, if any. "Records and Plans" shall mean, all financial records showing the income and expenses of the Hotel for the prior three (3) calendar years and for the current year to date, certificates of occupancy, records of the Hotel's operations (including utility bills), building plans, specifications and drawings, lists of Personal Property, surveys, tax bills for the Real Property for the last three (3) years and for the current year to date, copies of the Service Contracts, Licenses and Permits and other documents related to the use, maintenance, repair, management, construction and/or operation of the Hotel, in each case, to the extent located on-site at the Hotel, or to Seller's Knowledge, otherwise under the control of Seller. "Related Agreement" shall have the meaning set forth in Section 9.1.3. "Schedule of Advance Bookings" means the Schedule of Advance Bookings delivered pursuant to Section 4.2.1.19. 7 15 "Schedule of Tenant Leases" means the Schedule of Tenant Leases set forth in Schedule 1.1.7 annexed hereto and made a part hereof. "Scheduled Closing Date" shall mean January 15, 1998, as such date may be extended in accordance with the provisions of Section 7.1 time being of the essence. "SEC" shall mean the United States Securities and Exchange Commission. "SEC Documents" shall have the meaning set forth in Section 6.1.4. "Securities Act" shall mean the Securities Act of 1933, as amended. "Seller Default" shall have the meaning set forth in Section 11.1. "Seller's Closing Certificate" shall have the meaning set forth in Section 4.2.1.18. "Seller's Counsel" shall mean Morrison & Foerster LLP acting through Thomas R. Fileti, Esq. "Seller's Due Diligence" shall mean the information gathering and review process described on Schedule 1.1.8. "Seller's Insurance" shall have the meaning set forth in Section 6.3.12. "Seller's Knowledge" shall mean with respect to any representation or warranty so qualified, the knowledge of the person(s) identified on Schedule 1.1.8 annexed hereto and made a part hereof, on the date on or as of which such representation or warranty is made, following the completion by such person(s) of Seller's Due Diligence, but without any other duty to investigate or inquire and without attribution to any such identified person(s) of facts and matters otherwise within the personal knowledge of any other officers, employees, or agents of Seller or any third parties (including, but not limited to, the Manager or any previous manager of the Hotel), but not within the actual current knowledge of such named person(s). It is understood that none of the individuals identified on Schedule 1.1.8 shall have any personal liability for any of Seller's representations, warranties and other obligations under this Agreement. "Service Contracts" shall mean any and all service contracts, landscaping contracts, maintenance agreements, open purchase orders and other contracts for the provision of services, materials or supplies to or for the benefit of the Property, except for the Management Agreement, together with any and all amendments thereto. "Specific Disclosure Matters" shall mean certain disclosures and information provided or disclosed by Seller to Buyer described on Schedule 1.1.9 annexed hereto and made a part hereof. "Starwood Disclosure" shall mean collectively, the Form S-3 filed by the Corporation and the Trust with the SEC on November 12, 1997, and the Form S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as the same may be amended by 8 16 any filing with the SEC made by the Trust or the Corporation, as amended to date and from time to time thereafter . "Starwood Operating Partnership" shall mean SLC Operating Limited Partnership, a Delaware limited partnership. "Starwood Realty Partnership" shall mean SLT Realty Limited Partnership, a Delaware limited partnership. "State" shall mean the state in which the Hotel is located. "Stock Agreement" shall have the meaning set forth in Section 4.2.1.6. "Survey" shall mean an as-built ALTA survey of the Real Property certified to the Title Company meeting all State land survey requirements. "Tangible Personal Property" shall mean, in each case to the extent owned by Seller and excluding any and all of the Excluded Property: (i) all Records and Plans; (ii) all "Inventories", as such term is defined in the Uniform System of Accounts; (iii) all depreciable personal property; and (iv) all other tools, vehicles, supplies, artwork, furniture, furnishings, machinery, equipment, licensed software and personal computer based security systems, if any, specialized hotel equipment and other tangible personal property, used in connection with the ownership, operation or maintenance of the Property, including, without limitation, all china, glassware, silverware, linens, towels, curtains, uniforms, engineering, maintenance, and housekeeping supplies, draperies, materials and carpeting, used or intended for use, but not for sale, in connection with the operation of the Hotel, all equipment used in the operation of the kitchen, dining rooms, lounges, bars, laundry, dry cleaners, lobby, reservation desk and all merchandise, food and beverages held for sale in connection with the operation of the Hotel, which are on hand on the Closing Date; provided, however, that to the extent that any applicable law prohibits the transfer of alcoholic beverages from Seller to Buyer, such beverages shall not be considered a part of the Tangible Personal Property. "Tenant" shall mean a tenant, licensee or concessionaire occupying space at any portion of the Property pursuant to a Tenant Lease. "Tenant Lease" shall mean a lease, concession agreement or license agreement entered into by or on behalf of Seller with a third party for the use of any part of the Real Property, including those leases, concession agreements and license agreements shown on the Schedule of Tenant Leases, together with any amendments thereto but excluding Bookings. "Tenant Security Deposits" shall mean all security deposits or other security of Tenants under the Tenant Leases, plus accrued interest, if any, payable thereon. "Termination Charges" shall have the meaning set forth in Section 14.1. "Termination Notice" shall have the meaning set forth in Section 3.5.1. 9 17 "Threshold Amount" shall mean One Million Dollars ($1,000,000). "Title Company" shall mean Chicago Title Insurance Company. "Title Policy" shall have the meaning set forth in Section 7.2. "Transfer Restriction Period" shall have the meaning set forth in Section 17.18. "Uninsured Casualty Notice" shall have the meaning set forth in Section 12.2.1. "Uninsured Estimate to Repair" shall have the meaning set forth in Section 12.2.1. "Uniform System of Accounts" shall mean the Uniform System of Accounts for Hotels, prepared by The Hotel Association of New York City, Inc., in effect as of the date hereof. "Utility Deposits" shall mean Seller's right, title and interest in and to all deposits delivered by Seller to utilities, governmental agencies, suppliers or others pursuant to an Approved Service Contract or otherwise in connection with the Real Property. "Value Letter" shall have the meaning set forth in Section 4.3.1.4. "WARN Act" shall mean the Workers Adjustment and Retraining Notification Act and the Regulations promulgated thereunder, as the same has been amended. 1.2 Other Definitional Provisions. The terms "hereof," "hereto," "hereunder" and similar terms when used in this Agreement shall refer to this Agreement generally, rather than to the section in which such term is used, unless otherwise specifically provided. Unless the context otherwise requires, any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. SECTION 2 PURCHASE AND SALE OF PROPERTY On the terms and subject to the conditions of this Agreement, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller all as hereinafter provided. Notwithstanding any other provision of this Agreement, there shall be excluded from the Property being conveyed hereunder the Excluded Property. 10 18 SECTION 3 PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES 3.1 Purchase Price. The purchase price for the Property shall be the Purchase Price. 3.2 Payment. The Purchase Price shall be paid as follows: 3.2.1 Upon the execution hereof, Buyer shall deliver to Escrow Holder, in cash or other immediately available funds, the Deposit, to be held by Escrow Holder strictly in accordance with the provisions of this Agreement. If the Close of Escrow shall occur, Seller shall be entitled to receive the Deposit as a credit against the Purchase Price. 3.2.2 At least one (1) day prior to the Scheduled Closing Date (unless extended pursuant to Section 7.1), Buyer shall deliver to Escrow Holder an amount (the "Closing Payment") payable in the form specified in Sections 3.2.2.1 and 3.2.2.2 below, equal to the Purchase Price less the amount of the Deposit. The Closing Payment shall be paid as follows: 3.2.2.1 The Equity Purchase Price, if any, shall be delivered in Paired Shares without adjustment for the pro-rations hereunder, which shares shall be delivered in accordance with and subject to and transferable in accordance with the provisions of the Stock Agreement and the Pairing Agreement. If any portion of the Equity Purchase Price cannot be paid in Paired Shares on account of the Ownership Limitation, a cash payment in an amount equal to the product of (a) the number of Paired Shares which are not delivered hereunder or under the Stock Agreement because of the Ownership Limitation and (b) the Market Price on the Closing Date (the "Overage Cash Payment") shall be paid in cash or other immediately available funds. 3.2.2.2 The balance of the Closing Payment shall be paid in cash or other immediately available funds adjusted for the pro-rations provided for expressly in this Agreement. 3.3 Investment of Escrowed Funds. Escrow Holder shall invest and reinvest any funds deposited by Buyer in the Escrow only in bonds, notes, Treasury bills or other securities having maturities of thirty (30) days or less and constituting direct obligations of, or fully guaranteed by, the United States of America (and provided, further, that such direct obligations or guarantees, as the case may be, are entitled to the full faith and credit of the United States of America) or such other investments as Buyer may direct and Seller may approve, until Escrow Holder is required to deliver or use such funds or any interest earned thereon in accordance with the provisions of this Agreement. All interest accruing on the Deposit shall be paid to the party ultimately entitled to the Deposit. All risk of loss on funds held in Escrow shall be borne by Buyer or Escrow Holder. 11 19 3.4 Allocation of Purchase Price. The Purchase Price shall be allocated among the assets and property that comprise the Property as proposed by Seller prior to Closing subject to the reasonable approval of Buyer, and such allocation shall be used by Seller and Buyer in connection with the preparation of their respective income tax, sales tax, transfer tax, and any other applicable tax returns. Seller and Buyer shall not, nor shall they permit their respective Affiliates to, take a federal or state income tax position with any taxing or other public authorities in any jurisdiction which is materially inconsistent with the allocation so agreed upon by the parties. 3.5 Default by Buyer Prior to Closing; Liquidated Damages. 3.5.1 EXCEPT AS PROVIDED TO THE CONTRARY IN SECTION 7.1.1., IF BUYER BREACHES ITS OBLIGATION TO PURCHASE THE PROPERTY UNDER THIS AGREEMENT AND FAILS TO CURE SUCH BREACH ON OR BEFORE THE SCHEDULED CLOSING DATE (A "BUYER DEFAULT"), THEN UPON WRITTEN NOTICE OF TERMINATION (A "TERMINATION NOTICE") FROM SELLER TO BUYER AND ESCROW HOLDER, THE ESCROW AND THIS AGREEMENT SHALL TERMINATE AND ESCROW HOLDER SHALL DISBURSE FROM THE ESCROW THE DEPOSIT TO SELLER AS LIQUIDATED DAMAGES, WHICH SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR THE BUYER DEFAULT, AND THEREAFTER NEITHER PURCHASER NOR SELLER SHALL HAVE ANY FURTHER LIABILITY HEREUNDER, EXCEPT THAT BUYER SHALL REMAIN OBLIGATED FOR PERFORMANCE OF ITS OBLIGATIONS UNDER SECTIONS 8, 10, 17.14, 17.19 AND ANY OTHER PROVISION HEREOF WHICH BY ITS EXPRESS TERMS SURVIVES THE TERMINATION OF THIS AGREEMENT. NOTHING CONTAINED HEREIN SHALL LIMIT SELLER'S RIGHT TO OBTAIN SPECIFIC PERFORMANCE OF BUYER'S OBLIGATION TO CLOSE PURSUANT TO SECTION 7.1.1. 3.5.2 THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS SECTION 3.5.2 THAT IF A BUYER DEFAULT OCCURS ON OR PRIOR TO THE SCHEDULED CLOSING DATE AND IF, AS A RESULT OF SUCH BUYER DEFAULT, CLOSE OF ESCROW FAILS TO OCCUR, SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN; AND THE DEPOSIT BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR AND THAT SELLER'S RETENTION OF THE DEPOSIT IS FAIR AND REASONABLE COMPENSATION TO SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR. INITIALS: __________________________ _________________________ Seller Buyer 12 20 SECTION 4 ESCROW; CLOSING; COSTS 4.1 Escrow. The purchase and sale of the Property shall be consummated through the Escrow. Immediately upon the execution of this Agreement, the parties shall deposit a copy of this Agreement with Escrow Holder. This Agreement, together with any general provisions agreed to in writing by Buyer and Seller for the benefit of Escrow Holder, shall constitute the escrow instructions for the transfer of the Property (the "Escrow Instructions"). In the event of any conflict between this Agreement and such general provisions, this Agreement shall control unless otherwise expressly agreed in writing by Buyer, Seller and Escrow Holder. If any requirements relating to the duties or obligations of Escrow Holder are not acceptable to Escrow Holder, or if Escrow Holder requires additional instructions, the parties shall make such deletions, substitutions and additions to the Escrow Instructions as Buyer's Counsel and Seller's Counsel shall mutually approve and which do not substantially alter this Agreement or its intent. Written instructions from Seller's Counsel, in the case of Seller, or from Buyer's Counsel, in the case of Buyer, shall be accepted by Escrow Holder and shall be binding upon the party whose counsel gave such instructions to Escrow Holder. 4.2 Seller's Deliveries to Escrow Holder. 4.2.1 Prior to the Scheduled Closing Date (subject to extension pursuant to Section 7.1), Seller shall deliver to Escrow Holder the following documents duly executed and, where applicable, acknowledged by Seller, each of which shall be undated and the delivery of each of which shall be a condition precedent to the obligation of Buyer to close hereunder. 4.2.1.1 Deed. A deed with respect to the Real Property in the form of Exhibit 4.2.1.1 annexed hereto and made a part hereof, sufficient to transfer all of Seller's right, title and interest in and to the Real Property, subject only to matters of record as of the Closing Date, from Seller to Buyer (the "Deed"); 4.2.1.2 Assignment and Assumption of Tenant Leases. An Assignment and Assumption of Tenant Leases in the form of Exhibit 4.2.1.2 annexed hereto and made a part hereof pursuant to which Seller shall assign the Tenant Leases to Buyer and Buyer shall assume all of Seller's obligations thereunder (the "Assignment and Assumption of Tenant Leases"); 4.2.1.3 General Assignment. A General Assignment and Assumption Agreement in the form of Exhibit 4.2.1.3 annexed hereto and made a part thereof pursuant to which Seller shall assign to Buyer all of Seller's right, title and interest in and to all of the Intangible Property and Buyer shall assume all obligations thereunder (the "General Assignment and Assumption Agreement"); 4.2.1.4 Assignment and Assumption of Management Agreement. An Assignment and Assumption of Management Agreement in the form of Exhibit 4.2.1.4 annexed hereto and made a part hereof pursuant to which Seller shall assign to Buyer the 13 21 Management Agreement and Buyer shall assume the obligations of Seller thereunder, provided, however, the obligation to deliver the Assignment and Assumption of Management Agreement shall be irrevocably waived, if prior to the Close of Escrow, the Management Agreement shall have been terminated and the Interim Management Agreement shall have become effective in accordance with Section 17.20; 4.2.1.5 Bill of Sale. One or more Bills of Sale in the form of Exhibit 4.2.1.5A and 4.2.1.5B annexed hereto and made a part hereof conveying to Buyer or designees of Buyer all of Seller's right, title and interest in and to the Tangible Personal Property (the "Bill of Sale"); 4.2.1.6 Stock Agreement. The Stock Agreement in the form of Exhibit 4.2.1.6 annexed hereto and made a part hereof (the "Stock Agreement"); 4.2.1.7 Liquor License Management Agreement. The Liquor License Management Agreement in the form of Exhibit 4.2.1.7 annexed hereto and made a part hereof (the "Liquor License Management Agreement"); 4.2.1.8 [Intentionally Omitted] 4.2.1.9 [Intentionally Omitted] 4.2.1.10 [Intentionally Omitted] 4.2.1.11 [Intentionally Omitted] 4.2.1.12 [Intentionally Omitted] 4.2.1.13 Non-Foreign Person Certificate. A Non-Foreign Person Certificate in the form of Exhibit 4.2.1.13 annexed hereto and made a part hereof (the "Non-Foreign Person Certificate"); 4.2.1.14 Transfer Tax Forms. Any statements, such as a transfer or conveyance tax forms or returns required by applicable state or local law to be executed by Seller in order to effect the Closing; 4.2.1.15 Certified Rent Roll. A copy of the rent roll for the Property dated as of the Closing Date and certified by Seller to be (a) a true, correct and complete copy of the rent roll for the Property provided to Seller by the Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.16 Certified Operating Statement. An operating statement for the Property dated as of a date no more than thirty (30) days prior to the Closing Date and certified by Seller to be (a) a true, correct and complete copy of the operating statement for the Property provided to Seller by Manager for the period of Manager's employment at the Property; and (b) to Seller's Knowledge, to be, true, correct and complete; 14 22 4.2.1.17 Guest Ledger. A copy of the guest ledger dated as of the Proration Time showing all Guest Ledger Receivables and certified by Seller (a) to be a true, correct and complete copy of the guest ledger provided to Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.18 Closing Certificate. A certification by Seller to Seller's Knowledge that the representations and warranties set forth in Section 6.3 are true, correct and complete as of the Closing Date, except to the extent that any such representation or warranty is expressly made only as of the Execution Date subject to Seller's right to make revisions pursuant to Section 6.7 to such representations and warranties ("Seller's Closing Certificate"); 4.2.1.19 Schedule of Bookings. A schedule of all Bookings relating to periods after the Proration Time, certified by Seller (a) to be a true, correct and complete copy of the schedule of Bookings provided to Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and complete; 4.2.1.20 Title Requirements. Any and all certificates, affidavits and other instruments and documents which the Title Company shall reasonably require, to permit it to issue the Title Policy in the condition required herein; provided, however, that (a) Seller is given written notice by Title Company of the requirement of any such certificates, affidavits or other instruments and documents within a reasonably sufficient time in advance of the Scheduled Closing Date and (b) such incidental documents do not create any liability to Seller that is inconsistent with the liability retained by Seller under the terms of this Agreement; 4.2.1.21 Payoff Letters. A pay-off letter from the holder of any mortgage or deed of trust presently encumbering the Real Property indicating all sums required to satisfy the debt secured by and permit the discharge of record the lien of such mortgage or deed of trust; 4.2.1.22 Notices to Tenants. Notices to Tenants of the assignment to Buyer of the Tenant Leases in form and substance satisfactory to Seller and Buyer; 4.2.1.23 Opinion of Seller's Counsel. An opinion of Seller's Counsel in a form to be agreed upon by the parties; and 4.2.1.24 Other. Any other incidental documents, not otherwise expressly provided for herein, reasonably required by Escrow Holder to consummate the purchase and sale of the Property; provided, however, that (a) Seller is given written notice by Escrow Holder of the requirement of any such incidental documents within a reasonably sufficient time in advance of the Scheduled Closing Date (subject to extension in accordance with the provisions of Section 7.1); and (b) such incidental documents do not create any liability to Seller that is inconsistent with the liability retained by Seller under the terms of the this Agreement. 15 23 4.3 Buyer's Deliveries to Escrow Holder. 4.3.1 Prior to the Scheduled Closing Date (subject to extension in accordance with the provisions of Section 7.1), and subject further to the provisions of Section 4.3.1.4 in the case of the Value Letter, Buyer shall deliver to Escrow Holder the following items and documents, which documents shall be duly executed and, where applicable, acknowledged by Buyer or its designee, as applicable, and undated, and the delivery of each of which shall be a condition precedent to the obligation of Seller to close hereunder: 4.3.1.1 The Cash Purchase Price. The Cash Purchase Price; 4.3.1.2 Stock Certificates. Paired Shares in the amount required to be delivered at the Closing in accordance with the provisions of this Agreement and in accordance with and subject to the provisions of the Stock Agreement; 4.3.1.3 Assignment and Assumption of Management Agreement. A counterpart of the Assignment and Assumption of Management Agreement, provided, however, the obligation to deliver the Assignment and Assumption of Management Agreement shall be irrevocably waived, if prior to the Close of Escrow, the Management Agreement shall have been terminated and the Interim Management Agreement shall have become effective in accordance with Section 17.20; 4.3.1.4 Value Letter. A letter (the "Value Letter") to be obtained by Buyer at Buyer's expense with respect to the reasonableness of the allocation of the purchase price among the transactions being entered into as of the date hereof between Buyer and Seller and/or Seller's Affiliates issued by Bear Stearns; 4.3.1.5 Opinion of Buyer's Counsel. An opinion of Buyer's counsel in a form to be agreed upon by the parties; 4.3.1.6 Stock Agreement. A counterpart of the Stock Agreement; 4.3.1.7 [Intentionally Omitted] 4.3.1.8 Liquor License Management Agreement. A counterpart of the Liquor License Management Agreement; 4.3.1.9 [Intentionally Omitted] 4.3.1.10 [Intentionally Omitted] 4.3.1.11 [Intentionally Omitted] 4.3.1.12 Closing Certificate. A certification by Buyer that the representations and warranties set forth in Section 6.1 and Section 6.2 are true, correct and complete as of the Closing Date; 16 24 4.3.1.13 The Assignment and Assumption of Tenant Leases. A counterpart of the Assignment and Assumption of Tenant Leases; 4.3.1.14 The General Assignment and Assumption Agreement. A counterpart of the General Assignment and Assumption Agreement; 4.3.1.15 Transfer Tax Forms. Any statements, such as a transfer or conveyance tax forms or returns required by applicable state or local law to be executed by Buyer in order to effect the closing; and 4.3.1.16 Other. Any other incidental documents, not otherwise expressly provided for herein, required by Escrow Holder to consummate the purchase and sale of the Property; provided, however, that (a) Buyer is given written notice by Escrow Holder of the requirement of such incidental documents within a reasonably sufficient time in advance of the Scheduled Closing Date; and (b) Buyer shall not be required to incur any liability, in connection with the delivery of such incidental documents inconsistent with the provisions of this Agreement. 4.4 Seller's Deliveries to Buyer. At or prior to the Close of Escrow, Seller shall deliver to Buyer or cause to be available to Buyer on-site at the Hotel, the following documents, to the extent the same have not already been delivered and to the extent in the possession or control of Seller: 4.4.1 Tenant Leases/Tenant Deposits. The original Tenant Leases (or if not available, the best available copies), and the originals of Tenant Security Deposits which are evidenced by letters of credit or escrow agreements, if any, and if necessary to enable Buyer to realize or draw upon same, consents of the applicable Tenants and/or financial institutions or replacement letters of credit or escrow agreements in favor of Buyer; 4.4.2 Service Contracts. The originals, or, if not available, the best available copies, of the Approved Service Contracts; 4.4.3 Licenses and Permits. The originals, or, if not available, the best available copies of the Licenses and Permits; and 4.4.4 Records and Plans. The originals, or, if not available, the best available copies of the Records and Plans. 4.5 Possession. Seller shall deliver the keys and possession of the Property to Buyer at the Close of Escrow free and clear of all leases, tenancies and occupancies, except for the Management Agreement, the Bookings, the rights of guests in guest rooms, banquet facilities, conference rooms and meeting rooms, the rights of Tenants under the Tenant Leases (including their assignees, subtenants or licensees), and the other Permitted Encumbrances. 4.6 Evidence of Authorization. At the Close of Escrow, each party shall deliver to the other party evidence in form and content reasonably satisfactory to the other party and the Title 17 25 Company that (a) the party is duly organized and validly existing under the laws of the state of its organization and has the power and authority to enter into this Agreement, (b) this Agreement and all documents delivered pursuant hereto have been duly executed and delivered by the party, and (c) the performance by the party of its obligations under this Agreement have been duly authorized by all necessary corporate, partnership or other action. 4.7 Close of Escrow. 4.7.1 The Escrow shall close on or before the Scheduled Closing Date. 4.7.2 Provided that Escrow Holder has not received from either party written notice of the failure of any condition precedent specified in Section 9 to the obligations of such party (or any previous such notice has been withdrawn), then when the parties have each deposited into the Escrow the documents and funds required by this Agreement and the Title Company is unconditionally prepared to issue the Title Policy at the Close of Escrow, Escrow Holder shall perform the following actions (collectively, "Close of Escrow" or "Closing"): 4.7.2.1 Prepare a closing statement for the transaction for approval by Seller and Buyer prior to the Close of Escrow; 4.7.2.2 Insert the Closing Date as the date of any undated document to be delivered through Escrow; 4.7.2.3 Cause the Deed to be recorded in the land records of the state and county where the Real Property is located; 4.7.2.4 Deliver to Buyer the documents deposited into the Escrow for delivery to Buyer at the Close of Escrow; 4.7.2.5 Deliver to Seller (a) all funds and Paired Shares to be received by Seller from Buyer through the Escrow at the Close of Escrow less (i) all amounts to be paid by Seller for Escrow Holder's fees and expenses and (ii) all amounts paid by Escrow Holder in satisfaction of liens and encumbrances on the Real Property or other matters pursuant to the written instruction of Seller, and (b) the documents deposited into the Escrow for delivery to Seller at the Close of Escrow; and 4.7.2.6 Cause the Title Policy to be issued by the Title Company and delivered to Buyer. 4.8 Costs of Escrow. Costs of the Escrow shall be allocated as follows: 4.8.1 Buyer and Seller shall each pay one-half (1/2) of the fees of Escrow Holder; 4.8.2 Buyer and Seller shall each pay one-half (1/2) of the cost of providing the Survey required to be delivered in accordance with the provisions of Section 7.1; provided, 18 26 however, Buyer shall be responsible for the full cost of the Survey in the event the Closing does not occur hereunder other than on account of default of Seller; 4.8.3 Buyer and Seller shall each pay one-half (1/2) of all transfer taxes and recording fees payable in connection with the conveyance of each portion of the Real Property and/or the recording of the Deed and any other documents or instruments recorded pursuant to this Agreement (other than the Assignment of Mortgage); 4.8.4 Buyer and Seller shall each pay one-half (1/2) of all sales or other personal property taxes, levies, fees and charges payable as a result of the transfer of the Personal Property to Buyer and the consummation of the transactions contemplated hereby. Buyer shall be the reporting person for such purposes and shall prepare the necessary sales tax reports based upon the allocations set forth in Section 3.4. The parties acknowledge that additional sales tax may be assessed as a result of the transfer of the Personal Property to Buyer and the consummation of the transactions contemplated hereby after the Closing and that Buyer and Seller shall continue to each be responsible for one-half of any such additional taxes. The provisions of Section 4.8.3 and Section 4.8.4 shall survive the Closing; 4.8.5 Buyer and Seller shall each pay one-half (1/2) of the cost of obtaining the coverage under the Title Policy, except that the cost of any special endorsements shall be paid exclusively by Buyer; 4.8.6 At Closing or thereafter Buyer shall pay for the cost of the Value Letter; 4.8.7 [Intentionally Omitted] 4.8.8 If the Close of Escrow fails to occur other than as a result of a default hereunder by either party, including, without limitation, as a result of a failure of a condition precedent set forth in Section 9, the fees of the Escrow Holder and Title Company (including, without limitation, cancellation fees) shall be borne equally between Buyer and Seller; 4.8.9 If the Close of Escrow fails to occur as a result of a default hereunder by either party, the fees of the Escrow Holder and Title Company (including, without limitation, cancellation fees) shall be borne by the defaulting party; and 4.8.10 Pursuant to ss.6045 of the Internal Revenue and Taxation Code, the Title Company shall be designated the "Closing Agent" hereunder and shall be solely responsible for complying with the Tax Reform Act of 1986 with regard to the reporting of all settlement information to the Internal Revenue Service. 4.9 Other Costs. Except as set forth in Section 4.8.6, Section 11.1 and Section 15.1.6, each party shall pay all of its own legal, accounting and consulting fees and other costs and expenses incurred in connection with this Agreement. 4.10 Maintenance of Confidentiality by Escrow Holder. Escrow Holder shall maintain in strict confidence and not disclose to anyone the existence of the Escrow, the identity of the 19 27 parties thereto, the amount of the Purchase Price, the existence or provisions of this Agreement or any other information concerning the Escrow or the transactions contemplated hereby, without the prior written consent of Buyer and Seller. SECTION 5 PRORATIONS AND ASSUMPTION OF OBLIGATIONS 5.1 General. All income, receivables, expenses (whether payable or prepaid) and payables of the Property shall be apportioned equitably between the parties as of the Proration Time in accordance with the provisions of this Section 5 (all prorations are to be based upon the number of days in a 365 day year). The obligation to make apportionments under Sections 5.1 and 5.2 shall, unless otherwise expressly provided in this Section 5, survive the Close of Escrow for a period of sixty (60) days at which time such apportionment shall be final unless disputed during such period. 5.2 General and Specific Prorations. Without limitation, the following items shall be apportioned: 5.2.1 At the Closing, Buyer shall assume all of the accounts payable relating to goods and services ordered or obtained in the ordinary course of operation of the business of the Hotel (including without limitation, payments under the Service Contracts and Equipment Leases) prior to the Proration Time. Seller shall be obligated to credit Buyer at the Close of Escrow with an amount mutually agreed upon by Buyer and Seller at the Closing, reflecting the parties' good faith estimate of such accounts payable as of the Proration Time (which estimate shall deduct any discounts then available in the ordinary course of business for the prompt payment of such accounts payable), plus a further credit for any late fees then payable with respect to any identified accounts payable. Buyer shall be responsible for paying when due all accounts payable arising from the operation of the Property on or after the Proration Time, and Seller shall have no further liability for such payables or charges. As of the date which is sixty (60) days following the Closing Date, Buyer and Seller shall calculate the amount of all accounts payable relating to goods and services ordered or obtained in the ordinary course of operation of the business of the Hotel (including without limitation, payments under the Service Contracts and Equipment Leases) prior to the Proration Time. Seller shall reimburse Buyer for any payments made on account of any such accounts payable which were not reflected in the Parties' estimate of such amount credited to Buyer at Closing and which have been paid by Buyer or for which Buyer is obligated to pay in accordance with the provisions hereof, and if the amount of such credit exceeds the amounts so paid or for which Buyer is so obligated, Buyer shall pay such excess amount to Seller. 5.2.2 At the Closing, Seller shall assign to Buyer all of the Accounts Receivable, for which Seller shall receive a credit at the Close of Escrow in an amount equal to (a) the full, aggregate outstanding balance of the Cash Equivalent Receivables (without discount except for service charges due to charge card companies) plus (b) the full aggregate outstanding 20 28 balance of the Invoiced Receivables and Other Accounts Receivable as of the Proration Time, provided, Buyer shall at its option accept or reject any Invoiced Receivables and Other Accounts Receivable over ninety (90) days and Seller shall not receive a credit for any Invoiced Receivables and Other Accounts Receivable over ninety (90) days rejected by Buyer; provided, that Buyer shall at its own expense use reasonable efforts to collect any such rejected Invoiced Receivables and Other Accounts Receivable on behalf of Seller for a period of sixty (60) days after the Closing Date and thereafter Seller shall have the right to collect same for its own account; provided, further, as of the date which is sixty (60) days following the Closing Date, Buyer and Seller shall make any adjustments required to reflect the collectibility of any Invoiced Receivables and Other Accounts Receivable (it being agreed that (a) any accounts receivable not listed on the schedule of accounts receivable of the Property as of the date which is sixty (60) days following the Closing Date shall be deemed paid as of such date and (b) except as provided in (a), any accounts receivable which are more than ninety (90) days past due as of the date which is sixty (60) days following the Closing Date shall be deemed uncollectable as of such date) and Seller and Buyer shall make a corresponding payment to the other as required to accurately reflect the collectibility of such Invoiced Receivables and Other Accounts Receivable and any accounts receivable deemed uncollectable as of such date in accordance with the terms hereof shall be the property of Seller and Seller shall be permitted (at its expense and for its own account) to collect the same; 5.2.3 In prorating the Accounts Receivable, Buyer and Seller shall each receive credit for one-half (1/2) of all Guest Ledger Receivables attributable to the room night during which the Proration Time occurs. Seller shall receive the income from all restaurant and bar facilities located at the Property through the Proration Time and Buyer shall receive such income thereafter; 5.2.4 [Intentionally Omitted] 5.2.5 All sales, use and occupancy taxes arising from the operation of the Property shall be prorated as of the Proration Time; 5.2.6 Fees for transferable annual permits, licenses, and/or inspection fees, if any, for periods during which the Proration Time occurs shall be prorated as of the Proration Time; 5.2.7 Utility charges with respect to the Property levied against Seller or the Property and the value of fuel stored on the Property shall be prorated at Seller's cost therefor as of the Proration Time. Seller shall notify all utilities, governmental agencies, suppliers and others providing services to the Property of the prospective change in ownership and operation of the Property, and Seller shall use its reasonable efforts to cause all utilities furnished to the Property, including, but not limited to, electricity, gas, water and sewer, along with any fuel storage tanks to be read the day prior to the Proration Time; 5.2.8 Permitted administrative charges, if any, on Tenant Security Deposits shall be prorated; 21 29 5.2.9 Buyer shall receive a credit for advance payments and/or deposits, if any, under Bookings to the extent the Bookings relate to a period after the Proration Time; 5.2.10 Vending machine monies will be removed by Seller as of the Proration Time for the benefit of Seller; 5.2.11 Buyer shall purchase and Seller shall sell to Buyer (or Seller shall receive a credit therefore) all petty cash funds and cash in the Property's house banks at 100% of face value at the Proration Time; 5.2.12 Wages, salaries and payroll taxes and other payroll deductions for all Hotel Employees shall be apportioned as of the Proration Time (i.e., the night shift shall be prorated 50/50 for the night preceding the Closing Date). Buyer shall assume all accrued vacation benefits and sick leave benefits due to such Hotel Employees which relate to any period prior to the Proration Time and shall receive a credit for the full amount of all such accrued benefits reasonably expected to be paid after the Closing Date; provided, that as of the date which is sixty (60) days following the Closing, Buyer and Seller shall adjust the amount of the credit if required to take into account the benefits actually required to be paid by Buyer or then reasonably expected to be paid following the Closing Date by Buyer. Buyer shall also assume all obligations of Seller and the Employer Corporation, under the Employment Agreements and/or the Management Agreement to pay all such wages, salaries, and compensation set forth above accruing subsequent to Proration Time; provided, however, that other than as set forth in Section 14.1 hereof, no provision contained in this Agreement shall be construed to prevent the Buyer from terminating or amending in any manner such Employment Agreements and Management Agreements subsequent to the Proration Time. The obligation to pay bonuses, if any, following the Closing shall be allocated as of the Proration Time and adjusted between Buyer and Seller; and 5.2.13 Real and personal property taxes, assessments and special district levies shall be prorated for the tax fiscal year in which the Closing Date occurs on the basis of the then most current available tax bills, Seller being charged through the day prior to the Closing Date and Buyer with the Closing Date and thereafter. 5.3 Deposits. All rights to utility, assessment, and other cash deposits (including, without limitation, any Utility Deposits) held by others for Seller's account, and all certificates of deposit or other forms of cash collateral held by or otherwise pledged to others for Seller's account to secure obligations of Seller under Service Contracts, Equipment Leases or other obligations assumed by Buyer, shall be assigned or transferred to Buyer at the Close of Escrow; provided, that if any of such deposits are not transferable, Seller shall retain all rights with respect thereto and there shall be no debit made to Buyer on account thereof. 5.4 Tenant Leases. At the Close of Escrow, pursuant to the Assignment and Assumption of Tenant Leases, Buyer shall assume all of the obligations of Seller under the Tenant Leases as of the Proration Time, including, without limitation, tenant improvement obligations of landlord thereunder and obligations with respect to Tenant Security Deposits (to the extent received by Buyer or credited to Buyer hereunder). 22 30 5.5 Service Contracts and Other Intangible Property. At the Close of Escrow, Seller shall assign to Buyer pursuant to the terms of the General Assignment and Assumption Agreement, all right, title and interest of Seller in and to the Approved Service Contracts and other Intangible Property, and Buyer shall assume all of the obligations of Seller under the Approved Service Contracts arising from and after the Close of Escrow. Buyer shall protect, hold harmless, indemnify and defend Seller and its directors, officers, agents, affiliates, principals, partners, shareholders, representatives and controlling persons from any Losses attributable to the period beginning on and after the Closing Date with respect to the Approved Service Contracts. Seller shall be responsible for all obligations thereunder attributable to the period prior to the Closing Date with respect to Approved Service Contracts (except to the extent that Buyer shall have received a credit hereunder with respect to any such obligations). The provisions of this Section 5.5 shall survive the Close of Escrow. 5.6 Tax Refunds and Proceedings. Buyer shall have the exclusive right to commence or continue any proceeding to determine the assessed value of the Property, the real or personal property taxes payable with respect to the Property or any action to contest water charges, sewer charges, sales tax or use tax for the relevant taxable period during which the Proration Time occurs and to settle or compromise any claim thereof, and any refunds or proceeds resulting from such proceedings along with the costs (including reasonable legal and accounting fees) incurred by Buyer in obtaining the same, shall be prorated as of the Proration Time. In prosecuting any such action, Buyer shall utilize the services of Marvin Poer & Co. Seller shall retain the right to continue, commence, prosecute, settle or compromise any proceedings relating exclusively to any relevant taxable period or periods prior to the period during which the Proration Time shall occur. Buyer and Seller agree to cooperate with each other and to execute any and all documents reasonably requested in furtherance of the foregoing. The provisions of Section 5.6 shall survive the Closing. 5.7 Guest Baggage. As of the Close of Escrow, Buyer shall indemnify and hold harmless Seller against all Losses with respect to all baggage of departed guests or guests who are still registered at the Hotel on the Closing Date which has been checked with the Hotel. As of the Close of Escrow, Seller shall assign to Buyer all claims and causes of action against the Manager with respect to any Losses with respect to such baggage. Seller agrees to submit to Seller's Insurance any claims for Losses with respect to such baggage which arose from acts or omissions prior to the Closing Date to the extent coverage is available under said insurance and provide Buyer with the proceeds therefrom provided Buyer is not in default under this Section 5.7. The provisions of this Section 5.7 shall survive the Closing. 5.8 Safe Deposit Boxes. As of the Close of Escrow, Buyer shall indemnify and hold harmless Seller against all Losses with respect to the contents of any safety deposit boxes in use at the Hotel. As of the Close of Escrow, Seller shall assign to Buyer all claims and causes of action against the Manager with respect to any Losses relating to said safety deposit boxes. Seller agrees to submit to Seller's insurance any claims for Losses which arose from acts or omissions prior to the Closing Date to the extent coverage is available under said insurance and provide Buyer with the proceeds therefrom provided Buyer is not in default under this Section 5.8. The provisions of this Section 5.8 shall survive the Closing. 23 31 5.9 Advance Bookings. Buyer shall assume and honor for its account all Bookings relating to dates after the Proration Time set forth on the Schedule of Advance Bookings delivered by Seller to Buyer at the Close of Escrow pursuant to Section 4.2.1.9. 5.10 [Intentionally Omitted] SECTION 6 REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY 6.1 Of the Trust. As an inducement to Seller to enter into this Agreement, the Trust hereby represents, warrants and covenants to Seller as follows: 6.1.1 Power and Authority. The Trust is a real estate investment trust duly organized and validly existing under the laws of the State of Maryland. The Trust has the power and authority to carry on its present business, to enter into this Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement by the Trust, nor the performance by the Trust of the Trust's obligations hereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Trust is a party or by which the Trust is bound and/or violate any applicable law, rule or regulation the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.1.2 Authorization; Valid Obligation. All proceedings required to be taken by or on behalf of the Trust to authorize the Trust to make, deliver and carry out the terms of this Agreement will be duly taken prior to the Closing Date. No consent to the execution, delivery and performance of this Agreement will be required from any partner, board of directors, shareholder, creditor, investor, judicial or administrative body, governmental authority or other person, other than any such consent which already has been (or prior to the Closing will have been unconditionally given. The individuals executing this Agreement and the documents referenced herein on behalf of the Trust have the legal power, right and actual authority to bind the Trust to the terms and conditions hereof. This Agreement is a valid and binding obligation of Trust, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 6.1.3 Capital Structure. The authorized and outstanding capital stock and units of the Trust and its operating partnership are as set forth in the Starwood Disclosure. All Paired Shares to be issued as the Equity Purchase Price at the Closing in accordance with this Agreement will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. 24 32 6.1.4 SEC Documents and Other Reports. The Trust has filed all required documents with the SEC since January 1, 1996 (such documents together with the Starwood Disclosure being referred to herein as the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Trust included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Trust and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Trust has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. Prior to the Closing Date, the Trust will file all required documents with the SEC, which documents will comply in all material respects with the requirements of the applicable law, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 6.1.5 Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed prior to the date of this Agreement, since December 31, 1996, (a) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole, or (b) there has not been any split, combination or reclassification of any of the capital stock or units of the Trust or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. 6.1.6 Actions and Proceedings. Except as set forth in the SEC Documents filed prior to the date of this Agreement, there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Trust or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Trust or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. Except as set forth in the SEC Documents, there are no actions, suits or claims or legal, administrative or arbitrative 25 33 proceedings or investigations pending or, to the knowledge of the Trust, threatened against or involving the Trust or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits, labor disputes or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Trust, threatened against or affecting the Trust or any of their subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement. 6.1.7 REIT Status. The Trust is currently a "real estate investment trust" ("REIT") for federal income tax purposes and, to its knowledge, the Trust is and at all times during the testing period described in Code Section 897(h)(4)(D) has been a "domestically controlled REIT" (as defined in Section 897(h)(4)(D) of the Code). From and after January 1, 1995, neither the Internal Revenue Service nor any other taxing entity or authority has made any assertion that the Trust does not qualify as a REIT for income tax purposes, nor has there been any challenge to the REIT status of the Trust. From time to time upon request by the Seller or its assigns after the Closing Date, the Trust agrees to inform Seller or such assigns whether to its knowledge it complies with the representation and warranties set forth in this Section 6.1.7. 6.1.8 Partnership Status. Starwood Realty Partnership is classified and taxable as a partnership for U.S. federal income tax purposes. 6.1.9 Hart-Scott-Rodino Act. The provisions of the Hart-Scott-Rodino Act are not applicable to the transactions contemplated hereby and neither the Trust nor Seller is required to make any filings or submissions or obtain any approvals thereunder in connection herewith. 6.2 Of the Corporation. As an inducement to Seller to enter into this Agreement, the Corporation hereby represents, warrants and covenants to Seller as follows: 6.2.1 Power and Authority. The Corporation is a corporation duly organized and validly existing under the laws of the State of Maryland. The Corporation has the power and authority to carry on its present business, to enter into this Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement by the Corporation nor the performance by the Corporation of the Corporation's obligations hereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Corporation is a party or by which the Corporation is bound and/or violate any applicable law, rule or regulation the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.2.2 Authorization; Valid Obligation. All proceedings required to be taken by, or on behalf of the Corporation, to authorize the Corporation to make, deliver and carry out the terms of this Agreement will be duly taken prior to the Closing Date. No consent to the execution, delivery and performance of this Agreement will be required from any partner, board 26 34 of directors, shareholder, creditor, investor, judicial or administrative body, governmental authority or other person, other than any such consent which already has been (or prior to the Closing will have been) unconditionally given. The individuals executing this Agreement and the documents referenced herein on behalf of the Corporation have the legal power, right and actual authority to bind the Corporation to the terms and conditions hereof. This Agreement is a valid and binding obligation of Corporation, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 6.2.3 Capital Structure. The authorized and outstanding capital stock and units of the Corporation and its operating partnership are as set forth in the Starwood Disclosure. All Paired Shares to be issued as the Equity Purchase Price at the Closing in accordance with this Agreement will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. 6.2.4 SEC Documents and Other Reports. The Corporation has filed all required SEC Documents since January 1, 1996. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Corporation included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Corporation and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Corporation has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. Prior to the Closing Date, the Corporation will file all required documents with the SEC, which documents will comply in all material respects with the requirements of the applicable law, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 6.2.5 Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed prior to the date of this Agreement, since December 31, 1996, (a) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial 27 35 condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole, or (b) there has not been any split, combination or reclassification of any of the capital stock or units of the Corporation or its respective operating partnerships or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of such capital stock. 6.2.6 Actions and Proceedings. Except as set forth in the SEC Documents filed prior to the date of this Agreement, there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Corporation or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Corporation or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. Except as set forth in the SEC Documents, there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Corporation, threatened against or involving the Corporation or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits, labor disputes or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Corporation, threatened against or affecting the Corporation or any of their subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement. 6.2.7 Starwood Operating Partnership is classified and taxable as a partnership for U.S. Federal Income Tax purposes. 6.2.8 Hart-Scott-Rodino. The provisions of the Hart-Scott-Rodino Act are not applicable to the transactions contemplated hereby and neither the Corporation nor Seller is required to make any filings or submissions to obtain any approvals thereunder in connection herewith. 6.3 Of Seller. As an inducement to Buyer to enter into this Agreement, Seller, represents, warrants and covenants to Buyer as follows: 6.3.1 Regarding Seller's Authority. 6.3.1.1 Seller is a limited partnership in dissolution under the laws of the District of Columbia. Seller has the power and authority to enter into this Agreement and the Conveyance Documents and, to sell the Property on the terms set forth in this Agreement. The execution and delivery hereof and the performance by Seller of its obligations hereunder, will not violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which Seller is a party or by 28 36 which Seller is bound and/or violate any applicable law, rule or regulation the violation of which would have a Material effect upon the principal benefits intended to be provided by this Agreement. 6.3.1.2 The individuals executing this Agreement and the documents referenced herein on behalf of Seller have the legal power, right and actual authority to bind Seller to the terms and conditions hereof. This Agreement is a valid and binding obligation of Seller, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 6.3.2 Tenant Leases. There are no leases, licenses or concessions for space which will affect the Real Property or any portion thereof following the Close of Escrow other than as set forth on the Schedule of Tenant Leases. Seller has delivered to Buyer a true, correct and complete copy of each lease and agreement listed on the Schedule of Lease. Seller has not received written notice of any sublease and/or assignment of any Tenant Lease except as set forth on Schedule 6.3.2. No outstanding written notice of any Material default has been delivered by Seller or received by Seller with respect to any Tenant Lease, except as disclosed on the Schedule 6.3.2 annexed hereto and made a part hereof. To Seller's knowledge, all rent under the leases listed on the Schedule of Leases is being paid currently. All Material brokerage, leasing and other commissions due in connection with the Tenant Leases have been paid by Seller other than those payable with respect to the renewal or extension of such Tenant Leases or expansion of the leased premises thereunder after the Closing Date, each of which are payable under agreements described on Schedule 6.3.2. 6.3.3 Service Contracts. There are no Service Contracts which will affect the Property after the Closing Date except for the Approved Service Contracts. No outstanding written notice of any Material default has been delivered by Seller or received by Seller with respect to any Approved Service Contract, except as disclosed on Schedule 6.3.3 annexed hereto and made a part hereof. 6.3.4 Claims. There are no pending litigation or condemnation proceedings with respect to Seller or the Property which would result in an adverse effect on the ability of Buyer to operate the Property after the Closing, except as disclosed on Schedule 6.3.4 annexed hereto and made a part hereof. There is no pending litigation or to Seller's knowledge, other claims of Seller with respect to the Property attributable to the period prior to the date hereof which may result in a material judgment in favor of Seller except as disclosed on Schedule 6.3.4. 6.3.5 Employees. To Seller's Knowledge, Schedule 1.1.6 sets forth a true and complete list of all Hotel Employees as of the Execution Date together with their positions, salaries or hourly wages, as applicable, and years of service. Except for or pursuant to the Employment Agreements, the Collective Bargaining Agreements, the Management Agreement and the agreements related to the Ritz-Carlton management of the Hotel described on Schedule 6.3.5 hereto, neither Seller nor the Employer Corporation has relating to the Property (i) at any time maintained, contributed to or participated in, (ii) or had at any time obligation to maintain, 29 37 contribute to, or participate in, or (iii) any liability or contingent liability, direct or indirect, with respect to: any employment agreement, oral or written retirement or deferred compensation plan, incentive compensation plan, stock plan, unemployment compensation plan, vacation pay plan, severance plan, bonus plan, stock compensation plan or any other type or form of employee-related (or independent contractor-related) arrangement, program, policy, plan or agreement. Except as set forth on Schedule 6.3.5, to Seller's knowledge there is no Material default under any of the Employment Agreements. 6.3.6 Compliance with Laws. During the past twelve (12) months, Seller has not received any written notice from any party, including, without limitation, from any municipal, state, federal or other governmental authority, of a Material violation of any zoning, building, fire, water, use, health, or other similar statute, ordinance, or code bearing on the construction, operation or use of the Property or any part thereof (other than as to matters previously cured), except as disclosed on Schedule 6.3.6 annexed hereto and made a part hereof and except for violations of Environmental Laws, which are addressed in Section 6.3.7 below. 6.3.7 Hazardous Materials. Seller has not received any written notice from any municipal, state, federal or other governmental authority or from any other person during the last three (3) years of (a) any Material violation of applicable Environmental Laws or (b) any Environmental Condition requiring Material remediation under applicable Environmental Laws, in either case only to the extent relating to Environmental Conditions at or on the Real Property, except as disclosed on Schedule 6.3.7 annexed hereto and made a part hereof; 6.3.8 Records and Plans. Seller will have delivered to Buyer on the Closing Date true and correct copies of the Records and Plans. 6.3.9 Licenses and Permits. Seller has delivered to Buyer true and correct copies of the Liquor License and all other Material Licenses and Permits and such Licenses and Permits are identified on Schedule 6.3.9 annexed hereto and made a part hereof. 6.3.10 Management Agreements. There are no hotel management or property management agreements, which will be binding upon Buyer after the Closing Date, other than the Management Agreement, a true and complete copy of which will be delivered to Buyer on the Closing Date. Seller has not sent or received any notice of default or notice of termination under or with respect to the Management Agreement. 6.3.11 Personal Property. Seller owns the Tangible Personal Property (other than the Tangible Personal Property that is subject to the Equipment Leases) free and clear of any liens and/or encumbrances other than the Permitted Encumbrances. 6.3.12 Insurance. The Seller in respect of the Real Property is insured under those policies of casualty and general liability insurance ("Seller's Insurance") described on Schedule 6.3.12 annexed hereto, each of which is in full force and effect as of the date hereof and will remain in full force and effect through the Closing Date. Seller has received no notices of any Material default or demands to cure from any applicable insurer in respect of Seller's Insurance. 30 38 6.3.13 Real Estate Taxes. Except as set forth on Schedule 6.3.13 annexed hereto and made a part hereof, Seller has not commenced any proceedings which are pending for the reduction of the assessed valuation of the Real Property or any portion thereof, and other than the Permitted Encumbrances, to Seller's Knowledge, there are no special assessments affecting the Property. Nothing in this Section 6.3.13 or any other provision of this Agreement shall be construed to limit Seller's rights to initiate or prosecute after the Close of Escrow additional proceedings for property tax refunds for taxes relating to any relevant taxable period or periods prior to the taxable period during which the Proration Time occurs. 6.3.14 [Intentionally Omitted] 6.3.15 [Intentionally Omitted] 6.3.16 District of Columbia Underground Storage Tank Disclosure Notice. In accordance with the requirements of the D.C. Underground Storage Tank Management Act of 1990 as amended by the District of Columbia Underground Storage Tank Management Act of 1990 Amendment Act of 1992 (D.C. Code 6-995.1 et seq.) (the "Act") and the D.C. Underground Storage Tank Regulations, 20 DCMR Chapters 55-68 (the "Regulations"), Seller hereby informs Buyer that Seller has knowledge of the past existence of one or more "underground storage tanks" in, under, or upon the Property as that term is defined in the Act and the Regulations. In accordance with the Regulations, Seller has executed the disclosure form attached as Exhibit 6.3.16. This disclosure notice was provided to Buyer prior to entering into this Agreement. 6.4 Buyer's Review of Records and Plans. 6.4.1 Access to Records and Plans; Specific Disclosures. Buyer acknowledges that prior to the Closing Date, Buyer has been provided with such access to the Records and Plans and such other information relating to the Hotel as Buyer has deemed relevant. Buyer acknowledges that it (a) has been made aware of and given an opportunity to inquire into the Specific Disclosure Matters described herein; (b) has been given access to the Property and the opportunity to conduct such inquiries and analyses as Buyer has deemed necessary or appropriate in order to evaluate the physical condition of the Property and any and all other matters concerning the current and future use, feasibility, or value, or any other matter or circumstance relevant to Buyer concerning the Property or its marketability; and (c) the Records and Plans and the other books and records of Seller with respect to the Hotel may not be complete. 6.4.2 Limitation on Access to Records and Plans. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and agrees that the Records and Plans or other information made available to or delivered to Buyer prior to, or at the Closing, shall not include any information which is privileged, confidential or proprietary to Seller or any of its constituent partners or affiliates, including without limitation, (i) Seller's internal financial analyses, any appraisals undertaken for Seller or other parties, income tax returns, financial statements, corporate or partnership governance records, investment advisory records, and other records concerning Seller's professional relationships, any Hotel Employee personnel files (prior to the Closing), or any other internal, proprietary, or confidential information, files, or records of 31 39 Seller, (ii) the work papers, memoranda, analysis, correspondence, and similar materials prepared by or for Seller in connection with the negotiation and documentation of the transaction contemplated hereby or any other offer to purchase the Property received by Seller, and (iii) any documents or communications subject to the attorney/client privilege or attorney work product privilege. Buyer expressly agrees that its review of the Records and Plans, and any and all other information of any type or nature, whether oral or written, provided to Buyer by or on behalf of Seller and relating to the Property (collectively, the "Property Information") is for informational purposes only, and neither Seller nor any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller has verified either the accuracy of the Property Information, or the adequacy of any method used to compile the Property Information or the qualifications of any person preparing the Property Information except that, in delivering or making available a copy of any document or papers to Buyer, Seller has delivered or made available copies of the originals of such documents or papers in Seller's possession or included in the Records and Files. Except as expressly set forth in this Section 6, neither Seller nor any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller is making or giving any representation or warranty about, or assuming any responsibility for, the accuracy or completeness of the Property Information. Reliance by Buyer upon any Property Information shall not create or give rise to any liability of or against Seller or any agent, advisor, officer, attorney, representative or other person acting or purporting to act on behalf of Seller. Subject to Seller's express representations and warranties set forth herein, the consummation of the Closing shall constitute Buyer's unconditional approval of all aspects of the Property and Buyer's unconditional acknowledgment that Buyer has had the opportunity to request from Seller and review such documents and materials relating of the Property as Buyer deems appropriate. All copies of such documents delivered to Buyer shall be returned to Seller if the Closing fails to occur for any reason. 6.5 PURCHASE AS IS. BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER THAT BUYER HAS INDEPENDENTLY AND PERSONALLY INSPECTED THE PROPERTY AND THE PROPERTY INFORMATION AND THAT BUYER HAS ENTERED INTO THIS AGREEMENT BASED UPON SUCH PERSONAL EXAMINATION AND INSPECTION. BUYER ACCEPTS THE PROPERTY, IN ITS CONDITION ON THE CLOSE OF ESCROW AS-IS AND WITH ALL ITS FAULTS, INCLUDING WITHOUT LIMITATION, ANY FAULTS AND CONDITIONS SPECIFICALLY REFERENCED IN THIS AGREEMENT. NO PERSON ACTING ON BEHALF OF SELLER IS AUTHORIZED TO MAKE, AND BY EXECUTION HEREOF, BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO: (A) THE VALUE OF THE PROPERTY; 32 40 (B) THE INCOME TO BE DERIVED FROM THE PROPERTY; (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON; (D) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (E) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (F) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY; (G) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (H) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY; (I) THE COMPLIANCE OF THE PROPERTY WITH ANY ENVIRONMENTAL LAWS OR THE AMERICANS WITH DISABILITIES ACT; (J) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR ADJACENT TO THE PROPERTY; (K) THE CONTENT, COMPLETENESS OR ACCURACY OF ANY OF THE RECORDS AND PLANS OR OTHER INFORMATION PROVIDED BY SELLER TO BUYER WITH RESPECT TO THE PROPERTY; (L) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER; (M) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE APPLICABLE ZONING OR BUILDING REQUIREMENTS; (N) DEFICIENCY OF ANY UNDER SHORING; (O) DEFICIENCY OF ANY DRAINAGE; (P) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; (Q) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE PROPERTY; 33 41 (R) WITH RESPECT TO ANY OTHER MATTER CONCERNING THE PROPERTY (INCLUDING, WITHOUT LIMITATION, THE TENANT LEASES, THE EQUIPMENT LEASES, ANY FIXTURES AND EQUIPMENT, THE LICENSES AND PERMITS, THE PERSONAL PROPERTY, THE SERVICE CONTRACTS, THE EMPLOYMENT CONTRACTS, ANY EMPLOYEE BENEFIT PLANS AND THE LIQUOR LICENSE) EXCEPT AS MAY BE OTHERWISE EXPRESSLY STATED HEREIN; (S) [INTENTIONALLY OMITTED] (T) ANY OF THE SPECIFIC DISCLOSURE MATTERS; OR (U) WITHOUT LIMITING THE OTHER DISCLAIMERS SET FORTH HEREIN BUT SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, THE ASSIGNMENTS AND CONVEYANCES OF THE PERSONAL PROPERTY AND THE MANAGEMENT AGREEMENT ARE WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS OF ANY KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, (1) WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY OR ASSIGNABILITY OF THE MANAGEMENT AGREEMENT, (2) WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, (3) WARRANTIES RELATING TO THE DESIGN, CONDITION, QUALITY, WORKMANSHIP OR CAPACITY OF THE TANGIBLE PERSONAL PROPERTY, (4) REPRESENTATIONS OR WARRANTIES THAT THE TANGIBLE PERSONAL PROPERTY IS IN COMPLIANCE WITH ALL LAWS, STATUTES, ORDINANCES RULES, REGULATIONS, SPECIFICATIONS OR CONTRACTS PERTAINING THERETO, (5) WARRANTIES AGAINST PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, AND (F) WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY, OR COLLECTIBILITY OF ANY ITEM. 6.6 Limitation on Representations and Warranties of Seller. In no event shall Buyer be entitled to seek recovery against Seller for an alleged breach of any representation or warranty by Seller if the information, transaction, or occurrence alleged to give rise to such breach was disclosed to, made available to or discovered by Buyer, whether in the course of its review of the Records and Plans or otherwise, prior to the Close of Escrow (the sole adjustment with respect to same being as set forth in Section 6.7 below). Without limiting the foregoing, each of the representations and warranties by Seller set forth herein shall be deemed to be qualified in their entirety by the Specific Disclosure Matters in addition to any other qualifications of such representations and warranties. 6.7 Right to Supplement Disclosures. At any time prior to the Closing, Seller may add additional disclosures to the Specific Disclosure Matters and the Schedules referenced in this Section 6, and may make appropriate revisions thereto, provided, however, that any such revisions do not in the aggregate disclose any matter or matters which would reasonably be expected to have an impact upon the value of the Property in excess of the amount of the Deposit; and provided, further, that the receipt of any notice of termination under the Management Agreement shall not be deemed to create any diminution in value to the Property. 34 42 In the event that Buyer or Seller discovers any matter or matters which would be expected to exceed the Threshold Amount, then, in such event, the provisions of Section 7.1.1 shall apply. 6.8 Basket. In no event will Seller be liable to Buyer for any breach of a representation or warranty hereunder unless and to the extent the Loss actually and directly incurred by Buyer as results of such breach together with the Loss actually and directly incurred by Buyer as results of any other breach(s) in the aggregate exceed the Threshold Amount, provided, that in no event shall Seller have any liability to Buyer for any consequential damages arising from a breach by Seller of any representation or warranty unless such breach results from the intentional concealment by Seller. 6.9 Survival. The Trust, the Corporation and Seller each hereby covenants and agrees with the other that the representations and warranties of the Trust, the Corporation and Seller (as the case may be) set forth in Sections 6.1.1 through 6.1.3, inclusive, Section 6.2.1 through Section 6.2.3, inclusive and Section 6.3.1 and Section 6.3.2 shall survive the Close of Escrow without limitation as to duration. The remaining warranties and representations set forth in Section 6 shall survive the Close of Escrow until the date which is one (1) year following the Closing Date, at which time such representations and warranties shall expire unless prior to such time Buyer or Seller, as the case may be, have duly commenced an action in a court of competent jurisdiction, alleging a breach of such representation or warranty. Notwithstanding anything herein to the contrary, in no event shall either Buyer or Seller have any right to make a claim after the Closing with respect to any representation or warranty, the breach of which such party shall have discovered prior to the Closing, unless such party shall have notified the other party of such breach prior to the Close of Escrow. Nothing contained in this Section 6.9 shall limit the right of Seller to any remedy otherwise available under Federal or other applicable securities law. 6.10 Soil Disclosure. In accordance with D.C. Code ss.45-508(b), Seller advises Buyer that the characteristics of the soil on the Property is Urban Land. For further information, Buyer can contact a soil testing laboratory, the D.C. Department of Consumer and Regulatory Affairs or the Soil Conservation Service (U.S.D.A.). The foregoing is given pursuant to District of Columbia statutory requirements and does not constitute a representation or warranty by Seller as to soil characteristics or conditions. SECTION 7 TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING 7.1 Buyer's Review of Title. Seller has caused to be delivered to Buyer and Buyer's Counsel a current preliminary title commitment for title insurance issued by the Title Company showing the condition of title to the Real Property (the "Preliminary Title Report") together with a copy of all documents evidencing or creating the exceptions to title referenced therein. 35 43 7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens. On or prior to the Close of Escrow, Seller shall be obligated (i) to cause to be insured over or removed of record all Monetary Liens affecting the Property as of the date hereof; and (ii) to remove or to bond over any Monetary Lien arising after the issuance of the Preliminary Title Report which (a) was created by or with the consent of Seller, or (b) is in an amount less than the Deposit. In the event that any Monetary Lien not reflected on the Preliminary Title Report exceeds the Deposit and was not created by or with the consent of Seller or any other title defect or other matters arise which requires Seller to supplement its disclosure pursuant to Section 6.7 and which in the aggregate may create a diminution in value to the Property in excess of the Deposit, (i) the Deposit shall be refunded by Escrow Holder to Buyer on February 28, 1998 if the Closing does not occur by such date in accordance with the provisions hereof; (ii) the Scheduled Closing Date shall be extended and Seller shall use all reasonable efforts, to remove or bond over or otherwise cause the Title Company to omit such Monetary Lien as an exception from coverage under the Title Policy and/or remove or cure as applicable such other defect or condition as applicable; and (iii) Buyer shall be permitted to record the Memorandum of Contract in the real property records of the state and county in which the Real Property is located. In the event that the Scheduled Closing Date is so extended and Seller is able to remove or cure such Monetary Lien, remove or cure as applicable the title defect or other condition, the Close of Escrow shall occur as soon as practicable following such removal or cure with time being of the essence as to the performance of both Buyer's and Seller's obligations hereunder. THE PARTIES ACKNOWLEDGE AND AGREE THAT DAMAGES WILL NOT BE AN ADEQUATE REMEDY TO SELLER IF BUYER SHALL DEFAULT IN ITS OBLIGATION TO CLOSE IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND CONSEQUENTLY THAT BUYER'S OBLIGATIONS UNDER THIS SECTION 7.1.1 SHALL BE SPECIFICALLY ENFORCEABLE AGAINST THE TRUST. IN CONSIDERATION FOR THE REFUND TO BUYER OF THE DEPOSIT PROVIDED FOR UNDER THIS SECTION 7.1.1, THE RIGHT OF BUYER TO RECORD THE MEMORANDUM OF CONTRACT PURSUANT TO THIS SECTION 7.1.1, SELLER'S AGREEMENT TO ENTER INTO THE INTERIM MANAGEMENT AGREEMENT PURSUANT TO THE PROVISIONS OF THIS SECTION 17.20 (UNDER WHICH AGREEMENT THE VALUE OF THE HOTEL MAY BE AFFECTED BY THE PERFORMANCE BY THE MANAGER OF ITS RESPONSIBILITIES THEREUNDER) AND TO ENCUMBER THE PROPERTY WITH THIS AGREEMENT FOR A PERIOD OF UP TO FIVE (5) YEARS IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND IN LIGHT OF THE RISKS WHICH SELLER WILL BE ASSUMING AS A RESULT IN RELATION TO THE VALUE OF THE EQUITY PURCHASE PRICE TO BE DELIVERED IF AND WHEN THE CLOSING OCCURS HEREUNDER, THE PARTIES HAVE AGREED THAT THE PROVISIONS OF THIS SECTION 7.1.1 ARE SPECIFICALLY ENFORCEABLE AGAINST THE TRUST AS AND TO THE EXTENT PROVIDED IN THE PRECEDING SENTENCE. In the event that a Monetary Lien cannot be removed or cured or a title defect or other condition cannot be removed or cured as required hereunder to close within five (5) years of the date of this Agreement, this Agreement shall terminate and the parties hereto shall have no further obligations. 7.1.2 [Intentionally Omitted] 36 44 7.2 Title Insurance Policy. Buyer's title to the Real Property shall be insured at Closing by an ALTA extended coverage owner's policy or policies of title insurance in the amount of the Purchase Price (the "Title Policy") issued by the Title Company, insuring title to the Real Property vested in Buyer, subject only to the Permitted Encumbrances, together with such customary endorsements or affirmative insurance as may be reasonably requested by Buyer and purchased at Buyer's sole cost and expense. 7.3 Title to Real Property. At the Close of Escrow, title to the Real Property will be conveyed to Buyer by Seller pursuant to the Deed, subject only to the matters of title respecting the Property shown on Schedule 7.3 annexed hereto and, if the Closing is delayed pursuant to Section 7.1.1, any additional easements, covenants, conditions, restrictions or other matters entered into with the prior written consent of Buyer which consent shall not be unreasonably withheld, delayed or conditioned (collectively, the "Permitted Encumbrances"); Buyer agrees to rely exclusively on the Title Policy for protection against any title defects except as set forth in Section 7.1.2. Buyer shall have no claim following the Closing against Seller on account of the Permitted Encumbrances. Buyer's agreement under this Section 7.1 shall survive the execution, delivery, and recordation of the Deed. SECTION 8 INTERIM ACTIVITIES During the period from the Execution Date through the Close of Escrow, Seller shall (subject to the provisions of the Interim Management Agreement if entered into in accordance with the provisions of this Agreement) cause the Property to be continued to be operated in ordinary course as a hotel consistent with current operating practices during the period since Manager has been manager of the Hotel. Buyer shall have the right to enter onto and inspect the Property, from and after the date hereof, through the Closing Date to inspect the Property and otherwise perform its due diligence provided such inspections are performed upon prior notice to Seller and so as not to interfere with the operation of the Property or to disclose the pendency of the transaction contemplated hereby. All fees and expenses of any kind relating to the inspection of the Property by Buyer will be paid for by Buyer. Buyer agrees to keep the Property free from any liens arising out of or in connection with Buyer's or its agents entry or the Property. Buyer shall at its sole cost and expense, clean up and repair the Property as reasonably necessary after Buyer's or its agents entry thereon. Buyer shall hold harmless, indemnify and defend Seller from all Losses relating to any action by Buyer, its Affiliates and/or agents at or on the Property prior to Closing. Any of Buyer's agents shall be bound by the provisions of Section 17.19. 37 45 SECTION 9 CONDITIONS PRECEDENT TO CLOSING 9.1 Conditions Precedent to Buyer's Obligations. The Close of Escrow and the obligation of Buyer to purchase the Property is subject to the satisfaction, not later than the Scheduled Closing Date, (subject to extensions as provided in Section 7.1) of the following conditions: 9.1.1 Seller's Deliveries. Seller shall have delivered the items described in Section 4.2 and shall be prepared to deliver the items described in Section 4.4; 9.1.2 Title Policy. The Title Company shall be unconditionally prepared (subject only to payment of all necessary title insurance premiums and other charges) to issue to Buyer the Title Policy insuring Buyer's title to the Real Property subject only to the Permitted Encumbrances; 9.1.3 Performance Under Related Agreements. All conditions precedent to the closing of the transactions contemplated by that certain Purchase and Sale Agreements with Joint Escrow Instructions (the "Related Agreement"), dated as of the date hereof, by and between N.Y. Overnight Partners, L.P. and Buyer, shall have been satisfied or waived and the Seller and Escrow Holder thereunder shall be ready, willing and able to perform thereunder, and there shall be no default of Seller under such agreement. 9.1.4 [Intentionally Omitted] 9.1.5 Seller Performance. Seller shall have performed in all material respects all of the obligations of Seller under this Agreement, to the extent required to be performed at or prior to the Close of Escrow. 9.1.6 Representations and Warranties of Seller. The Seller's representations and warranties set forth in Section 6.3 shall be true, correct and complete, as of the Close of Escrow subject to modification thereof to the extent permitted under Section 6.7 and subject further to the applicable provisions of Section 7.1.1. The conditions set forth in this Section 9.1 are solely for the benefit of Buyer and may be waived only by Buyer. Buyer shall at all times have the right to waive any such condition. Any such waiver or waivers shall be in writing and shall be delivered to Seller and Escrow Holder. 9.2 Conditions Precedent to Seller's Obligations. The Close of Escrow and Seller's obligation with respect to the transactions contemplated by this Agreement are subject to the satisfaction, not later than the Scheduled Closing Date, of the following conditions: 9.2.1 Funds and Documents. Buyer shall have delivered to Escrow Holder, prior to the Closing Date, for disbursement as directed by Seller, the Paired Shares and all cash 38 46 or other immediately available funds due from Buyer in accordance with Section 4 of this Agreement and the documents described in Section 4.3; 9.2.2 Representations and Warranties of Buyer. The Trust's representations and warranties set forth in Section 6.1 and the Corporation's representations and warranties set forth in Section 6.2 shall be true, correct and complete, as of the Close of Escrow; 9.2.3 No Material Changes. There shall have been no casualty or condemnation for which Buyer has elected to terminate this Agreement pursuant to Section 12 or Section 13 of this Agreement; 9.2.4 [Intentionally Omitted] 9.2.5 Performance Under Related Agreements. All conditions precedent to the closing of the transactions contemplated by the Related Agreement shall have been satisfied or waived and the Buyer and Escrow Holder thereunder shall be ready, willing and able to perform thereunder and there shall be no default of Buyer under such agreement. The conditions set forth in this Section 9.2 are solely for the benefit of Seller and may be waived only by Seller. Seller shall at all times have the right to waive any such condition. Any such waiver or waivers shall be in writing and shall be delivered to Buyer and Escrow Holder. 9.3 Failure of Condition. Except as otherwise provided in this Agreement, if the Escrow fails to close on the Outside Closing Date for any reason whatsoever, including, without limitation, a failure of a condition precedent set forth in this Section 9, either Buyer or Seller, if not then in default under this Agreement, may terminate the Escrow and this Agreement upon notice to the other; and, thereupon: 9.3.1 This Agreement and the Escrow shall terminate; 9.3.2 The costs of the Escrow through the Scheduled Closing Date shall be governed by Section 4.8; 9.3.3 All monies paid into the Escrow and all documents deposited in the Escrow shall be returned to the party paying or depositing the same together with interest earned thereon; and 9.3.4 Each party shall be released from all obligations under this Agreement except for the obligations that are expressly stated to survive the termination of this Agreement. 39 47 SECTION 10 BROKER Buyer and Seller each represent and warrant to the other that it has not dealt with any broker, finder or other middleman in connection with this Agreement, or the transactions contemplated hereby and that no broker, finder, middleman or other person has claimed, or has the right to claim a commission, finder's fee or other brokerage fee in connection with this Agreement or the transactions contemplated hereby. Each party shall indemnify, protect, defend and hold the other party harmless from and against any costs, claims or expenses (including actual attorneys' fees and expenses), arising out of the breach by the indemnifying party of any of its representations, warranties or agreements contained in this Section 10. The representations and obligations under this Section 10 shall survive the Close of Escrow, or, if the Close of Escrow does not occur, the termination of this Agreement. SECTION 11 REMEDIES FOR SELLER'S DEFAULT 11.1 Buyer's Remedies in General. If Buyer shall discover prior to the Close of Escrow any default in any of Seller's obligations under this Agreement (a "Seller Default"), Buyer shall notify Seller thereof, and Seller shall have a reasonable period of time (not in excess of thirty (30) days) unless extended by Buyer in its sole discretion in which to cure such default, in which case the Scheduled Closing Date shall be extended during the continuation of such cure period. If there shall be any Seller Default discovered by Buyer prior to the Close of Escrow and not cured by the Scheduled Closing Date, then Buyer's sole right and remedy other than with respect to a breach of a representation and warranty which shall be subject to the provisions of Section 6.7, shall be to compel specific performance of this Agreement; provided, however, that Buyer shall only be entitled to compel specific performance of this Agreement if, as of the time of Seller's default, Buyer shall (a) not be in default hereunder, (b) shall be ready, willing and able to perform its obligations hereunder, and (c) shall have waived all contingencies to closing other than those relating to Seller's default. 11.2 MATERIAL INDUCEMENT. BUYER SPECIFICALLY ACKNOWLEDGES THAT THE LIMITATIONS ON DAMAGES AND SURVIVAL AND OTHER REMEDIES WHICH BUYER MAY RECOVER FROM AND ENFORCE AGAINST SELLER UNDER THIS AGREEMENT ARE A SPECIFIC AND MATERIAL INDUCEMENT TO SELLER TO ENTER INTO THIS TRANSACTION. 40 48 SECTION 12 DAMAGE TO OR DESTRUCTION OF THE PROPERTY 12.1 Insured Casualty. 12.1.1 If, prior to the Close of Escrow, the Property is damaged or destroyed, whether by fire or other insured casualty, Seller shall promptly notify Buyer of such damage or destruction and of the good-faith estimate of a reputable licensed contractor selected by Seller and reasonably approved by Buyer of the cost to repair the damage and Seller's good-faith belief that such casualty is insured (the "Insured Casualty Notice"). If the Insured Casualty Notice indicates that such casualty is a Material Casualty, Buyer may elect to be released from its obligations hereunder (including its obligation to purchase the Property) by delivering to Seller written notice of Buyer's intent to do so within ten (10) days after the date Buyer receives the Insured Casualty Notice. In such event, the Deposit together with all interest accrued thereon shall be promptly returned to Buyer. 12.1.2 If the casualty is insured, and (i) it is not a Material Casualty, or (ii) it is a Material Casualty, but Buyer elects not to terminate this Agreement in accordance with this Section 12.1, then the Escrow and this Agreement shall remain in full force and effect, the Closing shall occur on or before the Outside Closing Date, and Seller shall assign to Buyer, as a condition precedent to the Close of Escrow, all of Seller's right, title and interest in and to any of the casualty insurance proceeds or claims therefor with respect to such damage or destruction, together with any and all rental loss or business interruption insurance of Seller, if any, payable with respect to the Property for any period after the Proration Time and any and all claims against other persons for such damage or destruction. Additionally, if the Escrow and this Agreement remain in full force and effect, Seller shall pay to Buyer, by way of a reduction in the Cash Portion of the Closing Payment, an amount equal to the deductible under the casualty insurance. Within twelve (12) months following the Close of Escrow, Buyer shall upon thirty (30) days written notice by Seller, present reasonably satisfactory evidence to Seller that Buyer applied the proceeds of such insurance to the Property. If Buyer fails to present such evidence or such evidence is not reasonably satisfactory to Seller, Buyer shall promptly, but in any event within thirty (30) days of demand therefor from Seller, pay to Seller the proceeds of the casualty insurance assigned by Seller to Buyer as provided herein, together with an amount equal to the deductible under such insurance for which Buyer received a credit to the Purchase Price. 12.2 Uninsured Casualty. 12.2.1 If, prior to the Close of Escrow, all or any portion of the property is damaged or destroyed by an uninsured casualty (including, without limitation, a casualty as to which coverage has been disclaimed by Seller's insurers), Seller shall promptly notify Buyer of such damage or destruction and of the Seller's reasonable estimate of the cost to Seller to repair the same of a reputable licensed contractor selected by Seller and reasonably approved by Buyer (the "Uninsured Estimate to Repair") and Seller's reasonable belief that such casualty is uninsured (the "Uninsured Casualty Notice"). 41 49 12.2.2 If such Uninsured Estimate to Repair indicates the occurrence of a Material Casualty, either Seller or Buyer may elect to terminate this Agreement by giving to the other party written notice of its intent to do so within ten (10) days after the Seller delivers the Uninsured Casualty Notice to Buyer. If this Agreement is terminated pursuant to this Section 12.2.2, the Deposit together with interest accrued thereon shall be promptly returned to Buyer. 12.2.3 If the casualty is uninsured, and (i) it is not a Material Casualty, or (ii) it is a Material Casualty and Buyer and Seller have not elected to terminate this Agreement in accordance with Section 12.2.2, then the Escrow and this Agreement shall remain in full force and effect, the Closing shall occur on or before the Outside Closing Date, and Buyer shall be entitled to a reduction in the Purchase Price in an amount equal to the Uninsured Estimate to Repair. 12.2.4 If and to the extent that the Purchase Price is adjusted pursuant to this Section 12.2 as a result of a disclaimer of coverage by Seller's insurers, Buyer shall not be entitled to insurance proceeds due under Seller's policies, or to be assigned any claim under or with respect to Seller's policies, and Seller shall retain all rights thereunder or with respect thereto and to proceeds therefrom, it being the intent of this Section 12 that there be no double recovery by, or double compensation of, Buyer for the casualty. SECTION 13 CONDEMNATION If, prior to the Close of Escrow, a Material Taking has occurred or is pending, Seller shall immediately notify Buyer of such fact. In such event, Buyer may elect upon written notice to Seller given not later than fifteen (15) days after receipt of Seller's notice to terminate this Agreement. If Buyer does not exercise option which Buyer may have pursuant to this Section 13 to terminate this Agreement, or if any such taking is not a Material Taking, then neither party shall have the right to terminate this Agreement, but Seller shall assign and turn over, and Buyer shall be entitled to receive and keep, all awards for the taking of any of the Real Property by eminent domain which accrue to Seller (other than those relating to loss of use prior to the Closing), and the parties shall proceed to the Close of Escrow pursuant to the terms hereof, without modification of the terms of this Agreement and without any reduction in the Purchase Price. SECTION 14 EMPLOYEES 14.1 Hiring of Hotel Employees; WARN Act Compliance. Buyer agrees to make an offer of employment to all existing Hotel Employees as of the Close of Escrow, on terms and conditions generally comparable to their existing terms and conditions of employment (to the 42 50 extent such terms and conditions have been disclosed by Seller and/or its agents to Buyer) and to make all reasonable efforts to retain such employees for a reasonable period of time. Without limiting the foregoing, Buyer shall offer to maintain without loss of employment (as defined in the WARN Act) the employment at the Property (other than upon good cause for termination) of such number of Hotel Employees and on such terms and conditions as shall not result in, and only to the extent necessary to prevent, a plant closing or mass layoff as defined in the WARN Act. Buyer (i) shall also cause each of the health and medical benefit plans maintained for Hotel Employees to waive any preexisting condition in connection with employment at the Property that was not excluded under the applicable program as of the Closing Date, (ii) shall also cause each of such benefit plans to take into account any deductibles or coinsurance amounts incurred by each Hotel Employee for the year in which the Closing Date occurs and (iii) shall also cause each of the health and medical benefit plans to deem each Hotel Employee to be eligible for participation in such plan as of the Close of Escrow. In the event that Buyer fails to comply with any of the foregoing covenants, Buyer agrees that Buyer shall be solely responsible for the payment of any and all costs, charges, penalties, compensation, severance pay, benefits and liabilities, arising under the WARN Act, and any other applicable law, rule or regulation on account thereof, and Buyer agrees to indemnify, defend and hold Seller and the Employer Corporation and their directors, officers, agents, affiliates, principals, partners, shareholders representatives and controlling persons harmless from and against any and all claims, causes of action, judgments, damages, penalties and liabilities asserted under the WARN Act or any other applicable law, rule or regulation, whether against Buyer or Seller, the Employer Corporation or any other such indemnified party and whether based on employment of any of the Hotel Employees prior to or following the Closing, arising from Buyer's failure to comply with the foregoing covenants (collectively, "Termination Charges"). Following the Closing, if Buyer desires to terminate the employment of any Hotel Employees other than for cause, Buyer shall be solely responsible for complying with all applicable provisions of the WARN Act and all other applicable laws, rules and regulations with respect to such termination, including without limitation, the payment of all costs and termination payments owing under the WARN Act and all other applicable laws, rules and regulations to any of such employees. Buyer shall assume all obligations under the Employment Agreement for the Director of Finance attributable to the period from and after the Closing Date (it being agreed that the Director of Finance may resign thereunder at any time without penalty). 14.2 Collective Bargaining Agreements. Without limiting the provisions of Section 14.1, immediately upon the Close of Escrow, without the necessity of further action by Buyer, Buyer shall assume each collective bargaining agreement or other labor union contracts identified on Schedule 14.2 (the "Collective Bargaining Agreements"). Buyer further agrees to indemnify Seller and the Employer Corporation and their directors, officers, employees, agents, affiliates, principals, partners, shareholders, representatives and controlling persons for any and all liability to the bargaining agents or Hotel Employees, resulting from the failure of Buyer to comply with the terms and conditions of any of the Collective Bargaining Agreements with respect to periods beginning after the Close of Escrow. 43 51 14.3 Continuation of Benefits. 14.3.1 (i) Except as provided in Section 14.3.2 , on and after the Closing Date, Seller (or any insurer at Seller's cost) shall continue to process and pay (or cause applicable insurers and third party administrators, including ITT Sheraton, to process and pay) in an expeditious manner and with respect to all covered Hotel Employees (and, to the extent applicable, their covered spouses, dependents and beneficiaries) all claims under the Employment Agreements that provide health and medical, or other welfare, benefits submitted for covered expenses with respect to occurrences commencing on or prior to the Closing Date, including, but not limited to: (A) covered hospital benefits for any confinements; (B) covered life and survivor income benefits, if any, for deaths which occur on or prior to the Closing Date; (C) workers' compensation benefits for disabilities resulting from a work-related accident which occurred on or prior to the Closing Date; (D) all covered benefits that are being, or that may be, paid to, or with respect to, any of such individuals who are on short or long term disability, or medical, personal or other leaves of absence as of the Closing Date; (E) covered benefits under any "spending account," or similar arrangement, under any "cafeteria plan" (as defined under Section 125 of the Internal Code) with respect to salary reduction elections made prior to the Closing Date; and (F) covered benefits under all other such Employment Agreements which accrue on or before the Closing Date; but, only in each instance, to the extent that Buyer shall not have received a credit against the Purchase Price on account of such item. (ii) [Intentionally Omitted] 14.3.2 Buyer (or any plan maintained by Buyer) will provide continued health and medical coverage as required under Section 4980B of the Code, Part 6 of Title I of ERISA or any other applicable federal, state or local law or ordinance to all current and former Hotel Employees (and their spouses, dependents and beneficiaries) with respect to whom a "qualifying event" (as such term is defined under Sections 4980B(f)(3) of the Code or 603 of ERISA) or other triggering event described under the applicable federal, state or local laws or ordinances occurred on or before the Closing Date. 14.3.3 Buyer shall maintain supplies of claims forms necessary for Hotel Employees to make claims under Employment Agreements that provide health, medical or other welfare benefits with respect to occurrences commencing on or prior to the Closing Date, and shall furnish such forms to the Hotel Employees when needed and otherwise assist the Hotel Employees in presenting such claims. 14.4 Buyer and Seller intend by this Agreement to comply with Section 4204 of ERISA, so as to prevent Seller from incurring at the Closing Date a complete or partial withdrawal in respect of any employee benefit plans, if any, in which the Hotel Employees currently participate that are "multiemployer plans," as defined in Section 4001(a)(3) of ERISA (and which have been disclosed to Buyer on the Schedule of Employment Agreements), determined as if Buyer is the "buyer" referred to in such Section 4204. Accordingly, with respect to such multiemployer plans, Buyer agrees as follows: 44 52 (A) For the first plan year of each such multiemployer plan commencing after the Close of Escrow, and for each of the succeeding four plan years for each such plan, Buyer shall assume the obligation to contribute to each such plan with respect to operations conducted with business assets acquired from Seller for substantially the same number of contribution base units (as defined in Section 4001(a)(11) of ERISA) for which Seller had an obligation to contribute to such plan. (B) Prior to each such multiemployer plan's first plan year beginning after the Close of Escrow, Buyer shall apply to such plan for a variance from the requirement of Section 4204(a)(1)(b) of ERISA, that a bond be obtained or an amount be held in escrow as provided in said Section. In the event any such plan determines that the request does not qualify for a variance on it, Buyer shall obtain any required bond or establish any required escrow within thirty (30) days after the date on which it receives notice of the plan's decision, and shall maintain such bond or escrow until the earliest of: (i) the date a variance is obtained from the plan; (ii) the date a variance or exemption is obtained from the Pension Benefit Guaranty Corporation; or (iii) the last day of the fifth (5th) plan year commencing after the Close of Escrow; which bond or escrow shall be paid to such plan if Buyer withdraws therefrom or fails to make a contribution to such plan when due, at any time during the first (1st) five (5) plan years of such plan beginning after the Closing Date. In order to comply with subsection (a)(1)(C) of such Section 4204, if Buyer withdraws in a complete withdrawal or a partial withdrawal from any multiemployer plan with respect to which Buyer has assumed an obligation to contribute pursuant to this Agreement and such withdrawal or partial withdrawal occurs during the five (5) plan years commencing with the first (1st) plan year beginning after the date of the Close of Escrow, Seller shall be secondarily liable for any withdrawal liability it would have had to such multiemployer plan on the date of the Close of Escrow under Title IV of ERISA. Buyer agrees to provide Seller with reasonable advance notice of its anticipated failure to pay any withdrawal liability and to furnish Seller promptly with a copy of any notice of withdrawal liability it may receive with respect to such plans. 14.5 Indemnification. Buyer and Seller (as applicable, the "Indemnitor") agrees to indemnify, defend, protect and hold the other and, the Employer Corporation in the case of Seller, and their directors, officers, agents, affiliates, principals, partners, shareholders, representatives and controlling persons (as applicable, the "Indemnitee") harmless from and against any and all claims, damages, liabilities, losses, and expenses, (including attorneys' fees and costs) paid, suffered or incurred by the Indemnitee, arising out of or related to Indemnitor's failure to comply with any of the covenants, obligations, or duties contained in Section 14. 14.6 Survival. The provisions of this Section 14 shall survive the Close of Escrow. 45 53 SECTION 15 COOPERATION 15.1 Seller has advised Buyer that it may be necessary after the Close of Escrow for Seller (or its representatives) to audit the Records and Plans with respect to the period prior to the Closing Date. In addition, Seller may require access to the such Books and Records in connection with any litigation by or against Seller and its Affiliates with respect to the Property, any tax audit, examination or challenge or similar proceeding, or any calculation of sums payable under Section 5. Accordingly, Buyer hereby: (i) agrees to retain the Records and Plans with respect to the period prior to the Closing Date at the Property for a period of seven (7) years after the Close of Escrow or such additional period as may reasonably be requested by Seller; (ii) grants Seller, its Affiliates and their respective representatives access to the such Records and Plans and the Property after the Close of Escrow, at reasonable times and upon reasonable prior notice, for such purposes; (iii) subject to the rights of guests in guest rooms, tenants under tenant leases, grants Seller, its Affiliates, and their respective representatives access to the Property after the Close of Escrow for the purpose of conducting such inspections and/or testing (including destructive testing) of the Property as may be necessary or advisable in connection with any litigation and other proceedings to which Seller is a party (provided that Seller shall give Buyer prior notice of the scope of such inspections and testing) which shall be scheduled for such periods as shall be reasonably agreeable to the parties; 15.1.1 All inspections fees, appraisal fees, engineering fees and other expenses of any kind relating to the inspection of the Property by Seller or Seller's Affiliate will paid for by Seller and/or Seller's Affiliate. 15.1.2 Prior to Seller or Seller's Affiliate's entry on the Property for the purpose of conducting inspections and/or tests, Seller or Seller's Affiliate shall provide Buyer with certificates of insurance from Seller's agents from an insurance carrier and for such risks and policy limits as Seller shall reasonably approve. 15.1.3 Seller agrees to keep the Property free from any liens arising out of or in connection with such testing and inspection. 15.1.4 Seller, shall, at its sole cost and expense, clean up and repair the Property as reasonably necessary, after Seller's or Seller's agents, entry thereon. 15.1.5 Seller shall hold harmless, indemnify and defend Buyer for all losses relating to any action by Seller, its Affiliates and/or agents at or on the Property after the Closing; [and] 15.1.6 Buyer agrees to cooperate with Seller, its Affiliates and their respective representatives in connection with any such litigation or proceedings with respect to the Property, any such tax audit, examination or challenge or similar proceeding, or any such calculation of sums payable under Section 5, said cooperation to be at no material cost or expense to Buyer; and 46 54 15.2 Seller shall cooperate with Buyer in connection with the assignment of all transferable Licenses and Permits to Buyer and the application for and procurement of replacements of any non-transferable Licenses and Permits. SECTION 16 NOTICES 16.1 Addresses. Whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be made in writing and shall be (a) sent via a nationally recognized overnight courier service fully prepaid, (b) deposited in the United States by mail, registered or certified, return receipt requested, postage prepaid, or (c) sent via telefacsimile, provided that the original of such notice, demand or request shall also be sent via one of the methods described in (a) and (b) above, in each case to the addressees (and individuals) set forth below: As to Seller: D.C. Overnight Partners, L.P. c/o Al Anwa USA International 1925 Century Park East Suite 1900 Los Angeles, CA 90067 Attn: General Counsel Telefacsimile: (310) 229-2939 With a copy to Seller's Additional Addressees: Gordon Eng, Esq. 19191 S. Vermont Avenue Suite 420 Torrance, CA 90502 Telefacsimile: (310) 207-1006 Morrison & Foerster LLP 555 West Fifth Street, Suite 3500 Los Angeles, CA 90013-1024 Attn: Thomas R. Fileti, Esq. Telefacsimile: (213) 892-5454 47 55 As to Buyer: Starwood Lodging Corporation Starwood Lodging Trust 2231 E. Camelback Road Suite 400 Phoenix, AZ 85016 Attn: Steven R. Goldman Telefacsimile: (602) 852-0115 With a copy to Buyer's Additional Addressee: Greenberg Traurig Hoffman Lipoff Rosen & Quentel 153 East 53rd Street New York, NY 10022 Attn: Andrew E. Zobler, Esq. Telefacsimile: (212) 223-7161 As to Escrow Holder: Chicago Title Insurance Company 700 South Flower Street, Suite 900 Los Angeles, CA 90017 Attn: Maggie Watson Telefacsimile: (213) 488-4388 16.2 Receipt of Notices. Any notice, demand or request that shall be delivered to Buyer and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Buyer for all purposes hereunder, and any notice, demand or request that shall be delivered to Seller and its Additional Addresses in the manner aforesaid shall be deemed sufficiently given to and received by Seller for all purposes hereunder (i) the next business day following the day such notice, demand or request is delivered by a nationally recognized overnight courier service fully prepaid, to such party and its Additional Addressee, (ii) if sent via registered or certified mail, at the time of receipt by such party and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date and time stated upon confirmation reports generated by the sending party's telefacsimile machine confirming the delivery of such notice, demand or request to such party and its Additional Addressee. 16.3 Refusal of Delivery. The inability to deliver any notice, demand or request because the individual to whom it is properly addressed in accordance with this Section 16 refused delivery thereof or no longer can be located at that address shall constitute delivery thereof to such individual. 48 56 16.4 Change of Address. Each party shall have the right from time to time to designate by written notice to the other parties hereto such other person or persons and such other place or places as said party may desire written notices to be delivered or sent in accordance herewith. SECTION 17 GENERAL PROVISIONS 17.1 Amendment. Except as provided in Section 4.1, no provision of this Agreement or of any documents or instrument entered into, given or made pursuant to this Agreement may be amended, changed, waived, discharged or terminated except by an instrument in writing, signed by the party against whom enforcement of the amendment, change, waiver, discharge or termination is sought. 17.2 Time of Essence. All times provided for in this Agreement for the performance of any act will be strictly construed, time being of the essence. 17.3 Entire Agreement. This Agreement and other documents delivered at Closing, set forth the entire agreement and understanding of the parties in respect of the transactions contemplated by this Agreement, and supersede all prior agreements, arrangements and understandings relating to the subject matter hereof and thereof. No representation, promise, inducement or statement of intention has been made by Seller or Buyer which is not embodied in this Agreement, or in the attached Exhibits or the written certificates, schedules or instruments of assignment or conveyance delivered pursuant to this Agreement, and neither Buyer nor Seller shall be bound by or liable for any alleged representations, promise, inducement or statement of intention not therein so set forth. 17.4 No Waiver. No failure of any party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder shall constitute a waiver of any party's right to demand strict compliance with the terms of this Agreement. 17.5 Counterparts. This Agreement, any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby, and any amendment or supplement thereto may be executed in two or more counterparts, and, when so executed, will have the same force and effect as though all signatures appeared on a single document. Any signature page of this Agreement or of such an amendment, supplement, document or instrument may be detached from any counterpart without impairing the legal effect of any signatures thereon, and may be attached to another counterpart identical in form thereto but having attached to it one or more additional signature pages. 17.6 Costs and Attorneys' Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement or any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby or thereby 49 57 (including, without limitation, the enforcement of any obligation to indemnify, defend or hold harmless provided for herein or therein), or because of an alleged dispute, default, or misrepresentation in connection with any of the provisions of this Agreement or of such document or instrument, or if Escrow Holder commences any action with respect to the Escrow(s), the successful or prevailing party shall be entitled to recover actual attorneys' fees, charges and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 17.7 Payments; Interests. Except as otherwise provided herein, payment of all amounts required by the terms of this Agreement shall be made in the United States and in immediately available funds of the United States of America which, at the time of payment, is accepted for the payment of all public and private obligations and debts. Unless the parties otherwise agree, payments shall be made through the Escrow Holder. If any payment due under this Agreement is not paid when due, it shall thereafter bear interest at a variable rate equal to the rate announced from time to time by Citibank, N.A. as its prime or reference rate, plus five percent (5%) per annum, but in no event more than the maximum rate, if any, allowed by law to be charged by the party receiving the interest on such type of indebtedness. 17.8 Transfer By Buyer. Buyer shall not have the right to assign this Agreement, but shall be permitted to designate an Affiliate or Affiliates to take title to the Property. In the event that Buyer elects to so designate any Affiliate or Affiliates to take title to the Property hereunder, (i) Buyer shall upon close of Escrow be released of all obligations hereunder other than pursuant to Section 6, Section 7.1, Section 10, Section 17.18, Section 17.19 and Section 17.20 or arising prior to the Close of Escrow, (ii) such Affiliate or Affiliates shall assume all of Buyer's obligations hereunder; and (iii) such Affiliate of Affiliates shall represent and warrant to Seller that such entities are duly organized and validly existing and otherwise as to the matters covered in Section 6.1.1 and Section 6.1.2 as applicable. 17.9 Parties in Interest. Subject to Section 17.8, the rights and obligations of the parties hereto shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs and the legal representatives of their respective estates. Nothing in this Agreement is intended to confer any right or remedy under this Agreement on any person other than the parties to this Agreement and their respective successors and permitted assigns, or to relieve or discharge the obligation or liability of any person to any party to this Agreement or to give any person any right of subrogation or action over or against any party to this Agreement. 17.10 Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the state in which the Real Property is located without giving effect to the conflict-of-law rules and principles of that state. 17.11 Incorporation of Recitals and Exhibits. The Recitals and Exhibits attached to this Agreement are incorporated into and made a part of this Agreement. 17.12 Construction of Agreement. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any of 50 58 the parties hereto. Headings at the beginning of sections of this Agreement are solely for the convenience of the parties and are not a part of this Agreement. When required by the context, whenever the singular number is used in this Agreement, the same shall include the plural, and the plural shall include the singular, the masculine gender shall include the feminine and neuter genders, and vice versa. As used in this Agreement, the term "Seller" shall include the respective permitted successors and assigns of Seller, and the term "Buyer" shall include the permitted successors and assigns of Buyer, if any. 17.13 Severability. If any term or provision of this Agreement is determined to be illegal, unconscionable or unenforceable, all of the other terms, provisions and sections hereof will nevertheless remain effective and be in force to the fullest extent permitted by law. 17.14 Announcements. Seller and Buyer shall consult with each other and provide each other One (1) Business Day prior notice with regard to all press releases and other announcements issued at or prior to the Close of Escrow and during the one year period thereafter concerning the existence of this Agreement or the sale of the Property and, except as permitted under Section 17.19, neither Seller nor Buyer shall issue any such press release or other such publicity prior to the Close of Escrow without the prior written consent of the other party, which consent may be withheld in such other party's sole and absolute discretion. Buyer will not issue any public announcement with respect to Seller (other than to describe the transaction contemplated hereby to the extent permitted hereunder) without the prior written consent of Seller which may be withheld in its sole and absolute discretion. The agreements of the parties in this Section 17.14 shall survive the Close of Escrow or any termination of this Agreement. 17.15 Submission of Agreement. The submission of this Agreement to Buyer or its broker, agent or attorney for review or signature does not constitute an offer to sell the Property to Buyer or the granting of an option or other rights with respect to the Property to Buyer. No agreement with respect to the purchase and sale of the Property shall exist, and this writing shall have no binding force or effect, until this Agreement shall have been executed and delivered by Buyer and by Seller and Buyer shall have deposited the Deposit with Escrow Holder. 17.16 Further Assurances. Buyer and Seller agree to execute such instructions to the Escrow Holder and such other instruments and take such further actions either before or after the Close of Escrow as may be reasonably necessary to carry out the provisions of this Agreement provided that no material additional cost or liability shall be created thereby. 17.17 Cooperation. Buyer and Seller shall cooperate with the other to carry out the purpose of this Agreement (provided, such cooperation shall not require either party to expend any sum not otherwise required pursuant to the other provisions of this Agreement). This Section 17.17 shall survive the Close of Escrow. 17.18 Moratorium on Re-Sale. Buyer covenants and agrees that it will not sell the Property to Marriott International, Inc., Host Marriott, the Ritz Carlton Hotel Company, L.L.C. or any of their respective affiliates, successors and assigns, or any other party that Buyer reasonably believes will sell, and/or operate the Property pursuant to a franchise or operating 51 59 agreement with any of the above-described entities, (collectively, "Excluded Parties") during the period (the "Transfer Restriction Period") commencing upon the Close of Escrow and expiring upon the later of (a) five (5) years following the Close of Escrow and (b) settlement of or the final non-appealable judgment is issued in connection with the existing litigation between Seller and the Ritz Carlton Hotel Company, LLC and their respective affiliates and shall cause any permitted purchaser of the Property during the Transfer Restriction Period to covenant and agree not to sell the Property to any Excluded Party for the balance of the Transfer Restriction Period. The provisions of this Section 17.18 shall be specifically enforceable. Buyer hereby waives any requirement for Seller to post a bond in order to seek or obtain any temporary restraining order or other injunctive relief pursuant to this Section 17.18. The parties acknowledge and agree that the provisions of this Section 17.18 form a material part of the consideration to Seller for entering into this Agreement. The parties agree that these provisions are reasonable in light of Seller's ongoing litigation with Ritz Carlton Hotel Company and its affiliates. 17.19 Confidentiality. Buyer shall hold as confidential all information concerning the transaction contemplated by this Agreement, Seller and the Property disclosed in connection with this transaction and Buyer shall not, prior to the Close of Escrow, release any such information relating to the transaction, Seller or the Property to any governmental agencies or third parties without Seller's prior written consent except as may be required by law and in such case subject to the provisions of Section 17.14. Seller hereby gives its consent to Buyer's disclosure of information relating to the transaction contemplated hereby to Buyer's Counsel and other consultants, in each instance to the extent reasonably necessary to verify information given to Buyer by Seller or otherwise to carry out the purposes of this Agreement and provided in each instance, such consultants agree in writing to be bound by the confidentiality provisions of this Section 17.19. If the Close of Escrow shall fail to occur for any reason, neither party shall issue any press release, publicity or other public announcement of the subject matter of this Agreement, or to make any other disclosure concerning the subject matter of this Agreement (except as may be required by law and in such case subject to the provisions of Section 17.14.), without the prior written consent of the other party, which consent may be withheld in such other party's sole and absolute discretion. The agreements of the parties in this Section 17.19 shall survive any termination of this Agreement. 17.20 Interim Management Agreement. Seller shall provide Manager with a notice of termination of the Management Agreement on January 2, 1998 or as soon thereafter as Seller shall have obtained any required lender consent thereto. Seller shall, on or prior to January 2, 1998, seek any required lender consents and use all reasonable commercial efforts to obtain the same as promptly as possible. Buyer and Seller shall enter into a management agreement with respect to the Property in the form attached as Exhibit 17.20 hereto (the "Interim Management Agreement") which shall be effective (and the Interim Management Agreement shall be dated as of such effective date) on the earlier of (a) thirty days from the date of the delivery to Manager of such termination notice, and (b) the effective date of a written waiver of Manager of the notice of termination required under the Management Agreement. Buyer shall advance any fee payable to Manager under the Management Agreement on account of the termination thereof up to $127,132.00. Buyer shall be deemed to have waived delivery of all items under Sections 52 60 4.2.1.15, 4.2.1.16, 4.2.1.17 and 4.2.1.19 in the event the Management Agreement is terminated in accordance with the provisions of this Section 17.20 prior to the Closing Date. 17.21 Starwood Lodging Trust. The parties hereto understand and agree that the name "Starwood Lodging Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] 53 61 IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be executed as of the day and year first above written. "Seller" D.C. OVERNIGHT PARTNERS, L.P., a District of Columbia limited partnership By: D.C. OVERNIGHT, INC. a District of Columbia corporation, its sole General Partner By: /s/ Tarek Ayoubi -------------------------------------- Name: Tarek Ayoubi Its: President "Buyer" STARWOOD LODGING TRUST, a Maryland real estate investment trust By: /s/ Steven R. Goldman -------------------------- Name: Steven R. Goldman Title: Senior Vice President STARWOOD LODGING CORPORATION, a Maryland corporation By: /s/ Michael C. Mueller -------------------------- Name: Michael C. Mueller Title: Vice President "Escrow Agent" CHICAGO TITLE INSURANCE COMPANY, a Missouri corporation By: /s/ Maggie G. Watsu* -------------------------- Name: Maggie G. Watsu Title: Authorized Signatory *Subject to receiving mutual instruction in the event Paragraph 3.5 becomes operative. 54 EX-99.5 6 STOCK AGREEMENT 1 STOCK AGREEMENT by and among SAVANAH LIMITED PARTNERSHIP a District of Columbia Limited Partnership as Stock Purchaser and STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust and STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation, Dated as of January 15, 1998 2 STOCK AGREEMENT THIS STOCK AGREEMENT (this "Agreement") is entered into as of January 15, 1998 (the "Closing Date") by and between SAVANAH LIMITED PARTNERSHIP, a District of Columbia limted partnership, ("Stock Purchaser"), STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust (the "Trust"), and STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the "Corporation", and, with the Trust, "Starwood Lodging"). R E C I T A L S A. Stock Purchaser has agreed to acquire from Starwood Lodging, and Starwood Lodging has agreed to issue and deliver to Stock Purchaser, Paired Shares in partial consideration for certain assets owned by Stock Purchaser. B. The parties desire to enter into this Agreement in order to set forth certain terms and conditions under which the Paired Shares are to be issued to and held by Stock Purchaser. A G R E E M E N T NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby mutually acknowledged, Starwood Lodging and Stock Purchaser agree as follows: SECTION 1 DEFINITIONS 1.1 Defined Terms. "Accredited Investor" shall have the meaning ascribed to that term in Rule 501 promulgated by the SEC under the Securities Act. "Affiliate" shall mean, with respect to any Person, any other Person that controls, is controlled by or is under common control with such first Person. "Applicable Percentage" shall mean: (a) if Starwood Lodging delivers Registered Shares to Stock Purchaser pursuant to Section 2.1 hereof, 100% and (b) if Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, 91.95%. "Business Day" shall mean any day on which the New York Stock Exchange is open for business. "Closing Date" shall mean the date hereof. "Equity Value" shall mean One Hundred Fifty-Two Million Six Hundred Thirty-Seven Thousand Dollars ($152,637,000), divided by the Applicable Percentage, rounded to the nearest whole number. "ITT Closing" shall have the meaning set forth in the Registration Rights Agreement. 3 "Joinder Agreement" means an agreement to be bound by this Agreement in the form of Attachment A hereto. "LIBOR" means the average of the interbank offered rates for three-month dollar deposits in the London market based on quotations at five (5) major banks, as published from time to time in The Wall Street Journal. If The Wall Street Journal ceases to publish such a compilation of interbank offered rates, or if The Wall Street Journal ceases to be published, then Starwood Lodging shall propose a substitute method of determining the interest rate generally known as the three-month LIBOR rate, which method, absent manifest error, shall be binding on all holders of the Subject Shares and Starwood. "Lock Price" shall mean $53.75 per Paired Share if the Closing Date occurs on or before the 60th day after seven Business Days after January 15, 1998 (or thereafter because of a default by the Trust or the Corporation), and the Market Price as of the Closing Date if the Closing Date occurs thereafter for any reason other than a default by the Trust or the Corporation provided, however, that in the event that, at any time during the period between December 30, 1997 and the Settlement Date, the Corporation or the Trust effects any reclassification, stock split or stock dividend with respect to their stock, any change or conversion of stock into other securities, or any other dividend or distribution with respect to the Paired Shares, other than (i) dividends contemplated by the Starwood Lodging Disclosure in effect as of December 30, 1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the current rate (as of December 30, 1997) of their dividends (together with any increases in such rate in the ordinary course) and (b) the Trust's "real estate investment taxable income" (as such term is defined for purposes of the Internal Revenue Code) without regard to any net capital gains or the deduction for dividends paid, appropriate and proportionate adjustments shall be made to the Lock Price. "Market Price" shall mean, as of any date, the average closing prices of the Paired Shares on the New York Stock Exchange during the ten consecutive Business Days immediately preceding such date. "Open Market Sale" means one or more sales of Stock Agreements Shares (including "short sales" initiated with the intention of delivering Stock Agreements Shares) made or proposed to be made by placing one or more sale orders or offers to sell with one or more securities brokers or dealers with a view toward the consummation of one or more sale transactions that are required to be, or that actually are, reported to the New York Stock Exchange or the National Association of Securities Dealers. "Orderly Market Disposition" means the sale of Stock Agreements Shares by placing one or more sell orders with one or more securities brokers or dealers with a view toward the disposition in the market of such Stock Agreements Shares. "Other Stock Agreements" shall mean, collectively, (i) that certain Stock Agreement, dated as of January 15, 1998, among New Remington Partners, as stock purchaser, and Starwood Lodging, (ii) that certain Stock Agreement, dated as of January 15, 1998, among N.Y. Overnight Partners, L.P., as stock purchaser, and Starwood Lodging, and (iii) that certain Stock Agreement, dated as of January 15, 1998, among D.C. Overnight Partners, L.P., as stock purchaser, and Starwood Lodging. "Paired Shares" shall mean one share of beneficial interest, par value $.01 per share, of the Trust, and one share of common stock, par value $.01 per share, of the Corporation that are 2 4 subject to the Pairing Agreement. For purposes of calculating the number of Paired Shares to be delivered hereunder, each pair of the shares of the stock of the Trust and the Corporation shall be considered one share. "Pairing Agreement" shall mean the Pairing Agreement dated as of June 25, 1980, as amended, between the Trust and the Corporation providing, in relevant part, for the pairing of all outstanding shares of the Corporation and the Trust. "Payment Rights" shall have the meaning set forth in Section 5 hereof. "Person" shall have the meaning set forth in the Registration Rights Agreement. "Proposed Disposition Shares" shall have the meaning set forth in Section 3 hereof. "Put Price" and "Put Right" shall have the meaning set forth in Section 2.4 hereof. "Registered Shares" means Subject Shares the issuance of which to Stock Purchaser has been registered under the Securities Act. "Registration Rights Agreement" means the Registration Rights Agreement by and among Stock Purchaser, the Trust and the Corporation in the form of Attachment B hereto. "Registration Statement" shall have the meaning set forth in the Registration Rights Agreement. "Required Effectiveness Date" shall have the meaning set forth in the Registration Rights Agreement. "Response Date" shall have the meaning set forth in Section 3 hereof. "Restricted Group" shall mean two (2) or more Restricted Holders acting in concert or under common direction. "Restricted Holder" shall mean Stock Purchaser and any other Person who shall have acquired any Stock Agreements Shares in a Transfer not constituting an Open Market Sale. A Restricted Holder shall not include any Person who shall have acquired any Stock Agreements Shares in a Transfer not constituting an Open Market Sale if such Transfer occurs after the first Open Market Sale of such Stock Agreements Shares. "Sale Notice" shall have the meaning set forth in Section 3 hereof. "SEC" shall mean the United States Securities and Exchange Commission. "SEC Documents" means all documents required to have been filed by the Trust or the Corporation with the SEC since January 1, 1996 and through the date hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Settlement Date" shall mean, if Starwood Lodging shall deliver Unregistered Shares pursuant to Section 2.1 hereof, the date on which Starwood Lodging or its counsel shall notify Stock 3 5 Purchaser that (i) the Registration Statement has been declared effective by the SEC, (ii) that the Subject Shares have been registered, on the terms and subject to the provisions of the Registration Rights Agreement, for Transfer by the selling shareholders named therein in Open Market Sales and in such other manner as is provided in the Registration Statement, and (iii) that Starwood Lodging has completed all deliveries and other actions required to enable trading of the Subject Shares on the New York Stock Exchange; provided, however, that if such notice is given later than 1:00 PM Eastern Time, the Settlement Date shall be deemed for all purposes to occur on the Business Day following the date of such notice. "Starwood Lodging Disclosure" shall mean, collectively, the Form S-3 filed by the Corporation and the Trust with the SEC on November 12, 1997, and the Form S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as the same has been or may hereafter be amended by any filing with the SEC made by the Trust or the Corporation. "Stock Agreements Shares" shall mean the aggregate of the Subject Shares and the other Paired Shares delivered pursuant to the Other Stock Agreements. . "Stock Purchaser Affiliates" shall have the meaning set forth in Section 6.1 hereof. "Subject Shares" means the 3,088,372 Paired Shares delivered by Starwood Lodging pursuant to Section 2.1 hereof. "Transfer" shall have the meaning set forth in the Registration Rights Agreement. "Transfer Agent" shall mean the transfer agent for the Paired Shares. "Unregistered Shares" means Subject Shares the issuance of which to Stock Purchaser has not been registered under the Securities Act. 1.2 Other Definitional Provisions. The terms "hereof," "hereto," "hereunder" and similar terms when used in this Agreement shall refer to this Agreement generally, rather than to the section in which such term is used, unless otherwise specifically provided. Unless the context otherwise requires, any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. SECTION 2 CALCULATION OF SUBJECT SHARES 2.1 Calculation of Subject Shares. Starwood Lodging shall deliver to Stock Purchaser on the Closing Date Paired Shares in an amount equal to the Equity Value divided by the Lock Price. Starwood Lodging shall have the option to deliver Registered Shares or Unregistered Shares on the Closing Date. 2.2 Delivery Requirements for Paired Shares. The Paired Shares to be delivered hereunder shall be properly endorsed and certificated Paired Shares in the amount required to be delivered in accordance with the provisions of this Agreement. If Registered Shares are delivered, such shares shall be unlegended and fully and freely transferable without any consent of, registration 4 6 with or notice to any Person (except as provided for in Sections 3 and 4 hereof and in the Pairing Agreement). If Unregistered Shares are issued, each certificate evidencing Subject Shares shall be stamped or otherwise imprinted with a legend in substantially the following form (and no other restrictive legends): THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT. THE SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE OR THE SHARES EVIDENCED HEREBY IS SUBJECT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF JANUARY 15, 1998 BETWEEN THE ISSUER AND THE HOLDER HEREOF. There shall be no legend on the Paired Shares reflecting the restrictions in Sections 3 or 4 hereof. 2.3 Other Deliveries. Concurrently with the delivery of the Paired Shares, Starwood Lodging shall deliver to Stock Purchaser any statements, such as a transfer or conveyance tax forms or returns required by applicable federal or New York law to be executed by Starwood Lodging, as may reasonably be requested by Stock Purchaser in order to effect the delivery of the Subject Shares to Stock Purchaser. 2.4 Registration Rights and Requirements. (a) If Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, Stock Purchaser and Starwood Lodging shall on the Closing Date execute and deliver to each other the Registration Rights Agreement and the parties thereto shall perform their respective obligations thereunder. If Starwood Lodging delivers Registered Shares pursuant to Section 2.1 hereof, the Registration Rights Agreement shall not be executed or delivered and none of the parties shall have any obligations thereunder. (b) If Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, and if the Settlement Date shall not have occurred on or before the seventh Business Day after the Required Effectiveness Date, Starwood Lodging shall pay to each Restricted Holder, on the Settlement Date, an amount equal to the "Interest Factor." For each Restricted Holder, the "Interest Factor" shall be an amount equal to the product of (i) LIBOR plus 2% per annum for each day after the seventh Business Day after the Required Effectiveness Date to and including the earlier of the Settlement Date or the date that is 60 days after the Required Effectiveness Date, multiplied by (ii) the Market Price multiplied by the number of Subject Shares held by such Restricted Holder on the date of such payment. (c) In the event that the Settlement Date shall not have occurred by the date that is 60 days after the Required Effectiveness Date, each Person who is a Restricted Holder as of such date shall have the non-transferrable right (its "Put Right"), exercisable at any one time for each such Restricted Holder after such 60th day and through the earlier to occur of (i) the Settlement Date, and (ii) the day immediately prior to the first anniversary of the Closing, to "put" some or all of the Subject Shares held by such Restricted Holder to Starwood Lodging for an amount per share equal to the Put 5 7 Price; provided, however, that the Put Right shall not be exercisable by any Restricted Holder for a number of Subject Shares that is less than the lesser of (i) 100,000, or (ii) the number of Subject Shares then held by such Restricted Holder. Such right shall be exercised by such Restricted Holder giving Starwood Lodging notice of its election to exercise its Put Right and the number of Subject Shares to be purchased by Starwood, whereupon Starwood Lodging shall purchase such shares at 9:00 a.m. (Eastern Time) on the second Business Day following its receipt of such notice, with payment to be delivered (against delivery to Starwood Lodging of such shares free of all rights of other Persons) on the third Business Day thereafter in cash or immediately available funds to such account as such Restricted Holder may designate in such notice. The Put Price shall be the Market Price determined as of the date such notice is given. Starwood Lodging shall have the right to satisfy its obligations under the Put Rights by designating another Person as the purchaser of such shares, and such obligations shall be deemed satisfied upon such other Person's purchase of such shares for the Put Price and at the time and in the manner set forth herein. Such designation shall not affect Starwood's obligation to pay the Interest Factor as provided herein. (d) The Interest Factor and the right of each Restricted Holder to receive the Put Price in the event it elects to exercise its Put Right shall be each Restricted Holder's sole and exclusive monetary remedies arising from Starwood's failure to cause the Settlement Date to occur on or before the seventh Business Day after the Required Effectiveness Date and shall be deemed liquidated damages in respect of such failure; and each Restricted Holder shall be deemed to have waived its other monetary remedies. However, from and after the seventh Business Day after the Required Effectiveness Date, each Holder shall at all times have such equitable remedies as may be available under applicable law. SECTION 3 NOTICE PROCEDURES REGARDING OPEN MARKET SALE OF STOCK AGREEMENTS SHARES 3.1 If, at any time any Restricted Holder or Restricted Group elects to Transfer, in an Open Market Sale, more than 100,000 Stock Agreements Shares on any single Business Day (300,000 Stock Agreements Shares from and after the first Business Day after the ITT Closing), prior to executing such Transfer the designated representative of such Restricted Holder or Restricted Group shall provide Starwood's representative, the Chief Financial Officer of the Trust (or any successor representative identified by a notice given hereunder), with telephonic notice at (602) 852-3900 along with a confirmation of such notice by telefacsimile to Starwood Lodging and Starwood's additional addressees as provided in Section 7.1 hereof. Such notice (the "Sale Notice") shall indicate the number of Stock Agreements Shares which such Restricted Holder or Restricted Group has determined to Transfer in an Open Market Sale (the "Proposed Disposition Shares") on such day or days and shall comply with Section 3.5 hereof (if applicable). Such notice shall be deemed given on the Business Day the telephonic notice described above is given so long as such notice is given by 5:00 P.M., Eastern time, on such day; if given after that time, it shall be deemed given on the next Business Day. In the event that, at any time while this Section 3.1 is in effect, the Corporation or the Trust effects any reclassification, stock split or stock dividend with respect to their stock, any change or conversion of stock into other securities, or any other dividend or distribution with respect to the Paired Shares, other than (i) dividends contemplated by the Starwood Lodging Disclosure as in effect on December 30, 1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the current rate (as of December 30, 1997) of their dividends (together with any increases in such rate in the ordinary course) and (b) the Trust's "real estate investment taxable income" (as such term is defined for purposes of the Internal Revenue Code) without regard to any net capital gains or the deduction for dividends paid, 6 8 appropriate and proportionate adjustments shall be made to the numbers of Stock Agreements Shares set forth in the first sentence of this Section 3.1. 3.2 No later than noon, Eastern time, on the second Business Day after the Sale Notice is given as described above, Starwood Lodging may provide the representative(s) of such Restricted Holder or Restricted Group with telephonic notice, along with a confirmation of such notice to such representatives by telefacsimile, that Starwood Lodging is irrevocably offering to purchase or place all of the Proposed Disposition Shares at a price per share equal to the average of the closing prices on the New York Stock Exchange on the first and second Business Days following the giving of the Sale Notice. Such notice shall be given as provided in Section 3.5 hereof. It shall be a condition to such notice and the consummation of such transaction that such transaction not constitute a violation of Regulation M promulgated by the SEC. If Starwood Lodging fails to make such an offer within such period, it shall have no further rights under this Section 3 with respect to any Orderly Market Disposition by such Restricted Holder or Restricted Group of Stock Agreements Shares up to the amount of the Proposed Disposition Shares that is commenced not later than the seventh Business Day after the Sale Notice is given. 3.3 If Starwood Lodging duly makes such an offer, such Restricted Holder or Restricted Group shall elect by telephonic notice to Starwood's representative delivered and confirmed as described above, given by 8:30 a.m. (Eastern Time) on the Business Day following receipt of Starwood's offer (such day is referred to herein as the "Response Date"), in their sole and absolute discretion, to either (i) proceed with such proposed disposition, in which instance Starwood Lodging shall purchase or place the Proposed Disposition Shares at 9:00 a.m. (Eastern Time), on the Response Date, with payment to be delivered (against delivery to Starwood Lodging of the Proposed Disposition Shares free of all rights of other Persons) on the third Business Day after the Response Date in cash or immediately available funds to such account as such Restricted Holder may designate by notice to Starwood, or (ii) not to proceed with such proposed disposition, in which instance the Sale Notice shall be withdrawn and such Restricted Holder shall continue to hold the Proposed Disposition Shares subject to the terms of this Section 3 (to the extent applicable). If such Restricted Holder shall fail to so elect by 8:30 a.m. (Eastern Time) on the Response Date, it shall irrevocably be deemed to have elected not to proceed with such proposed disposition. 3.4 On the first anniversary of the Settlement Date, the provisions of this Section 3 shall automatically lapse and be of no further force or effect with respect to each Restricted Holder that holds less than 500,000 Stock Agreements Shares (except (i) to the extent that such Restricted Holder acts on or after such date as a member of a Restricted Group that holds in the aggregate 500,000 or more Stock Agreements Shares, and (ii) to the extent such Restricted Holder, either alone or as a member of a Restricted Group, has given or was required to have given Starwood Lodging a Sale Notice prior to such date and as to which the procedures in this Section 3 have not been fully performed). 3.5 Any notice given by Starwood Lodging pursuant to Section 3.2 hereof to Stock Purchaser shall be given telephonically to Mansor Dalaan at (310) 229-2929 and by telefacsimile to (310) 229-2927, or to such other telephone and telefacsimile numbers as may be set forth for such purpose in the Sale Notice. Any notice given by Starwood Lodging pursuant to Section 3.2 hereof to any other Restricted Holder or Restricted Group shall be given to the telephone and telefacsimile numbers as may be set forth for such purpose in the Sale Notice, and no Sale Notice from a Restricted Holder other than Stock Purchaser or from any Restricted Group shall be deemed properly given in accordance with Section 3.1 unless such numbers are set forth in such Sale Notice. 7 9 3.6 Time is of the essence in the performance by the parties of their obligations under this Section 3. SECTION 4 TRANSFERS NOT CONSTITUTING AN OPEN MARKET SALE; SHORT SALES 4.1 Each Restricted Holder covenants and agrees that, as a condition to any Transfer by a such Restricted Holder of Subject Shares in a transaction that does not constitute an Open Market Sale, such Restricted Holder will obtain and deliver to Starwood Lodging a Joinder Agreement duly executed by the transferee or the intended transferee; and any purported Transfer of Subject Shares made in breach of this provision shall be null and void ab initio. 4.2 Each Restricted Holder covenants and agrees that, prior to the effectiveness of the Registration Statement, it will not "sell short" (as such term is commonly understood in the brokerage industry) any Paired Shares, whether "against the box" or otherwise. SECTION 5 PAYMENT RIGHTS On the Settlement Date, Starwood Lodging shall pay to Stock Purchaser in cash or other immediately available funds an amount equal to the amount, if any, by which the Lock Price exceeds the Market Price as of the Settlement Date, multiplied by the number of Paired Shares delivered by Starwood Lodging to Stock Purchaser hereunder. Stock Purchaser's right to receive the payments from Starwood Lodging described in this section are referred to herein as the "Payment Rights." Pursuant to a written instrument a copy of which is delivered to Starwood Lodging promptly following its execution by Stock Purchaser, Stock Purchaser may distribute to its partners or their shareholders or assign to any other Person all or any portion of the Payment Rights either together with or separately from the Paired Shares delivered hereunder. SECTION 6 REPRESENTATIONS AND WARRANTIES 6.1 Stock Purchaser represents and warrants to Starwood Lodging as follows: (a) Stock Purchaser has the power and authority to enter into this Agreement and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. The execution and delivery hereof and thereof and the performance by Stock Purchaser of its obligations hereunder and thereunder will not violate or constitute an event of default under any material term or material provision of any agreement, document, instrument, judgment, order or decree to which Stock Purchaser is a party or by which it is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement on behalf of Stock Purchaser have the legal power, right and actual authority to bind Stock Purchaser to the terms and conditions hereof and thereof. Each of this Agreement and the Registration Rights Agreement is a valid and binding obligation of Stock Purchaser, enforceable in accordance with 8 10 its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) Stock Purchaser is acquiring the Subject Shares to be issued to it for investment, solely for the account of itself, on behalf of its partners and Persons who are stockholders of such partners, or on behalf of certain Persons each of whom is both an Affiliate of a partner of Stock Purchaser and a creditor of Stock Purchaser (collectively, such partners and other Persons the "Stock Purchaser Affiliates"). Neither Stock Purchaser nor any of the Affiliates of Stock Purchaser is acquiring Subject Shares with a view to or for sale in connection with any distribution of such Subject Shares in violation of applicable securities laws. (d) Stock Purchaser and each of the Stock Purchaser Affiliates is an Accredited Investor. (e) Stock Purchaser has obtained and reviewed the Starwood Lodging Disclosure and the SEC Documents that have been filed with the SEC through the date hereof. 6.2 By its execution of its Joinder Agreement, each Restricted Holder other than Stock Purchaser shall be deemed to have represented and warranted to Starwood, as of the date of its delivery of such Joinder Agreement, as follows: (a) Such Restricted Holder has the power and authority to enter into this Agreement, the Registration Rights Agreement and its Joinder Agreement and to perform its obligations hereunder and thereunder. The execution and delivery hereof and thereof and the performance by such Restricted Holder of its obligations hereunder and thereunder will not violate or constitute an event of default under any material term or material provision of any agreement, document, instrument, judgment, order or decree to which such Restricted Holder is a party or by which it is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement, the Registration Rights Agreement and its Joinder Agreement on behalf of such Restricted Holder have the legal power, right and actual authority to bind such Restricted Holder to the terms and conditions hereof and thereof. Each of this Agreement, the Registration Rights Agreement and its Joinder Agreement is a valid and binding obligation of such Restricted Holder, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) Such Restricted Holder is acquiring the Subject Shares Transferred or to be Transferred to it for investment, solely for the account of itself and not with a view to or for sale in connection with any distribution of such Subject Shares in violation of applicable securities laws; provided, however, that if such Restricted Holder is Stock Purchaser Affiliate, such Restricted Holder may acquire the Subject Shares on behalf of Persons who are stockholders of such Restricted Holder if each of such Persons is an Accredited Investor. (d) Such Restricted Holder is an Accredited Investor. (e) Such Restricted Holder has had the opportunity, prior to making the determination to acquire any Subject Shares, to obtain and review the Starwood Lodging Disclosure 9 11 and the SEC Documents that have been filed with the SEC through the date of the execution of such Restricted Holder's Joinder Agreement. 6.3 The Trust hereby represents and warrants to Stock Purchaser as follows: (a) The Trust has the power and authority to enter into this Agreement and the Registration Rights Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement or the Registration Rights Agreement by the Trust, nor the performance by the Trust of the Trust's obligations hereunder or thereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Trust is a party or by which the Trust is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement and the documents referenced herein on behalf of the Trust have the legal power, right and actual authority to bind the Trust to the terms and conditions hereof. This Agreement and the Registration Rights Agreement is a valid and binding obligation of Trust, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) All Paired Shares to be delivered in accordance with Section 2.1 hereof will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. (d) The Trust has filed all of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Trust included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Trust and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Trust has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. (e) Except as disclosed in the SEC Documents or the Starwood Lodging Disclosure, since December 31, 1996 and through the date hereof, (i) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be 10 12 expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole, or (ii) there has not been any split, combination or reclassification of any of the capital stock or units of the Trust or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. (f) Except as set forth in the SEC Documents or the Starwood Lodging Disclosure or in a separate writing provided to Stock Purchaser on or before the date hereof, as of the date hereof: there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Trust or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Trust or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole; and there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Trust, threatened against or involving the Trust or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Trust, threatened against or affecting the Trust or any of its subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement and the Registration Rights Agreement. 6.4 The Corporation hereby represents and warrants to Stock Purchaser as follows: (a) The Corporation has the power and authority to enter into this Agreement and the Registration Rights Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement or the Registration Rights Agreement by the Corporation, nor the performance by the Corporation of the Corporation's obligations hereunder or thereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Corporation is a party or by which the Corporation is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement and the documents referenced herein on behalf of the Corporation have the legal power, right and actual authority to bind the Corporation to the terms and conditions hereof. This Agreement and the Registration Rights Agreement is a valid and binding obligation of Corporation, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) All Paired Shares to be delivered in accordance with Section 2.1 hereof will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. 11 13 (d) The Corporation has filed all of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Corporation included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Corporation and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Corporation has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. (e) Except as disclosed in the SEC Documents or the Starwood Lodging Disclosure, since December 31, 1996 and through the date hereof, (i) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole, or (ii) there has not been any split, combination or reclassification of any of the capital stock or units of the Corporation or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. (f) Except as set forth in the SEC Documents or the Starwood Lodging Disclosure or in a separate writing provided to Stock Purchaser on or before the date hereof, as of the date hereof: there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Corporation or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Corporation or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole; and there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Corporation, threatened against or involving the Corporation or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Corporation, threatened against or affecting the Corporation or any of its subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement and the Registration Rights Agreement (other than those arising in connection with the Registration Statement or the performance by the Corporation of its obligations under the Registration Rights Agreement). 12 14 SECTION 7 NOTICES 7.1 Addresses. Except for the notices given pursuant to Section 3, whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be made in writing and shall be (a) sent via a nationally recognized overnight courier service fully prepaid, (b) deposited in the United States by mail, registered or certified, return receipt requested, postage prepaid, or (c) sent via telefacsimile, provided that the original of such notice, demand or request shall also be sent via one of the methods described in (a) and (b) above, in each case to the addressees (and individuals) set forth below: As to Stock Purchaser: c/o Al Anwa USA, Inc. 1925 Century Park East, Suite 1900 Los Angeles, CA 90067 Attn: Mansor Dalaan Telefacsimile: (310) 229-2927 With a copy to Stock Purchaser's additional addressees: Morrison & Foerster LLP 555 West Fifth Street, Suite 3500 Los Angeles, CA 90013-1024 Attn: Thomas R. Fileti, Esq. Telefacsimile: (213) 892-5454 Gordon K. Eng, Esq. 19191 South Vermont Avenue, Suite 420 Torrance, California 90502 Telefacsimile: (310) 207-1066 As to Starwood Lodging: Starwood Hotels & Resorts Trust 2231 E. Camelback Rd., Suite 410 Phoenix, AZ 85016 Attn: Ronald C. Brown or Chief Financial Officer Telefacsimile: (602) 852-0115 Starwood Hotels & Resorts Worldwide, Inc. 2231 E. Camelback Rd., Suite 400 Phoenix, AZ 85016 Attn: Alan M. Schnaid or Vice President Telefacsimile: (602) 852-0115 13 15 With a copy to Starwood Lodging's additional addressees: Greenberg Traurig Hoffman Lipoff Rosen & Quentel 153 East 53rd Street New York, NY 10022 Attn: Andrew E. Zobler, Esq. Telefacsimile: (212) 223-7161 Sidley & Austin 555 West Fifth Street, Suite 4000 Los Angeles, CA 90013 Attn: Sherwin L. Samuels, Esq. and Kenneth H. Levin, Esq. Telefacsimile: (213) 896-6600 If to any Restricted Holder other than Stock Purchaser: to the address and telefacsimile number set forth in such Restricted Holder's Joinder Agreement (or to any other address or telefacsimile number provided to Starwood Lodging in writing pursuant to a notice given by such Restricted Holder pursuant to this Section 7.1). 7.2 Receipt of Notices. Any notice, demand or request that shall be delivered to Starwood Lodging and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Starwood Lodging for all purposes hereunder, and any notice, demand or request that shall be delivered to Stock Purchaser and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Stock Purchaser for all purposes hereunder (i) the next business day following the day such notice, demand or request is delivered by a nationally recognized overnight courier service fully prepaid, to such party and its Additional Addressee, (ii) if sent via registered or certified mail, at the time of receipt by such party and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date and time stated upon confirmation reports generated by the sending party's telefacsimile machine confirming the delivery of such notice, demand or request to such party and its Additional Addressee. 7.3 Refusal of Delivery. The inability to deliver any notice, demand or request because the individual to whom it is properly addressed in accordance with this Section 7 refused delivery thereof or no longer can be located at that address shall constitute delivery thereof to such individual. 7.4 Change of Address. Each party shall have the right from time to time to designate by written notice to the other parties hereto such other Person or Persons and such other place or places as said party may desire written notices to be delivered or sent in accordance herewith. SECTION 8 GENERAL PROVISIONS 8.1 Amendment. No provision of this Agreement or of any documents or instrument entered into, given or made pursuant to this Agreement may be amended, changed, waived, discharged or terminated except by an instrument in writing, signed by the party against whom enforcement of the amendment, change, waiver, discharge or termination is sought. 14 16 8.2 Time of Essence. All times provided for in this Agreement for the performance of any act will be strictly construed, time being of the essence. 8.3 Entire Agreement. This Agreement and other documents delivered pursuant to this Agreement set forth the entire agreement and understanding of the parties in respect of the transactions contemplated by this Agreement, and supersede all prior agreements, arrangements and understandings relating to the subject matter hereof and thereof. No representation, promise, inducement or statement of intention with respect to the subject matter hereof has been made by Stock Purchaser or Starwood Lodging which is not embodied in this Agreement, and neither Starwood Lodging nor Stock Purchaser shall be bound by or liable for any alleged representations, promise, inducement or statement of intention not therein so set forth. 8.4 No Waiver. No failure of any party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder shall constitute a waiver of any party's right to demand strict compliance with the terms of this Agreement. 8.5 Counterparts. This Agreement, any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby, and any amendment or supplement thereto may be executed in two or more counterparts, and, when so executed, will have the same force and effect as though all signatures appeared on a single document. Any signature page of this Agreement or of such an amendment, supplement, document or instrument may be detached from any counterpart without impairing the legal effect of any signatures thereon, and may be attached to another counterpart identical in form thereto but having attached to it one or more additional signature pages. 8.6 Costs and Attorneys' Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement or because of an alleged dispute, default, or misrepresentation in connection with any of the provisions of this Agreement the successful or prevailing party shall be entitled to recover reasonable attorneys' fees, charges and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 8.7 Payments; Interests. Except as otherwise provided herein, payment of all amounts required by the terms of this Agreement shall be made in the United States and in immediately available funds of the United States of America which, at the time of payment, is accepted for the payment of all public and private obligations and debts. If any payment due under this Agreement is not paid when due, it shall thereafter bear interest at a variable rate equal to the rate announced from time to time by Citibank, N.A. as its prime or reference rate, plus five percent (5%) per annum, but in no event more than the maximum rate, if any, allowed by law to be charged by the party receiving the interest on such type of indebtedness. 8.8 Parties in Interest. The rights and obligations of the parties hereto shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, heirs and the legal representatives of their respective estates. However, none of Stock Purchaser's rights under this Agreement shall be assignable except (i) in the case of the Payment Rights, as provided in Section 5 hereof, and (ii) in the case of all other rights of Stock Purchaser or another Restricted Holder, to a transferee of Subject Shares in a transaction not constituting an Open Market Sale if such transferee delivers a Joinder Agreement in compliance with Section 4 hereof. Nothing in this Agreement is intended to confer any right or remedy under this Agreement on any Person other than the parties to this Agreement and their respective successors and assigns, or to relieve or discharge the obligation or liability of any Person to any party to this Agreement or to give any Person any right of subrogation or action over or against any party to this Agreement. 15 17 8.9 Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without giving effect to the conflict-of-law rules and principles of that state. 8.10 Incorporation of Recitals. The recitals of this Agreement are incorporated into and made a part of this Agreement. 8.11 Construction of Agreement. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any of the parties hereto. Headings at the beginning of sections of this Agreement are solely for the convenience of the parties and are not a part of this Agreement. When required by the context, whenever the singular number is used in this Agreement, the same shall include the plural, and the plural shall include the singular, the masculine gender shall include the feminine and neuter genders, and vice versa. As used in this Agreement, the term "Stock Purchaser" shall include the respective permitted successors and assigns of Stock Purchaser, and the term "Starwood Lodging" shall include the permitted successors and assigns of Starwood Lodging, if any. 8.12 Severability. If any term or provision of this Agreement is determined to be illegal, unconscionable or unenforceable, all of the other terms, provisions and sections hereof will nevertheless remain effective and be in force to the fullest extent permitted by law. 8.13 Further Assurances. Starwood Lodging and Stock Purchaser agree to execute upon the request of the other party such instruments and take such actions as may be reasonably necessary to carry out the provisions of this Agreement provided that no material additional cost or liability shall incurred thereby by the party of whom such request is made. 8.14 Starwood Hotels & Resorts Trust. The parties hereto understand and agree that the name "Starwood Hotels & Resorts Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. 16 18 IN WITNESS WHEREOF, Starwood Lodging and Stock Purchaser have caused this Agreement to be executed as of the day and year first above written. "Stock Purchaser" SAVANAH LIMITED PARTNERSHIP, a District of Columbia limited partnership By: ASPEN ENTERPRISES INTERNATIONAL, INC., a Colorado corporation, its General Partner By: ------------------------------ Mansor Dalaan President "Starwood Lodging" STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust By: ---------------------------- Steven R. Goldman Senior Vice President STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation By: ---------------------------- Nir E. Margalit Secretary 17 19 ATTACHMENT A to Stock Agreement AGREEMENT TO BE BOUND BY THE STOCK AGREEMENT (JOINDER AGREEMENT) The undersigned, being the transferee or the intended transferee of ______________ Paired Shares (the "Subject Shares") of Starwood Hotels & Resorts Trust, a Maryland real estate investment trust, and Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (together, the "Company"), as a condition to the transfer to and acquisition by the undersigned of such Subject Shares, acknowledges that certain sales or other transfers of such Subject Shares are governed by the Stock Agreement (the "Stock Agreement"), dated as of January 15, 1998, initially among the Company and Savanah Limited Partnership, a District of Columbia limited partnership , and the undersigned hereby (1) acknowledges receipt of a copy of the Stock Agreement, and (2) agrees to be bound as a "Restricted Holder" by the terms of the Stock Agreement, as the same has been or may be amended from time to time (including without limitation the representations and warranties of the undersigned set forth therein that will be deemed made by virtue hereof). The undersigned is hereby advised that the Subject Shares have not been registered under the Securities Act of 1933 and in such event cannot be resold unless they are registered under said act or unless an exemption from registration under said act is available. The following is the undersigned's representative and such representative's address, telephone number and fax number for all purposes under the Stock Agreement: _________________________________ _________________________________ _________________________________ Agreed to this ____ day of __________, ____. ________________________________ By: __________________________ Its: __________________________ EX-99.6 7 STOCK AGREEMENT 1 STOCK AGREEMENT by and among NEW REMINGTON PARTNERS a Texas general partnership as Stock Purchaser and STARWOOD HOTELS & RESORTS TRUST, a Maryland Real Estate Investment Trust and STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland Corporation, Dated as of January 15, 1998 2 STOCK AGREEMENT THIS STOCK AGREEMENT (this "Agreement") is entered into as of January 15, 1998 (the "Closing Date") by and between NEW REMINGTON PARTNERS, a Texas general partnership, ("Stock Purchaser"), STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust (the "Trust"), and STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the "Corporation", and, with the Trust, "Starwood Lodging"). R E C I T A L S A. Stock Purchaser has agreed to acquire from Starwood Lodging, and Starwood Lodging has agreed to issue and deliver to Stock Purchaser, Paired Shares in partial consideration for certain assets owned by Stock Purchaser. B. The parties desire to enter into this Agreement in order to set forth certain terms and conditions under which the Paired Shares are to be issued to and held by Stock Purchaser. A G R E E M E N T NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby mutually acknowledged, Starwood Lodging and Stock Purchaser agree as follows: SECTION 1 DEFINITIONS 1.1 Defined Terms. "Accredited Investor" shall have the meaning ascribed to that term in Rule 501 promulgated by the SEC under the Securities Act. "Affiliate" shall mean, with respect to any Person, any other Person that controls, is controlled by or is under common control with such first Person. "Applicable Percentage" shall mean: (a) if Starwood Lodging delivers Registered Shares to Stock Purchaser pursuant to Section 2.1 hereof, 100% and (b) if Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, 91.95%. "Business Day" shall mean any day on which the New York Stock Exchange is open for business. "Closing Date" shall mean the date hereof. "Equity Value" shall mean Twenty-Six Million Six Hundred Sixty-Five Thousand Five Hundred Dollars ($26,665,500), divided by the Applicable Percentage, rounded to the nearest whole number. "ITT Closing" shall have the meaning set forth in the Registration Rights Agreement. 1 3 "Joinder Agreement" means an agreement to be bound by this Agreement in the form of Attachment A hereto. "LIBOR" means the average of the interbank offered rates for three-month dollar deposits in the London market based on quotations at five (5) major banks, as published from time to time in The Wall Street Journal. If The Wall Street Journal ceases to publish such a compilation of interbank offered rates, or if The Wall Street Journal ceases to be published, then Starwood Lodging shall propose a substitute method of determining the interest rate generally known as the three-month LIBOR rate, which method, absent manifest error, shall be binding on all holders of the Subject Shares and Starwood Lodging. "Lock Price" shall mean $53.75 per Paired Share if the Closing Date occurs on or before the 60th day after seven Business Days after January 15, 1998 (or thereafter because of a default by the Trust or the Corporation), and the Market Price as of the Closing Date if the Closing Date occurs thereafter for any reason other than a default by the Trust or the Corporation, provided, however, that in the event that, at any time during the period between December 30, 1997 and the Settlement Date, the Corporation or the Trust effects any reclassification, stock split or stock dividend with respect to their stock, any change or conversion of stock into other securities, or any other dividend or distribution with respect to the Paired Shares, other than (i) dividends contemplated by the Starwood Lodging Disclosure in effect as of December 30, 1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the current rate (as of December 30, 1997) of their dividends (together with any increases in such rate in the ordinary course) and (b) the Trust's "real estate investment taxable income" (as such term is defined for purposes of the Internal Revenue Code) without regard to any net capital gains or the deduction for dividends paid, appropriate and proportionate adjustments shall be made to the Lock Price. "Market Price" shall mean, as of any date, the average closing prices of the Paired Shares on the New York Stock Exchange during the ten consecutive Business Days immediately preceding such date. "Open Market Sale" means one or more sales of Stock Agreements Shares (including "short sales" initiated with the intention of delivering Stock Agreements Shares) made or proposed to be made by placing one or more sale orders or offers to sell with one or more securities brokers or dealers with a view toward the consummation of one or more sale transactions that are required to be, or that actually are, reported to the New York Stock Exchange or the National Association of Securities Dealers. "Orderly Market Disposition" means the sale of Stock Agreements Shares by placing one or more sell orders with one or more securities brokers or dealers with a view toward the disposition in the market of such Stock Agreements Shares. "Other Stock Agreements" shall mean, collectively, (i) that certain Stock Agreement, dated as of January 15, 1998, among Savanah Limited Partnership, as stock purchaser, and Starwood Lodging, (ii) that certain Stock Agreement, dated as of January 15, 1998, among N.Y. Overnight Partners, L.P., as stock purchaser, and Starwood Lodging and (iii) that certain Stock Agreement, dated as of January 15, 1998, among D.C. Overnight Partners, L.P., as stock purchaser, and Starwood Lodging. "Paired Shares" shall mean one share of beneficial interest, par value $.01 per share, of the Trust, and one share of common stock, par value $.01 per share, of the Corporation that are 2 4 subject to the Pairing Agreement. For purposes of calculating the number of Paired Shares to be delivered hereunder, each pair of the shares of the stock of the Trust and the Corporation shall be considered one share. "Pairing Agreement" shall mean the Pairing Agreement dated as of June 25, 1980, as amended, between the Trust and the Corporation providing, in relevant part, for the pairing of all outstanding shares of the Corporation and the Trust. "Payment Rights" shall have the meaning set forth in Section 5 hereof. "Person" shall have the meaning set forth in the Registration Rights Agreement. "Proposed Disposition Shares" shall have the meaning set forth in Section 3 hereof. "Put Price" and "Put Right" shall have the meaning set forth in Section 2.4 hereof. "Registered Shares" means Subject Shares the issuance of which to Stock Purchaser has been registered under the Securities Act. "Registration Rights Agreement" means the Registration Rights Agreement by and among Stock Purchaser, the Trust and the Corporation in the form of Attachment B hereto. "Registration Statement" shall have the meaning set forth in the Registration Rights Agreement. "Required Effectiveness Date" shall have the meaning set forth in the Registration Rights Agreement. "Response Date" shall have the meaning set forth in Section 3 hereof. "Restricted Group" shall mean two (2) or more Restricted Holders acting in concert or under common direction. "Restricted Holder" shall mean Stock Purchaser and any other Person who shall have acquired any Stock Agreements Shares in a Transfer not constituting an Open Market Sale. A Restricted Holder shall not include any Person who shall have acquired any Stock Agreements Shares in a Transfer not constituting an Open Market Sale if such Transfer occurs after the first Open Market Sale of such Stock Agreements Shares. "Sale Notice" shall have the meaning set forth in Section 3 hereof. "SEC" shall mean the United States Securities and Exchange Commission. "SEC Documents" means all documents required to have been filed by the Trust or the Corporation with the SEC since January 1, 1996 and through the date hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Settlement Date" shall mean, if Starwood Lodging shall deliver Unregistered Shares pursuant to Section 2.1 hereof, the date on which Starwood Lodging or its counsel shall notify Stock 3 5 Purchaser that (i) the Registration Statement has been declared effective by the SEC, (ii) that the Subject Shares have been registered, on the terms and subject to the provisions of the Registration Rights Agreement, for Transfer by the selling shareholders named therein in Open Market Sales and in such other manner as is provided in the Registration Statement, and (iii) that Starwood Lodging has completed all deliveries and other actions required to enable trading of the Subject Shares on the New York Stock Exchange; provided, however, that if such notice is given later than 1:00 PM Eastern Time, the Settlement Date shall be deemed for all purposes to occur on the Business Day following the date of such notice. "Starwood Lodging Disclosure" shall mean, collectively, the Form S-3 filed by the Corporation and the Trust with the SEC on November 12, 1997, and the Form S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as the same has been or may hereafter be amended by any filing with the SEC made by the Trust or the Corporation. "Stock Agreements Shares" shall mean the aggregate of the Subject Shares and the other Paired Shares delivered pursuant to the Other Stock Agreements. "Stock Purchaser Affiliates" shall have the meaning set forth in Section 6.1 hereof. "Subject Shares" means the 539,535 Paired Shares delivered by Starwood Lodging pursuant to Section 2.1 hereof. "Transfer" shall have the meaning set forth in the Registration Rights Agreement. "Transfer Agent" shall mean the transfer agent for the Paired Shares. "Unregistered Shares" means Subject Shares the issuance of which to Stock Purchaser has not been registered under the Securities Act. 1.2 Other Definitional Provisions. The terms "hereof," "hereto," "hereunder" and similar terms when used in this Agreement shall refer to this Agreement generally, rather than to the section in which such term is used, unless otherwise specifically provided. Unless the context otherwise requires, any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. SECTION 2 CALCULATION OF SUBJECT SHARES 2.1 Calculation of Subject Shares. Starwood Lodging shall deliver to Stock Purchaser on the Closing Date Paired Shares in an amount equal to the Equity Value divided by the Lock Price. Starwood Lodging shall have the option to deliver Registered Shares or Unregistered Shares on the Closing Date. 2.2 Delivery Requirements for Paired Shares. The Paired Shares to be delivered hereunder shall be properly endorsed and certificated Paired Shares in the amount required to be delivered in accordance with the provisions of this Agreement. If Registered Shares are delivered, such shares shall be unlegended and fully and freely transferable without any consent of, registration 4 6 with or notice to any Person (except as provided for in Sections 3 and 4 hereof and in the Pairing Agreement). If Unregistered Shares are issued, each certificate evidencing Subject Shares shall be stamped or otherwise imprinted with a legend in substantially the following form (and no other restrictive legends): THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT. THE SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE OR THE SHARES EVIDENCED HEREBY IS SUBJECT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF JANUARY 15, 1998 BETWEEN THE ISSUER AND THE HOLDER HEREOF. There shall be no legend on the Paired Shares reflecting the restrictions in Sections 3 or 4 hereof. 2.3 Other Deliveries. Concurrently with the delivery of the Paired Shares, Starwood Lodging shall deliver to Stock Purchaser any statements, such as a transfer or conveyance tax forms or returns required by applicable federal or New York law to be executed by Starwood Lodging, as may reasonably be requested by Stock Purchaser in order to effect the delivery of the Subject Shares to Stock Purchaser. 2.4 Registration Rights and Requirements. (a) If Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, Stock Purchaser and Starwood Lodging shall on the Closing Date execute and deliver to each other the Registration Rights Agreement and the parties thereto shall perform their respective obligations thereunder. If Starwood Lodging delivers Registered Shares pursuant to Section 2.1 hereof, the Registration Rights Agreement shall not be executed or delivered and none of the parties shall have any obligations thereunder. (b) If Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, and if the Settlement Date shall not have occurred on or before the seventh Business Day after the Required Effectiveness Date, Starwood Lodging shall pay to each Restricted Holder, on the Settlement Date, an amount equal to the "Interest Factor." For each Restricted Holder, the "Interest Factor" shall be an amount equal to the product of (i) LIBOR plus 2% per annum for each day after the seventh Business Day after the Required Effectiveness Date to and including the earlier of the Settlement Date or the date that is 60 days after the Required Effectiveness Date, multiplied by (ii) the Market Price multiplied by the number of Subject Shares held by such Restricted Holder on the date of such payment. (c) In the event that the Settlement Date shall not have occurred by the date that is 60 days after the Required Effectiveness Date, each Person who is a Restricted Holder as of such date shall have the non-transferrable right (its "Put Right"), exercisable at any one time for each such Restricted Holder after such 60th day and through the earlier to occur of (i) the Settlement Date, and (ii) the day immediately prior to the first anniversary of the Closing, to "put" some or all of the Subject Shares held by such Restricted Holder to Starwood Lodging for an amount per share equal to the Put 5 7 Price; provided, however, that the Put Right shall not be exercisable by any Restricted Holder for a number of Subject Shares that is less than the lesser of (i) 100,000, or (ii) the number of Subject Shares then held by such Restricted Holder. Such right shall be exercised by such Restricted Holder giving Starwood Lodging notice of its election to exercise its Put Right and the number of Subject Shares to be purchased by Starwood Lodging, whereupon Starwood Lodging shall purchase such shares at 9:00 a.m. (Eastern Time) on the second Business Day following its receipt of such notice, with payment to be delivered (against delivery to Starwood Lodging of such shares free of all rights of other Persons) on the third Business Day thereafter in cash or immediately available funds to such account as such Restricted Holder may designate in such notice. The Put Price shall be the Market Price determined as of the date such notice is given. Starwood Lodging shall have the right to satisfy its obligations under the Put Rights by designating another Person as the purchaser of such shares, and such obligations shall be deemed satisfied upon such other Person's purchase of such shares for the Put Price and at the time and in the manner set forth herein. Such designation shall not affect Starwood Lodging's obligation to pay the Interest Factor as provided herein. (d) The Interest Factor and the right of each Restricted Holder to receive the Put Price in the event it elects to exercise its Put Right shall be each Restricted Holder's sole and exclusive monetary remedies arising from Starwood Lodging's failure to cause the Settlement Date to occur on or before the seventh Business Day after the Required Effectiveness Date and shall be deemed liquidated damages in respect of such failure; and each Restricted Holder shall be deemed to have waived its other monetary remedies. However, from and after the seventh Business Day after the Required Effectiveness Date, each Holder shall at all times have such equitable remedies as may be available under applicable law. SECTION 3 NOTICE PROCEDURES REGARDING OPEN MARKET SALE OF STOCK AGREEMENTS SHARES 3.1 If, at any time any Restricted Holder or Restricted Group elects to Transfer, in an Open Market Sale, more than 100,000 Stock Agreements Shares on any single Business Day (300,000 Stock Agreements Shares from and after the first Business Day after the ITT Closing), prior to executing such Transfer the designated representative of such Restricted Holder or Restricted Group shall provide Starwood Lodging's representative, the Chief Financial Officer of the Trust (or any successor representative identified by a notice given hereunder), with telephonic notice at (602) 852-3900 along with a confirmation of such notice by telefacsimile to Starwood Lodging and Starwood Lodging's additional addressees as provided in Section 7.1 hereof. Such notice (the "Sale Notice") shall indicate the number of Stock Agreements Shares which such Restricted Holder or Restricted Group has determined to Transfer in an Open Market Sale (the "Proposed Disposition Shares") on such day or days and shall comply with Section 3.5 hereof (if applicable). Such notice shall be deemed given on the Business Day the telephonic notice described above is given so long as such notice is given by 5:00 P.M., Eastern time, on such day; if given after that time, it shall be deemed given on the next Business Day. In the event that, at any time while this Section 3.1 is in effect, the Corporation or the Trust effects any reclassification, stock split or stock dividend with respect to their stock, any change or conversion of stock into other securities, or any other dividend or distribution with respect to the Paired Shares, other than (i) dividends contemplated by the Starwood Lodging Disclosure as in effect on December 30, 1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the current rate (as of December 30, 1997) of their dividends (together with any increases in such rate in the ordinary course) and (b) the Trust's "real estate investment taxable income" (as such term is defined for purposes of the Internal Revenue Code) without regard to any net capital gains or the 6 8 deduction for dividends paid, appropriate and proportionate adjustments shall be made to the numbers of Stock Agreements Shares set forth in the first sentence of this Section 3.1. 3.2 No later than noon, Eastern time, on the second Business Day after the Sale Notice is given as described above, Starwood Lodging may provide the representative(s) of such Restricted Holder or Restricted Group with telephonic notice, along with a confirmation of such notice to such representatives by telefacsimile, that Starwood Lodging is irrevocably offering to purchase or place all of the Proposed Disposition Shares at a price per share equal to the average of the closing prices on the New York Stock Exchange on the first and second Business Days following the giving of the Sale Notice. Such notice shall be given as provided in Section 3.5 hereof. It shall be a condition to such notice and the consummation of such transaction that such transaction not constitute a violation of Regulation M promulgated by the SEC. If Starwood Lodging fails to make such an offer within such period, it shall have no further rights under this Section 3 with respect to any Orderly Market Disposition by such Restricted Holder or Restricted Group of Stock Agreements Shares up to the amount of the Proposed Disposition Shares that is commenced not later than the seventh Business Day after the Sale Notice is given. 3.3 If Starwood Lodging duly makes such an offer, such Restricted Holder or Restricted Group shall elect by telephonic notice to Starwood Lodging's representative delivered and confirmed as described above, given by 8:30 a.m. (Eastern Time) on the Business Day following receipt of Starwood Lodging's offer (such day is referred to herein as the "Response Date"), in their sole and absolute discretion, to either (i) proceed with such proposed disposition, in which instance Starwood Lodging shall purchase or place the Proposed Disposition Shares at 9:00 a.m. (Eastern Time), on the Response Date, with payment to be delivered (against delivery to Starwood Lodging of the Proposed Disposition Shares free of all rights of other Persons) on the third Business Day after the Response Date in cash or immediately available funds to such account as such Restricted Holder may designate by notice to Starwood Lodging, or (ii) not to proceed with such proposed disposition, in which instance the Sale Notice shall be withdrawn and such Restricted Holder shall continue to hold the Proposed Disposition Shares subject to the terms of this Section 3 (to the extent applicable). If such Restricted Holder shall fail to so elect by 8:30 a.m. (Eastern Time) on the Response Date, it shall irrevocably be deemed to have elected not to proceed with such proposed disposition. 3.4 On the first anniversary of the Settlement Date, the provisions of this Section 3 shall automatically lapse and be of no further force or effect with respect to each Restricted Holder that holds less than 500,000 Stock Agreements Shares (except (i) to the extent that such Restricted Holder acts on or after such date as a member of a Restricted Group that holds in the aggregate 500,000 or more Stock Agreements Shares, and (ii) to the extent such Restricted Holder, either alone or as a member of a Restricted Group, has given or was required to have given Starwood Lodging a Sale Notice prior to such date and as to which the procedures in this Section 3 have not been fully performed). 3.5 Any notice given by Starwood Lodging pursuant to Section 3.2 hereof to Stock Purchaser shall be given telephonically to Mansor Dalaan at (310) 229-2929 and by telefacsimile to (310) 229-2927, or to such other telephone and telefacsimile numbers as may be set forth for such purpose in the Sale Notice. Any notice given by Starwood Lodging pursuant to Section 3.2 hereof to any other Restricted Holder or Restricted Group shall be given to the telephone and telefacsimile numbers as may be set forth for such purpose in the Sale Notice, and no Sale Notice from a Restricted Holder other than Stock Purchaser or from any Restricted Group shall be deemed properly given in accordance with Section 3.1 unless such numbers are set forth in such Sale Notice. 7 9 3.6 Time is of the essence in the performance by the parties of their obligations under this Section 3. SECTION 4 TRANSFERS NOT CONSTITUTING AN OPEN MARKET SALE; SHORT SALES 4.1 Each Restricted Holder covenants and agrees that, as a condition to any Transfer by a such Restricted Holder of Subject Shares in a transaction that does not constitute an Open Market Sale, such Restricted Holder will obtain and deliver to Starwood Lodging a Joinder Agreement duly executed by the transferee or the intended transferee; and any purported Transfer of Subject Shares made in breach of this provision shall be null and void ab initio. 4.2 Each Restricted Holder covenants and agrees that, prior to the effectiveness of the Registration Statement, it will not "sell short" (as such term is commonly understood in the brokerage industry) any Paired Shares, whether "against the box" or otherwise. SECTION 5 PAYMENT RIGHTS On the Settlement Date, Starwood Lodging shall pay to Stock Purchaser in cash or other immediately available funds an amount equal to the amount, if any, by which the Lock Price exceeds the Market Price as of the Settlement Date, multiplied by the number of Paired Shares delivered by Starwood Lodging to Stock Purchaser hereunder. Stock Purchaser's right to receive the payments from Starwood Lodging described in this section are referred to herein as the "Payment Rights." Pursuant to a written instrument a copy of which is delivered to Starwood Lodging promptly following its execution by Stock Purchaser, Stock Purchaser may distribute to its partners or their shareholders or assign to any other Person all or any portion of the Payment Rights either together with or separately from the Paired Shares delivered hereunder. SECTION 6 REPRESENTATIONS AND WARRANTIES 6.1 Stock Purchaser represents and warrants to Starwood Lodging as follows: (a) Stock Purchaser has the power and authority to enter into this Agreement and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. The execution and delivery hereof and thereof and the performance by Stock Purchaser of its obligations hereunder and thereunder will not violate or constitute an event of default under any material term or material provision of any agreement, document, instrument, judgment, order or decree to which Stock Purchaser is a party or by which it is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement on behalf of Stock Purchaser have the legal power, right and actual authority to bind Stock Purchaser to the terms and conditions hereof and thereof. Each of this Agreement and the Registration Rights Agreement is a valid and binding obligation of Stock Purchaser, enforceable in accordance with 8 10 its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) Stock Purchaser is acquiring the Subject Shares to be issued to it for investment, solely for the account of itself, on behalf of its partners and Persons who are stockholders of such partners, or on behalf of certain Persons each of whom is both an Affiliate of a partner of Stock Purchaser and a creditor of Stock Purchaser (collectively, such partners and other Persons the "Stock Purchaser Affiliates"). Neither Stock Purchaser nor any of the Affiliates of Stock Purchaser is acquiring Subject Shares with a view to or for sale in connection with any distribution of such Subject Shares in violation of applicable securities laws. (d) Stock Purchaser and each of the Stock Purchaser Affiliates is an Accredited Investor. (e) Stock Purchaser has obtained and reviewed the Starwood Lodging Disclosure and the SEC Documents that have been filed with the SEC through the date hereof. 6.2 By its execution of its Joinder Agreement, each Restricted Holder other than Stock Purchaser shall be deemed to have represented and warranted to Starwood Lodging, as of the date of its delivery of such Joinder Agreement, as follows: (a) Such Restricted Holder has the power and authority to enter into this Agreement, the Registration Rights Agreement and its Joinder Agreement and to perform its obligations hereunder and thereunder. The execution and delivery hereof and thereof and the performance by such Restricted Holder of its obligations hereunder and thereunder will not violate or constitute an event of default under any material term or material provision of any agreement, document, instrument, judgment, order or decree to which such Restricted Holder is a party or by which it is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement, the Registration Rights Agreement and its Joinder Agreement on behalf of such Restricted Holder have the legal power, right and actual authority to bind such Restricted Holder to the terms and conditions hereof and thereof. Each of this Agreement, the Registration Rights Agreement and its Joinder Agreement is a valid and binding obligation of such Restricted Holder, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) Such Restricted Holder is acquiring the Subject Shares Transferred or to be Transferred to it for investment, solely for the account of itself and not with a view to or for sale in connection with any distribution of such Subject Shares in violation of applicable securities laws; provided, however, that if such Restricted Holder is Stock Purchaser Affiliate, such Restricted Holder may acquire the Subject Shares on behalf of Persons who are stockholders of such Restricted Holder if each of such Persons is an Accredited Investor. (d) Such Restricted Holder is an Accredited Investor. (e) Such Restricted Holder has had the opportunity, prior to making the determination to acquire any Subject Shares, to obtain and review the Starwood Lodging Disclosure 9 11 and the SEC Documents that have been filed with the SEC through the date of the execution of such Restricted Holder's Joinder Agreement. 6.3 The Trust hereby represents and warrants to Stock Purchaser as follows: (a) The Trust has the power and authority to enter into this Agreement and the Registration Rights Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement or the Registration Rights Agreement by the Trust, nor the performance by the Trust of the Trust's obligations hereunder or thereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Trust is a party or by which the Trust is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement and the documents referenced herein on behalf of the Trust have the legal power, right and actual authority to bind the Trust to the terms and conditions hereof. This Agreement and the Registration Rights Agreement is a valid and binding obligation of Trust, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) All Paired Shares to be delivered in accordance with Section 2.1 hereof will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. (d) The Trust has filed all of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Trust included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Trust and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Trust has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. (e) Except as disclosed in the SEC Documents or the Starwood Lodging Disclosure, since December 31, 1996 and through the date hereof, (i) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be 10 12 expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole, or (ii) there has not been any split, combination or reclassification of any of the capital stock or units of the Trust or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. (f) Except as set forth in the SEC Documents or the Starwood Lodging Disclosure or in a separate writing provided to Stock Purchaser on or before the date hereof, as of the date hereof: there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Trust or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Trust or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole; and there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Trust, threatened against or involving the Trust or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Trust, threatened against or affecting the Trust or any of its subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement and the Registration Rights Agreement. 6.4 The Corporation hereby represents and warrants to Stock Purchaser as follows: (a) The Corporation has the power and authority to enter into this Agreement and the Registration Rights Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement or the Registration Rights Agreement by the Corporation, nor the performance by the Corporation of the Corporation's obligations hereunder or thereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Corporation is a party or by which the Corporation is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement and the documents referenced herein on behalf of the Corporation have the legal power, right and actual authority to bind the Corporation to the terms and conditions hereof. This Agreement and the Registration Rights Agreement is a valid and binding obligation of Corporation, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) All Paired Shares to be delivered in accordance with Section 2.1 hereof will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. 11 13 (d) The Corporation has filed all of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Corporation included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Corporation and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Corporation has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. (e) Except as disclosed in the SEC Documents or the Starwood Lodging Disclosure, since December 31, 1996 and through the date hereof, (i) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole, or (ii) there has not been any split, combination or reclassification of any of the capital stock or units of the Corporation or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. (f) Except as set forth in the SEC Documents or the Starwood Lodging Disclosure or in a separate writing provided to Stock Purchaser on or before the date hereof, as of the date hereof: there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Corporation or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Corporation or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole; and there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Corporation, threatened against or involving the Corporation or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Corporation, threatened against or affecting the Corporation or any of its subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement and the Registration Rights Agreement (other than those arising in connection with the Registration Statement or the performance by the Corporation of its obligations under the Registration Rights Agreement). 12 14 SECTION 7 NOTICES 7.1 Addresses. Except for the notices given pursuant to Section 3, whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be made in writing and shall be (a) sent via a nationally recognized overnight courier service fully prepaid, (b) deposited in the United States by mail, registered or certified, return receipt requested, postage prepaid, or (c) sent via telefacsimile, provided that the original of such notice, demand or request shall also be sent via one of the methods described in (a) and (b) above, in each case to the addressees (and individuals) set forth below: As to Stock Purchaser: c/o Al Anwa USA, Inc. 1925 Century Park East, Suite 1900 Los Angeles, CA 90067 Attn: Tarek Ayoubi Telefacsimile: (310) 229-2939 With a copy to Stock Purchaser's additional addressees: Morrison & Foerster LLP 555 West Fifth Street, Suite 3500 Los Angeles, CA 90013-1024 Attn: Thomas R. Fileti, Esq. Telefacsimile: (213) 892-5454 Gordon K. Eng, Esq. 19191 South Vermont Avenue, Suite 420 Torrance, California 90502 Telefacsimile: (310) 207-1066 As to Starwood Lodging: Starwood Hotels & Resorts Trust 2231 E. Camelback Rd., Suite 410 Phoenix, AZ 85016 Attn: Ronald C. Brown or Chief Financial Officer Telefacsimile: (602) 852-0115 Starwood Hotels & Resorts Worldwide, Inc. 2231 E. Camelback Rd., Suite 400 Phoenix, AZ 85016 Attn: Alan M. Schnaid or Vice President Telefacsimile: (602) 852-0115 13 15 With a copy to Starwood Lodging's additional addressees: Greenberg Traurig Hoffman Lipoff Rosen & Quentel 153 East 53rd Street New York, NY 10022 Attn: Andrew E. Zobler, Esq. Telefacsimile: (212) 223-7161 Sidley & Austin 555 West Fifth Street, Suite 4000 Los Angeles, CA 90013 Attn: Sherwin L. Samuels, Esq. and Kenneth H. Levin, Esq. Telefacsimile: (213) 896-6600 If to any Restricted Holder other than Stock Purchaser: to the address and telefacsimile number set forth in such Restricted Holder's Joinder Agreement (or to any other address or telefacsimile number provided to Starwood Lodging in writing pursuant to a notice given by such Restricted Holder pursuant to this Section 7.1). 7.2 Receipt of Notices. Any notice, demand or request that shall be delivered to Starwood Lodging and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Starwood Lodging for all purposes hereunder, and any notice, demand or request that shall be delivered to Stock Purchaser and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Stock Purchaser for all purposes hereunder (i) the next business day following the day such notice, demand or request is delivered by a nationally recognized overnight courier service fully prepaid, to such party and its Additional Addressee, (ii) if sent via registered or certified mail, at the time of receipt by such party and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date and time stated upon confirmation reports generated by the sending party's telefacsimile machine confirming the delivery of such notice, demand or request to such party and its Additional Addressee. 7.3 Refusal of Delivery. The inability to deliver any notice, demand or request because the individual to whom it is properly addressed in accordance with this Section 7 refused delivery thereof or no longer can be located at that address shall constitute delivery thereof to such individual. 7.4 Change of Address. Each party shall have the right from time to time to designate by written notice to the other parties hereto such other Person or Persons and such other place or places as said party may desire written notices to be delivered or sent in accordance herewith. SECTION 8 GENERAL PROVISIONS 8.1 Amendment. No provision of this Agreement or of any documents or instrument entered into, given or made pursuant to this Agreement may be amended, changed, waived, discharged or terminated except by an instrument in writing, signed by the party against whom enforcement of the amendment, change, waiver, discharge or termination is sought. 14 16 8.2 Time of Essence. All times provided for in this Agreement for the performance of any act will be strictly construed, time being of the essence. 8.3 Entire Agreement. This Agreement and other documents delivered pursuant to this Agreement set forth the entire agreement and understanding of the parties in respect of the transactions contemplated by this Agreement, and supersede all prior agreements, arrangements and understandings relating to the subject matter hereof and thereof. No representation, promise, inducement or statement of intention with respect to the subject matter hereof has been made by Stock Purchaser or Starwood Lodging which is not embodied in this Agreement, and neither Starwood Lodging nor Stock Purchaser shall be bound by or liable for any alleged representations, promise, inducement or statement of intention not therein so set forth. 8.4 No Waiver. No failure of any party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder shall constitute a waiver of any party's right to demand strict compliance with the terms of this Agreement. 8.5 Counterparts. This Agreement, any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby, and any amendment or supplement thereto may be executed in two or more counterparts, and, when so executed, will have the same force and effect as though all signatures appeared on a single document. Any signature page of this Agreement or of such an amendment, supplement, document or instrument may be detached from any counterpart without impairing the legal effect of any signatures thereon, and may be attached to another counterpart identical in form thereto but having attached to it one or more additional signature pages. 8.6 Costs and Attorneys' Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement or because of an alleged dispute, default, or misrepresentation in connection with any of the provisions of this Agreement the successful or prevailing party shall be entitled to recover reasonable attorneys' fees, charges and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 8.7 Payments; Interests. Except as otherwise provided herein, payment of all amounts required by the terms of this Agreement shall be made in the United States and in immediately available funds of the United States of America which, at the time of payment, is accepted for the payment of all public and private obligations and debts. If any payment due under this Agreement is not paid when due, it shall thereafter bear interest at a variable rate equal to the rate announced from time to time by Citibank, N.A. as its prime or reference rate, plus five percent (5%) per annum, but in no event more than the maximum rate, if any, allowed by law to be charged by the party receiving the interest on such type of indebtedness. 8.8 Parties in Interest. The rights and obligations of the parties hereto shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, heirs and the legal representatives of their respective estates. However, none of Stock Purchaser's rights under this Agreement shall be assignable except (i) in the case of the Payment Rights, as provided in Section 5 hereof, and (ii) in the case of all other rights of Stock Purchaser or another Restricted Holder, to a transferee of Subject Shares in a transaction not constituting an Open Market Sale if such transferee delivers a Joinder Agreement in compliance with Section 4 hereof. Nothing in this Agreement is intended to confer any right or remedy under this Agreement on any Person other than the parties to this Agreement and their respective successors and assigns, or to relieve or discharge the obligation or liability of any Person to any party to this Agreement or to give any Person any right of subrogation or action over or against any party to this Agreement. 15 17 8.9 Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without giving effect to the conflict-of-law rules and principles of that state. 8.10 Incorporation of Recitals. The recitals of this Agreement are incorporated into and made a part of this Agreement. 8.11 Construction of Agreement. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any of the parties hereto. Headings at the beginning of sections of this Agreement are solely for the convenience of the parties and are not a part of this Agreement. When required by the context, whenever the singular number is used in this Agreement, the same shall include the plural, and the plural shall include the singular, the masculine gender shall include the feminine and neuter genders, and vice versa. As used in this Agreement, the term "Stock Purchaser" shall include the respective permitted successors and assigns of Stock Purchaser, and the term "Starwood Lodging" shall include the permitted successors and assigns of Starwood Lodging, if any. 8.12 Severability. If any term or provision of this Agreement is determined to be illegal, unconscionable or unenforceable, all of the other terms, provisions and sections hereof will nevertheless remain effective and be in force to the fullest extent permitted by law. 8.13 Further Assurances. Starwood Lodging and Stock Purchaser agree to execute upon the request of the other party such instruments and take such actions as may be reasonably necessary to carry out the provisions of this Agreement provided that no material additional cost or liability shall incurred thereby by the party of whom such request is made. 8.14 Starwood Lodging Trust. The parties hereto understand and agree that the name "Starwood Lodging Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. 16 18 IN WITNESS WHEREOF, Starwood Lodging and Stock Purchaser have caused this Agreement to be executed as of the day and year first above written. "Stock Purchaser" NEW REMINGTON PARTNERS, a Texas general partnership By: REMINGTON VENTURERS, INC., a Texas corporation, a General Partner By: /s/ Mansor Dalaan ------------------------------ Mansor Dalaan President By: REMINGTON VENTURERS II, INC., a Texas corporation, a General Partner By: /s/ Mansor Dalaan ------------------------------ Mansor Dalaan President "Starwood Lodging" STARWOOD HOTELS & RESORTS TRUST , a Maryland Real Estate Investment Trust By: /s/ Steven R. Goldman ---------------------------- Steven R. Goldman Senior Vice President STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland Corporation By: /s/ Nir E. Margalit ---------------------------- Nir E. Margalit Secretary 17 19 ATTACHMENT A to Stock Agreement AGREEMENT TO BE BOUND BY THE STOCK AGREEMENT (JOINDER AGREEMENT) The undersigned, being the transferee or the intended transferee of _____________ Paired Shares (the "Subject Shares") of Starwood Lodging Trust, a Maryland real estate investment trust, and Starwood Lodging Corporation, a Maryland corporation (together, the "Company"), as a condition to the transfer to and acquisition by the undersigned of such Subject Shares, acknowledges that certain sales or other transfers of such Subject Shares are governed by the Stock Agreement (the "Stock Agreement"), dated as of January 15, 1998 initially among the Company and New Remington Partners, a Texas general partnership, and the undersigned hereby (1) acknowledges receipt of a copy of the Stock Agreement, and (2) agrees to be bound as a "Restricted Holder" by the terms of the Stock Agreement, as the same has been or may be amended from time to time (including without limitation the representations and warranties of the undersigned set forth therein that will be deemed made by virtue hereof). The undersigned is hereby advised that the Subject Shares have not been registered under the Securities Act of 1933 and in such event cannot be resold unless they are registered under said act or unless an exemption from registration under said act is available. The following is the undersigned's representative and such representative's address, telephone number and fax number for all purposes under the Stock Agreement: _________________________________ _________________________________ _________________________________ Agreed to this ____ day of __________, ____. ________________________________ By: ____________________________ Its: ___________________________ EX-99.7 8 STOCK AGREEMENT 1 STOCK AGREEMENT by and among N.Y. OVERNIGHT PARTNERS, L.P. a New York limited partnership as Stock Purchaser and STARWOOD HOTELS & RESORTS TRUST, a Maryland Real Estate Investment Trust and STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland Corporation, Dated as of January 15, 1998 2 STOCK AGREEMENT THIS STOCK AGREEMENT (this "Agreement") is entered into as of January 15, 1998 (the "Closing Date") by and between N.Y. OVERNIGHT PARTNERS, L.P., a New York limited partnership, ("Stock Purchaser"), STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust (the "Trust"), and STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the "Corporation", and, with the Trust, "Starwood Lodging"). R E C I T A L S A. Stock Purchaser has agreed to acquire from Starwood Lodging, and Starwood Lodging has agreed to issue and deliver to Stock Purchaser, Paired Shares in partial consideration for certain assets owned by Stock Purchaser. B. The parties desire to enter into this Agreement in order to set forth certain terms and conditions under which the Paired Shares are to be issued to and held by Stock Purchaser. A G R E E M E N T NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby mutually acknowledged, Starwood Lodging and Stock Purchaser agree as follows: SECTION 1 DEFINITIONS 1.1 Defined Terms. "Accredited Investor" shall have the meaning ascribed to that term in Rule 501 promulgated by the SEC under the Securities Act. "Affiliate" shall mean, with respect to any Person, any other Person that controls, is controlled by or is under common control with such first Person. "Applicable Percentage" shall mean: (a) if Starwood Lodging delivers Registered Shares to Stock Purchaser pursuant to Section 2.1 hereof, 100% and (b) if Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, 91.95%. "Business Day" shall mean any day on which the New York Stock Exchange is open for business. "Closing Date" shall mean the date hereof. "Equity Value" shall mean Two Million Nine Hundred Forty-Two Thousand Four Hundred Dollars ($2,942,400), divided by the Applicable Percentage, rounded to the nearest whole number. 3 "ITT Closing" shall have the meaning set forth in the Registration Rights Agreement. "Joinder Agreement" means an agreement to be bound by this Agreement in the form of Attachment A hereto. "LIBOR" means the average of the interbank offered rates for three-month dollar deposits in the London market based on quotations at five (5) major banks, as published from time to time in The Wall Street Journal. If The Wall Street Journal ceases to publish such a compilation of interbank offered rates, or if The Wall Street Journal ceases to be published, then Starwood Lodging shall propose a substitute method of determining the interest rate generally known as the three-month LIBOR rate, which method, absent manifest error, shall be binding on all holders of the Subject Shares and Starwood Lodging. "Lock Price" shall mean the Market Price as of the Closing Date, provided, however, that in the event that, at any time during the period between December 30, 1997 and the Settlement Date, the Corporation or the Trust effects any reclassification, stock split or stock dividend with respect to their stock, any change or conversion of stock into other securities, or any other dividend or distribution with respect to the Paired Shares, other than (i) dividends contemplated by the Starwood Lodging Disclosure in effect as of December 30, 1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the current rate (as of December 30, 1997) of their dividends (together with any increases in such rate in the ordinary course) and (b) the Trust's "real estate investment taxable income" (as such term is defined for purposes of the Internal Revenue Code) without regard to any net capital gains or the deduction for dividends paid, appropriate and proportionate adjustments shall be made to the Lock Price. "Market Price" shall mean, as of any date, the average closing prices of the Paired Shares on the New York Stock Exchange during the ten consecutive Business Days immediately preceding such date. "Open Market Sale" means one or more sales of Stock Agreements Shares (including "short sales" initiated with the intention of delivering Stock Agreements Shares) made or proposed to be made by placing one or more sale orders or offers to sell with one or more securities brokers or dealers with a view toward the consummation of one or more sale transactions that are required to be, or that actually are, reported to the New York Stock Exchange or the National Association of Securities Dealers. "Orderly Market Disposition" means the sale of Stock Agreements Shares by placing one or more sell orders with one or more securities brokers or dealers with a view toward the disposition in the market of such Stock Agreements Shares. "Other Stock Agreements" shall mean, collectively, (i) that certain Stock Agreement, dated as of January 15, 1998, among Savanah Limited Partnership, as stock purchaser, and Starwood Lodging, (ii) that certain Stock Agreement, dated as of January 15, 1998, among New Remington Partners, as stock purchaser, and Starwood Lodging, and (iii) that certain Stock Agreement, dated as of January 15, 1998, among D.C. Overnight Partners, L.P., as stock purchaser, and Starwood Lodging. "Paired Shares" shall mean one share of beneficial interest, par value $.01 per share, of the Trust, and one share of common stock, par value $.01 per share, of the Corporation that are 2 4 subject to the Pairing Agreement. For purposes of calculating the number of Paired Shares to be delivered hereunder, each pair of the shares of the stock of the Trust and the Corporation shall be considered one share. "Pairing Agreement" shall mean the Pairing Agreement dated as of June 25, 1980, as amended, between the Trust and the Corporation providing, in relevant part, for the pairing of all outstanding shares of the Corporation and the Trust. "Payment Rights" shall have the meaning set forth in Section 5 hereof. "Person" shall have the meaning set forth in the Registration Rights Agreement. "Proposed Disposition Shares" shall have the meaning set forth in Section 3 hereof. "Put Price" and "Put Right" shall have the meaning set forth in Section 2.4 hereof. "Registered Shares" means Subject Shares the issuance of which to Stock Purchaser has been registered under the Securities Act. "Registration Rights Agreement" means the Registration Rights Agreement by and among Stock Purchaser, the Trust and the Corporation in the form of Attachment B hereto. "Registration Statement" shall have the meaning set forth in the Registration Rights Agreement. "Required Effectiveness Date" shall have the meaning set forth in the Registration Rights Agreement. "Response Date" shall have the meaning set forth in Section 3 hereof. "Restricted Group" shall mean two (2) or more Restricted Holders acting in concert or under common direction. "Restricted Holder" shall mean Stock Purchaser and any other Person who shall have acquired any Stock Agreements Shares in a Transfer not constituting an Open Market Sale. A Restricted Holder shall not include any Person who shall have acquired any Stock Agreements Shares in a Transfer not constituting an Open Market Sale if such Transfer occurs after the first Open Market Sale of such Stock Agreements Shares. "Sale Notice" shall have the meaning set forth in Section 3 hereof. "SEC" shall mean the United States Securities and Exchange Commission. "SEC Documents" means all documents required to have been filed by the Trust or the Corporation with the SEC since January 1, 1996 and through the date hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. 3 5 "Settlement Date" shall mean, if Starwood Lodging shall deliver Unregistered Shares pursuant to Section 2.1 hereof, the date on which Starwood Lodging or its counsel shall notify Stock Purchaser that (i) the Registration Statement has been declared effective by the SEC, (ii) that the Subject Shares have been registered, on the terms and subject to the provisions of the Registration Rights Agreement, for Transfer by the selling shareholders named therein in Open Market Sales and in such other manner as is provided in the Registration Statement, and (iii) that Starwood Lodging has completed all deliveries and other actions required to enable trading of the Subject Shares on the New York Stock Exchange; provided, however, that if such notice is given later than 1:00 PM Eastern Time, the Settlement Date shall be deemed for all purposes to occur on the Business Day following the date of such notice. "Starwood Lodging Disclosure" shall mean, collectively, the Form S-3 filed by the Corporation and the Trust with the SEC on November 12, 1997, and the Form S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as the same has been or may hereafter be amended by any filing with the SEC made by the Trust or the Corporation. "Stock Agreements Shares" shall mean the aggregate of the Subject Shares and the other Paired Shares delivered pursuant to the Other Stock Agreements. "Stock Purchaser Affiliates" shall have the meaning set forth in Section 6.1 hereof. "Subject Shares" means the 57,405 Paired Shares delivered by Starwood Lodging pursuant to Section 2.1 hereof. "Transfer" shall have the meaning set forth in the Registration Rights Agreement. "Transfer Agent" shall mean the transfer agent for the Paired Shares. "Unregistered Shares" means Subject Shares the issuance of which to Stock Purchaser has not been registered under the Securities Act. 1.2 Other Definitional Provisions. The terms "hereof," "hereto," "hereunder" and similar terms when used in this Agreement shall refer to this Agreement generally, rather than to the section in which such term is used, unless otherwise specifically provided. Unless the context otherwise requires, any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. SECTION 2 CALCULATION OF SUBJECT SHARES 2.1 Calculation of Subject Shares. Starwood Lodging shall deliver to Stock Purchaser on the Closing Date Paired Shares in an amount equal to the Equity Value divided by the Lock Price. Starwood Lodging shall have the option to deliver Registered Shares or Unregistered Shares on the Closing Date. 4 6 2.2 Delivery Requirements for Paired Shares. The Paired Shares to be delivered hereunder shall be properly endorsed and certificated Paired Shares in the amount required to be delivered in accordance with the provisions of this Agreement. If Registered Shares are delivered, such shares shall be unlegended and fully and freely transferable without any consent of, registration with or notice to any Person (except as provided for in Sections 3 and 4 hereof and in the Pairing Agreement). If Unregistered Shares are issued, each certificate evidencing Subject Shares shall be stamped or otherwise imprinted with a legend in substantially the following form (and no other restrictive legends): THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT. THE SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE OR THE SHARES EVIDENCED HEREBY IS SUBJECT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF JANUARY 15, 1998 BETWEEN THE ISSUER AND THE HOLDER HEREOF. There shall be no legend on the Paired Shares reflecting the restrictions in Sections 3 or 4 hereof. 2.3 Other Deliveries. Concurrently with the delivery of the Paired Shares, Starwood Lodging shall deliver to Stock Purchaser any statements, such as a transfer or conveyance tax forms or returns required by applicable federal or New York law to be executed by Starwood Lodging, as may reasonably be requested by Stock Purchaser in order to effect the delivery of the Subject Shares to Stock Purchaser. 2.4 Registration Rights and Requirements. (a) If Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, Stock Purchaser and Starwood Lodging shall on the Closing Date execute and deliver to each other the Registration Rights Agreement and the parties thereto shall perform their respective obligations thereunder. If Starwood Lodging delivers Registered Shares pursuant to Section 2.1 hereof, the Registration Rights Agreement shall not be executed or delivered and none of the parties shall have any obligations thereunder. (b) If Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, and if the Settlement Date shall not have occurred on or before the seventh Business Day after the Required Effectiveness Date, Starwood Lodging shall pay to each Restricted Holder, on the Settlement Date, an amount equal to the "Interest Factor." For each Restricted Holder, the "Interest Factor" shall be an amount equal to the product of (i) LIBOR plus 2% per annum for each day after the seventh Business Day after the Required Effectiveness Date to and including the earlier of the Settlement Date or the date that is 60 days after the Required Effectiveness Date, multiplied by (ii) the Market Price multiplied by the number of Subject Shares held by such Restricted Holder on the date of such payment. 5 7 (c) In the event that the Settlement Date shall not have occurred by the date that is 60 days after the Required Effectiveness Date, each Person who is a Restricted Holder as of such date shall have the non-transferrable right (its "Put Right"), exercisable at any one time for each such Restricted Holder after such 60th day and through the earlier to occur of (i) the Settlement Date, and (ii) the day immediately prior to the first anniversary of the Closing, to "put" some or all of the Subject Shares held by such Restricted Holder to Starwood Lodging for an amount per share equal to the Put Price; provided, however, that the Put Right shall not be exercisable by any Restricted Holder for a number of Subject Shares that is less than the lesser of (i) 100,000, or (ii) the number of Subject Shares then held by such Restricted Holder. Such right shall be exercised by such Restricted Holder giving Starwood Lodging notice of its election to exercise its Put Right and the number of Subject Shares to be purchased by Starwood Lodging, whereupon Starwood Lodging shall purchase such shares at 9:00 a.m. (Eastern Time) on the second Business Day following its receipt of such notice, with payment to be delivered (against delivery to Starwood Lodging of such shares free of all rights of other Persons) on the third Business Day thereafter in cash or immediately available funds to such account as such Restricted Holder may designate in such notice. The Put Price shall be the Market Price determined as of the date such notice is given. Starwood Lodging shall have the right to satisfy its obligations under the Put Rights by designating another Person as the purchaser of such shares, and such obligations shall be deemed satisfied upon such other Person's purchase of such shares for the Put Price and at the time and in the manner set forth herein. Such designation shall not affect Starwood Lodging's obligation to pay the Interest Factor as provided herein. (d) The Interest Factor and the right of each Restricted Holder to receive the Put Price in the event it elects to exercise its Put Right shall be each Restricted Holder's sole and exclusive monetary remedies arising from Starwood Lodging's failure to cause the Settlement Date to occur on or before the seventh Business Day after the Required Effectiveness Date and shall be deemed liquidated damages in respect of such failure; and each Restricted Holder shall be deemed to have waived its other monetary remedies. However, from and after the seventh Business Day after the Required Effectiveness Date, each Holder shall at all times have such equitable remedies as may be available under applicable law. SECTION 3 NOTICE PROCEDURES REGARDING OPEN MARKET SALE OF STOCK AGREEMENTS SHARES 3.1 If, at any time any Restricted Holder or Restricted Group elects to Transfer, in an Open Market Sale, more than 100,000 Stock Agreements Shares on any single Business Day (300,000 Stock Agreements Shares from and after the first Business Day after the ITT Closing), prior to executing such Transfer the designated representative of such Restricted Holder or Restricted Group shall provide Starwood Lodging's representative, the Chief Financial Officer of the Trust (or any successor representative identified by a notice given hereunder), with telephonic notice at (602) 852-3900 along with a confirmation of such notice by telefacsimile to Starwood Lodging and Starwood Lodging's additional addressees as provided in Section 7.1 hereof. Such notice (the "Sale Notice") shall indicate the number of Stock Agreements Shares which such Restricted Holder or Restricted Group has determined to Transfer in an Open Market Sale (the "Proposed Disposition Shares") on such day or days and shall comply with Section 3.5 hereof (if applicable). Such notice shall be deemed given on the Business Day the telephonic notice described above is given so long as such notice is given by 5:00 P.M., Eastern time, on such day; if given after that time, it shall be deemed given on the next Business Day. In the event that, at any time while this Section 3.1 is in effect, the Corporation 6 8 or the Trust effects any reclassification, stock split or stock dividend with respect to their stock, any change or conversion of stock into other securities, or any other dividend or distribution with respect to the Paired Shares, other than (i) dividends contemplated by the Starwood Lodging Disclosure as in effect on December 30, 1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the current rate (as of December 30, 1997) of their dividends (together with any increases in such rate in the ordinary course) and (b) the Trust's "real estate investment taxable income" (as such term is defined for purposes of the Internal Revenue Code) without regard to any net capital gains or the deduction for dividends paid, appropriate and proportionate adjustments shall be made to the numbers of Stock Agreements Shares set forth in the first sentence of this Section 3.1. 3.2 No later than noon, Eastern time, on the second Business Day after the Sale Notice is given as described above, Starwood Lodging may provide the representative(s) of such Restricted Holder or Restricted Group with telephonic notice, along with a confirmation of such notice to such representatives by telefacsimile, that Starwood Lodging is irrevocably offering to purchase or place all of the Proposed Disposition Shares at a price per share equal to the average of the closing prices on the New York Stock Exchange on the first and second Business Days following the giving of the Sale Notice. Such notice shall be given as provided in Section 3.5 hereof. It shall be a condition to such notice and the consummation of such transaction that such transaction not constitute a violation of Regulation M promulgated by the SEC. If Starwood Lodging fails to make such an offer within such period, it shall have no further rights under this Section 3 with respect to any Orderly Market Disposition by such Restricted Holder or Restricted Group of Stock Agreements Shares up to the amount of the Proposed Disposition Shares that is commenced not later than the seventh Business Day after the Sale Notice is given. 3.3 If Starwood Lodging duly makes such an offer, such Restricted Holder or Restricted Group shall elect by telephonic notice to Starwood Lodging's representative delivered and confirmed as described above, given by 8:30 a.m. (Eastern Time) on the Business Day following receipt of Starwood Lodging's offer (such day is referred to herein as the "Response Date"), in their sole and absolute discretion, to either (i) proceed with such proposed disposition, in which instance Starwood Lodging shall purchase or place the Proposed Disposition Shares at 9:00 a.m. (Eastern Time), on the Response Date, with payment to be delivered (against delivery to Starwood Lodging of the Proposed Disposition Shares free of all rights of other Persons) on the third Business Day after the Response Date in cash or immediately available funds to such account as such Restricted Holder may designate by notice to Starwood Lodging, or (ii) not to proceed with such proposed disposition, in which instance the Sale Notice shall be withdrawn and such Restricted Holder shall continue to hold the Proposed Disposition Shares subject to the terms of this Section 3 (to the extent applicable). If such Restricted Holder shall fail to so elect by 8:30 a.m. (Eastern Time) on the Response Date, it shall irrevocably be deemed to have elected not to proceed with such proposed disposition. 3.4 On the first anniversary of the Settlement Date, the provisions of this Section 3 shall automatically lapse and be of no further force or effect with respect to each Restricted Holder that holds less than 500,000 Stock Agreements Shares (except (i) to the extent that such Restricted Holder acts on or after such date as a member of a Restricted Group that holds in the aggregate 500,000 or more Stock Agreements Shares, and (ii) to the extent such Restricted Holder, either alone or as a member of a Restricted Group, has given or was required to have given Starwood Lodging a Sale Notice prior to such date and as to which the procedures in this Section 3 have not been fully performed). 7 9 3.5 Any notice given by Starwood Lodging pursuant to Section 3.2 hereof to Stock Purchaser shall be given telephonically to Tarek Ayoubi at (310) 229-2929 and by telefacsimile at (310) 229-2927, or to such other telephone and telefacsimile numbers as may be set forth for such purpose in the Sale Notice. Any notice given by Starwood Lodging pursuant to Section 3.2 hereof to any other Restricted Holder or Restricted Group shall be given to the telephone and telefacsimile numbers as may be set forth for such purpose in the Sale Notice, and no Sale Notice from a Restricted Holder other than Stock Purchaser or from any Restricted Group shall be deemed properly given in accordance with Section 3.1 unless such numbers are set forth in such Sale Notice. 3.6 Time is of the essence in the performance by the parties of their obligations under this Section 3. SECTION 4 TRANSFERS NOT CONSTITUTING AN OPEN MARKET SALE; SHORT SALES 4.1 Each Restricted Holder covenants and agrees that, as a condition to any Transfer by a such Restricted Holder of Subject Shares in a transaction that does not constitute an Open Market Sale, such Restricted Holder will obtain and deliver to Starwood Lodging a Joinder Agreement duly executed by the transferee or the intended transferee; and any purported Transfer of Subject Shares made in breach of this provision shall be null and void ab initio. 4.2 Each Restricted Holder covenants and agrees that, prior to the effectiveness of the Registration Statement, it will not "sell short" (as such term is commonly understood in the brokerage industry) any Paired Shares, whether "against the box" or otherwise. SECTION 5 PAYMENT RIGHTS On the Settlement Date, Starwood Lodging shall pay to Stock Purchaser in cash or other immediately available funds an amount equal to the amount, if any, by which the Lock Price exceeds the Market Price as of the Settlement Date, multiplied by the number of Paired Shares delivered by Starwood Lodging to Stock Purchaser hereunder. Stock Purchaser's right to receive the payments from Starwood Lodging described in this section are referred to herein as the "Payment Rights." Pursuant to a written instrument a copy of which is delivered to Starwood Lodging promptly following its execution by Stock Purchaser, Stock Purchaser may distribute to its partners or their shareholders or assign to any other Person all or any portion of the Payment Rights either together with or separately from the Paired Shares delivered hereunder. SECTION 6 REPRESENTATIONS AND WARRANTIES 6.1 Stock Purchaser represents and warrants to Starwood Lodging as follows: (a) Stock Purchaser has the power and authority to enter into this Agreement and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. The execution and delivery hereof and thereof and the performance by Stock Purchaser of its obligations 8 10 hereunder and thereunder will not violate or constitute an event of default under any material term or material provision of any agreement, document, instrument, judgment, order or decree to which Stock Purchaser is a party or by which it is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement on behalf of Stock Purchaser have the legal power, right and actual authority to bind Stock Purchaser to the terms and conditions hereof and thereof. Each of this Agreement and the Registration Rights Agreement is a valid and binding obligation of Stock Purchaser, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) Stock Purchaser is acquiring the Subject Shares to be issued to it for investment, solely for the account of itself, on behalf of its partners and Persons who are stockholders of such partners, or on behalf of certain Persons each of whom is both an Affiliate of a partner of Stock Purchaser and a creditor of Stock Purchaser (collectively, such partners and other Persons the "Stock Purchaser Affiliates"). Neither Stock Purchaser nor any of the Affiliates of Stock Purchaser is acquiring Subject Shares with a view to or for sale in connection with any distribution of such Subject Shares in violation of applicable securities laws. (d) Stock Purchaser and each of the Stock Purchaser Affiliates is an Accredited Investor. (e) Stock Purchaser has obtained and reviewed the Starwood Lodging Disclosure and the SEC Documents that have been filed with the SEC through the date hereof. 6.2 By its execution of its Joinder Agreement, each Restricted Holder other than Stock Purchaser shall be deemed to have represented and warranted to Starwood Lodging, as of the date of its delivery of such Joinder Agreement, as follows: (a) Such Restricted Holder has the power and authority to enter into this Agreement, the Registration Rights Agreement and its Joinder Agreement and to perform its obligations hereunder and thereunder. The execution and delivery hereof and thereof and the performance by such Restricted Holder of its obligations hereunder and thereunder will not violate or constitute an event of default under any material term or material provision of any agreement, document, instrument, judgment, order or decree to which such Restricted Holder is a party or by which it is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement, the Registration Rights Agreement and its Joinder Agreement on behalf of such Restricted Holder have the legal power, right and actual authority to bind such Restricted Holder to the terms and conditions hereof and thereof. Each of this Agreement, the Registration Rights Agreement and its Joinder Agreement is a valid and binding obligation of such Restricted Holder, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. 9 11 (c) Such Restricted Holder is acquiring the Subject Shares Transferred or to be Transferred to it for investment, solely for the account of itself and not with a view to or for sale in connection with any distribution of such Subject Shares in violation of applicable securities laws; provided, however, that if such Restricted Holder is Stock Purchaser Affiliate, such Restricted Holder may acquire the Subject Shares on behalf of Persons who are stockholders of such Restricted Holder if each of such Persons is an Accredited Investor. (d) Such Restricted Holder is an Accredited Investor. (e) Such Restricted Holder has had the opportunity, prior to making the determination to acquire any Subject Shares, to obtain and review the Starwood Lodging Disclosure and the SEC Documents that have been filed with the SEC through the date of the execution of such Restricted Holder's Joinder Agreement. 6.3 The Trust hereby represents and warrants to Stock Purchaser as follows: (a) The Trust has the power and authority to enter into this Agreement and the Registration Rights Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement or the Registration Rights Agreement by the Trust, nor the performance by the Trust of the Trust's obligations hereunder or thereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Trust is a party or by which the Trust is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement and the documents referenced herein on behalf of the Trust have the legal power, right and actual authority to bind the Trust to the terms and conditions hereof. This Agreement and the Registration Rights Agreement is a valid and binding obligation of Trust, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) All Paired Shares to be delivered in accordance with Section 2.1 hereof will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. (d) The Trust has filed all of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Trust included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied 10 12 on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Trust and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Trust has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. (e) Except as disclosed in the SEC Documents or the Starwood Lodging Disclosure, since December 31, 1996 and through the date hereof, (i) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole, or (ii) there has not been any split, combination or reclassification of any of the capital stock or units of the Trust or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. (f) Except as set forth in the SEC Documents or the Starwood Lodging Disclosure or in a separate writing provided to Stock Purchaser on or before the date hereof, as of the date hereof: there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Trust or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Trust or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole; and there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Trust, threatened against or involving the Trust or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Trust, threatened against or affecting the Trust or any of its subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement and the Registration Rights Agreement. 6.4 The Corporation hereby represents and warrants to Stock Purchaser as follows: (a) The Corporation has the power and authority to enter into this Agreement and the Registration Rights Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement or the Registration Rights Agreement by the Corporation, nor the performance by the Corporation of the Corporation's obligations hereunder or thereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Corporation is a party or by which the Corporation is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. 11 13 (b) The individuals executing this Agreement and the Registration Rights Agreement and the documents referenced herein on behalf of the Corporation have the legal power, right and actual authority to bind the Corporation to the terms and conditions hereof. This Agreement and the Registration Rights Agreement is a valid and binding obligation of Corporation, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) All Paired Shares to be delivered in accordance with Section 2.1 hereof will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. (d) The Corporation has filed all of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Corporation included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Corporation and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Corporation has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. (e) Except as disclosed in the SEC Documents or the Starwood Lodging Disclosure, since December 31, 1996 and through the date hereof, (i) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole, or (ii) there has not been any split, combination or reclassification of any of the capital stock or units of the Corporation or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. (f) Except as set forth in the SEC Documents or the Starwood Lodging Disclosure or in a separate writing provided to Stock Purchaser on or before the date hereof, as of the date hereof: there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Corporation or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Corporation or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole; 12 14 and there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Corporation, threatened against or involving the Corporation or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Corporation, threatened against or affecting the Corporation or any of its subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement and the Registration Rights Agreement (other than those arising in connection with the Registration Statement or the performance by the Corporation of its obligations under the Registration Rights Agreement). SECTION 7 NOTICES 7.1 Addresses. Except for the notices given pursuant to Section 3, whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be made in writing and shall be (a) sent via a nationally recognized overnight courier service fully prepaid, (b) deposited in the United States by mail, registered or certified, return receipt requested, postage prepaid, or (c) sent via telefacsimile, provided that the original of such notice, demand or request shall also be sent via one of the methods described in (a) and (b) above, in each case to the addressees (and individuals) set forth below: As to Stock Purchaser: c/o Al Anwa USA, Inc. 1925 Century Park East, Suite 1900 Los Angeles, CA 90067 Attn: Tarek Ayoubi Telefacsimile: (310) 229-2927 With a copy to Stock Purchaser's additional addressees: Morrison & Foerster LLP 555 West Fifth Street, Suite 3500 Los Angeles, CA 90013-1024 Attn: Thomas R. Fileti, Esq. Telefacsimile: (213) 892-5454 Gordon K. Eng, Esq. 19191 South Vermont Avenue, Suite 420 Torrance, California 90502 Telefacsimile: (310) 207-1066 13 15 As to Starwood Lodging: Starwood Hotels & Resorts Trust 2231 E. Camelback Rd., Suite 410 Phoenix, AZ 85016 Attn: Ronald C. Brown or Chief Financial Officer Telefacsimile: (602) 852-0115 Starwood Hotels & Resorts Worldwide, Inc. 2231 E. Camelback Rd., Suite 400 Phoenix, AZ 85016 Attn: Alan M. Schnaid or Vice President Telefacsimile: (602) 852-0115 With a copy to Starwood Lodging's additional addressees: Greenberg Traurig Hoffman Lipoff Rosen & Quentel 153 East 53rd Street New York, NY 10022 Attn: Andrew E. Zobler, Esq. Telefacsimile: (212) 223-7161 Sidley & Austin 555 West Fifth Street, Suite 4000 Los Angeles, CA 90013 Attn: Sherwin L. Samuels, Esq. and Kenneth H. Levin, Esq. Telefacsimile: (213) 896-6600 If to any Restricted Holder other than Stock Purchaser: to the address and telefacsimile number set forth in such Restricted Holder's Joinder Agreement (or to any other address or telefacsimile number provided to Starwood Lodging in writing pursuant to a notice given by such Restricted Holder pursuant to this Section 7.1). 7.2 Receipt of Notices. Any notice, demand or request that shall be delivered to Starwood Lodging and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Starwood Lodging for all purposes hereunder, and any notice, demand or request that shall be delivered to Stock Purchaser and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Stock Purchaser for all purposes hereunder (i) the next business day following the day such notice, demand or request is delivered by a nationally recognized overnight courier service fully prepaid, to such party and its Additional Addressee, (ii) if sent via registered or certified mail, at the time of receipt by such party and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date and time stated upon confirmation reports generated by the sending party's telefacsimile machine confirming the delivery of such notice, demand or request to such party and its Additional Addressee. 7.3 Refusal of Delivery. The inability to deliver any notice, demand or request because the individual to whom it is properly addressed in accordance with this Section 7 refused 14 16 delivery thereof or no longer can be located at that address shall constitute delivery thereof to such individual. 7.4 Change of Address. Each party shall have the right from time to time to designate by written notice to the other parties hereto such other Person or Persons and such other place or places as said party may desire written notices to be delivered or sent in accordance herewith. SECTION 8 GENERAL PROVISIONS 8.1 Amendment. No provision of this Agreement or of any documents or instrument entered into, given or made pursuant to this Agreement may be amended, changed, waived, discharged or terminated except by an instrument in writing, signed by the party against whom enforcement of the amendment, change, waiver, discharge or termination is sought. 8.2 Time of Essence. All times provided for in this Agreement for the performance of any act will be strictly construed, time being of the essence. 8.3 Entire Agreement. This Agreement and other documents delivered pursuant to this Agreement set forth the entire agreement and understanding of the parties in respect of the transactions contemplated by this Agreement, and supersede all prior agreements, arrangements and understandings relating to the subject matter hereof and thereof. No representation, promise, inducement or statement of intention with respect to the subject matter hereof has been made by Stock Purchaser or Starwood Lodging which is not embodied in this Agreement, and neither Starwood Lodging nor Stock Purchaser shall be bound by or liable for any alleged representations, promise, inducement or statement of intention not therein so set forth. 8.4 No Waiver. No failure of any party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder shall constitute a waiver of any party's right to demand strict compliance with the terms of this Agreement. 8.5 Counterparts. This Agreement, any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby, and any amendment or supplement thereto may be executed in two or more counterparts, and, when so executed, will have the same force and effect as though all signatures appeared on a single document. Any signature page of this Agreement or of such an amendment, supplement, document or instrument may be detached from any counterpart without impairing the legal effect of any signatures thereon, and may be attached to another counterpart identical in form thereto but having attached to it one or more additional signature pages. 8.6 Costs and Attorneys' Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement or because of an alleged dispute, default, or misrepresentation in connection with any of the provisions of this Agreement the successful or prevailing party shall be entitled to recover reasonable attorneys' fees, charges and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 8.7 Payments; Interests. Except as otherwise provided herein, payment of all amounts required by the terms of this Agreement shall be made in the United States and in immediately available funds of the United States of America which, at the time of payment, is accepted for the payment of all public and private obligations and debts. If any payment due under this Agreement is not paid when due, it shall thereafter bear interest at a variable rate equal to the rate announced from 15 17 time to time by Citibank, N.A. as its prime or reference rate, plus five percent (5%) per annum, but in no event more than the maximum rate, if any, allowed by law to be charged by the party receiving the interest on such type of indebtedness. 8.8 Parties in Interest. The rights and obligations of the parties hereto shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, heirs and the legal representatives of their respective estates. However, none of Stock Purchaser's rights under this Agreement shall be assignable except (i) in the case of the Payment Rights, as provided in Section 5 hereof, and (ii) in the case of all other rights of Stock Purchaser or another Restricted Holder, to a transferee of Subject Shares in a transaction not constituting an Open Market Sale if such transferee delivers a Joinder Agreement in compliance with Section 4 hereof. Nothing in this Agreement is intended to confer any right or remedy under this Agreement on any Person other than the parties to this Agreement and their respective successors and assigns, or to relieve or discharge the obligation or liability of any Person to any party to this Agreement or to give any Person any right of subrogation or action over or against any party to this Agreement. 8.9 Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without giving effect to the conflict-of-law rules and principles of that state. 8.10 Incorporation of Recitals. The recitals of this Agreement are incorporated into and made a part of this Agreement. 8.11 Construction of Agreement. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any of the parties hereto. Headings at the beginning of sections of this Agreement are solely for the convenience of the parties and are not a part of this Agreement. When required by the context, whenever the singular number is used in this Agreement, the same shall include the plural, and the plural shall include the singular, the masculine gender shall include the feminine and neuter genders, and vice versa. As used in this Agreement, the term "Stock Purchaser" shall include the respective permitted successors and assigns of Stock Purchaser, and the term "Starwood Lodging" shall include the permitted successors and assigns of Starwood Lodging, if any. 8.12 Severability. If any term or provision of this Agreement is determined to be illegal, unconscionable or unenforceable, all of the other terms, provisions and sections hereof will nevertheless remain effective and be in force to the fullest extent permitted by law. 8.13 Further Assurances. Starwood Lodging and Stock Purchaser agree to execute upon the request of the other party such instruments and take such actions as may be reasonably necessary to carry out the provisions of this Agreement provided that no material additional cost or liability shall incurred thereby by the party of whom such request is made. 8.14 Starwood Hotels & Resorts Trust. The parties hereto understand and agree that the name "Starwood Hotels & Resorts Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. 16 18 IN WITNESS WHEREOF, Starwood Lodging and Stock Purchaser have caused this Agreement to be executed as of the day and year first above written. "Stock Purchaser" N.Y. OVERNIGHT PARTNERS, L.P., a New York limited partnership By: N.Y. OVERNIGHT, INC., a New York corporation, its sole General Partner By: /s/ Tarek Ayoubi ------------------------------ Tarek Ayoubi President "Starwood Lodging" STARWOOD HOTELS & RESORTS TRUST, a Maryland Real Estate Investment Trust By: /s/ Steven R. Goldman ------------------------------ Steven R. Goldman Senior Vice President STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland Corporation By: /s/ Nir E. Margalit ------------------------------ Nir E. Margalit Secretary 17 19 ATTACHMENT A to Stock Agreement AGREEMENT TO BE BOUND BY THE STOCK AGREEMENT (JOINDER AGREEMENT) The undersigned, being the transferee or the intended transferee of _________ Paired Shares (the "Subject Shares") of Starwood Hotels & Resorts Trust, a Maryland real estate investment trust, and Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (together, the "Company"), as a condition to the transfer to and acquisition by the undersigned of such Subject Shares, acknowledges that certain sales or other transfers of such Subject Shares are governed by the Stock Agreement (the "Stock Agreement"), dated as of January 15, 1998, initially among the Company and N.Y. Overnight Partners, L.P., a New York limited partnership, and the undersigned hereby (1) acknowledges receipt of a copy of the Stock Agreement, and (2) agrees to be bound as a "Restricted Holder" by the terms of the Stock Agreement, as the same has been or may be amended from time to time (including without limitation the representations and warranties of the undersigned set forth therein that will be deemed made by virtue hereof). The undersigned is hereby advised that the Subject Shares have not been registered under the Securities Act of 1933 and in such event cannot be resold unless they are registered under said act or unless an exemption from registration under said act is available. The following is the undersigned's representative and such representative's address, telephone number and fax number for all purposes under the Stock Agreement: _________________________________ _________________________________ _________________________________ Agreed to this ____ day of __________, ____. --------------------------------- By: _____________________________ Its: _____________________________ 18 EX-99.8 9 STOCK AGREEMENT 1 STOCK AGREEMENT by and among D.C. OVERNIGHT PARTNERS, L.P. a District of Columbia limited partnership as Stock Purchaser and STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust and STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation, Dated as of January 15, 1998 2 STOCK AGREEMENT THIS STOCK AGREEMENT (this "Agreement") is entered into as of January 15, 1998 (the "Closing Date") by and between D.C. OVERNIGHT PARTNERS, L.P., a District of Columbia limted partnership, ("Stock Purchaser"), STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust (the "Trust"), and STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the "Corporation", and, with the Trust, "Starwood Lodging"). R E C I T A L S A. Stock Purchaser has agreed to acquire from Starwood Lodging, and Starwood Lodging has agreed to issue and deliver to Stock Purchaser, Paired Shares in partial consideration for certain assets owned by Stock Purchaser. B. The parties desire to enter into this Agreement in order to set forth certain terms and conditions under which the Paired Shares are to be issued to and held by Stock Purchaser. A G R E E M E N T NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby mutually acknowledged, Starwood Lodging and Stock Purchaser agree as follows: SECTION 1 DEFINITIONS 1.1 Defined Terms. "Accredited Investor" shall have the meaning ascribed to that term in Rule 501 promulgated by the SEC under the Securities Act. "Affiliate" shall mean, with respect to any Person, any other Person that controls, is controlled by or is under common control with such first Person. "Applicable Percentage" shall mean: (a) if Starwood Lodging delivers Registered Shares to Stock Purchaser pursuant to Section 2.1 hereof, 100% and (b) if Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, 91.95%. "Business Day" shall mean any day on which the New York Stock Exchange is open for business. "Closing Date" shall mean the date hereof. "Equity Value" shall mean One Million Six Hundred Fifty-Five Thousand One Hundred Dollars ($1,655,100), divided by the Applicable Percentage, rounded to the nearest whole number. "ITT Closing" shall have the meaning set forth in the Registration Rights Agreement. 3 "Joinder Agreement" means an agreement to be bound by this Agreement in the form of Attachment A hereto. "LIBOR" means the average of the interbank offered rates for three-month dollar deposits in the London market based on quotations at five (5) major banks, as published from time to time in The Wall Street Journal. If The Wall Street Journal ceases to publish such a compilation of interbank offered rates, or if The Wall Street Journal ceases to be published, then Starwood Lodging shall propose a substitute method of determining the interest rate generally known as the three-month LIBOR rate, which method, absent manifest error, shall be binding on all holders of the Subject Shares and Starwood Lodging. "Lock Price" shall mean the Market Price as of the Closing Date, provided, however, that in the event that, at any time during the period between December 30, 1997 and the Settlement Date, the Corporation or the Trust effects any reclassification, stock split or stock dividend with respect to their stock, any change or conversion of stock into other securities, or any other dividend or distribution with respect to the Paired Shares, other than (i) dividends contemplated by the Starwood Lodging Disclosure in effect as of December 30, 1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the current rate (as of December 30, 1997) of their dividends (together with any increases in such rate in the ordinary course) and (b) the Trust's "real estate investment taxable income" (as such term is defined for purposes of the Internal Revenue Code) without regard to any net capital gains or the deduction for dividends paid, appropriate and proportionate adjustments shall be made to the Lock Price. "Market Price" shall mean, as of any date, the average closing prices of the Paired Shares on the New York Stock Exchange during the ten consecutive Business Days immediately preceding such date. "Open Market Sale" means one or more sales of Stock Agreements Shares (including "short sales" initiated with the intention of delivering Stock Agreements Shares) made or proposed to be made by placing one or more sale orders or offers to sell with one or more securities brokers or dealers with a view toward the consummation of one or more sale transactions that are required to be, or that actually are, reported to the New York Stock Exchange or the National Association of Securities Dealers. "Orderly Market Disposition" means the sale of Stock Agreements Shares by placing one or more sell orders with one or more securities brokers or dealers with a view toward the disposition in the market of such Stock Agreements Shares. "Other Stock Agreements" shall mean, collectively, (i) that certain Stock Agreement, dated as of January 15, 1998, among Savanah Limited Partnership, as stock purchaser, and Starwood Lodging, (ii) that certain Stock Agreement, dated as of January 15, 1998, among New Remington Partners, as stock purchaser, and Starwood Lodging, and (iii) that certain Stock Agreement, dated as of January 15, 1998, among N.Y. Overnight Partners, L.P., as stock purchaser, and Starwood Lodging. "Paired Shares" shall mean one share of beneficial interest, par value $.01 per share, of the Trust, and one share of common stock, par value $.01 per share, of the Corporation that are subject to the Pairing Agreement. For purposes of calculating the number of Paired Shares to be delivered hereunder, each pair of the shares of the stock of the Trust and the Corporation shall be considered one share. 2 4 "Pairing Agreement" shall mean the Pairing Agreement dated as of June 25, 1980, as amended, between the Trust and the Corporation providing, in relevant part, for the pairing of all outstanding shares of the Corporation and the Trust. "Payment Rights" shall have the meaning set forth in Section 5 hereof. "Person" shall have the meaning set forth in the Registration Rights Agreement. "Proposed Disposition Shares" shall have the meaning set forth in Section 3 hereof. "Put Price" and "Put Right" shall have the meaning set forth in Section 2.4 hereof. "Registered Shares" means Subject Shares the issuance of which to Stock Purchaser has been registered under the Securities Act. "Registration Rights Agreement" means the Registration Rights Agreement by and among Stock Purchaser, the Trust and the Corporation in the form of Attachment B hereto. "Registration Statement" shall have the meaning set forth in the Registration Rights Agreement. "Required Effectiveness Date" shall have the meaning set forth in the Registration Rights Agreement. "Response Date" shall have the meaning set forth in Section 3 hereof. "Restricted Group" shall mean two (2) or more Restricted Holders acting in concert or under common direction. "Restricted Holder" shall mean Stock Purchaser and any other Person who shall have acquired any Stock Agreements Shares in a Transfer not constituting an Open Market Sale. A Restricted Holder shall not include any Person who shall have acquired any Stock Agreements Shares in a Transfer not constituting an Open Market Sale if such Transfer occurs after the first Open Market Sale of such Stock Agreements Shares. "Sale Notice" shall have the meaning set forth in Section 3 hereof. "SEC" shall mean the United States Securities and Exchange Commission. "SEC Documents" means all documents required to have been filed by the Trust or the Corporation with the SEC since January 1, 1996 and through the date hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Settlement Date" shall mean, if Starwood Lodging shall deliver Unregistered Shares pursuant to Section 2.1 hereof, the date on which Starwood Lodging or its counsel shall notify Stock Purchaser that (i) the Registration Statement has been declared effective by the SEC, (ii) that the Subject Shares have been registered, on the terms and subject to the provisions of the Registration Rights Agreement, for Transfer by the selling shareholders named therein in Open Market Sales and in such other manner as is provided in the Registration Statement, and (iii) that Starwood Lodging has 3 5 completed all deliveries and other actions required to enable trading of the Subject Shares on the New York Stock Exchange; provided, however, that if such notice is given later than 1:00 PM Eastern Time, the Settlement Date shall be deemed for all purposes to occur on the Business Day following the date of such notice. "Starwood Lodging Disclosure" shall mean, collectively, the Form S-3 filed by the Corporation and the Trust with the SEC on November 12, 1997, and the Form S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as the same has been or may hereafter be amended by any filing with the SEC made by the Trust or the Corporation. "Stock Agreements Shares" shall mean the aggregate of the Subject Shares and the other Paired Shares delivered pursuant to the Other Stock Agreements. "Stock Purchaser Affiliates" shall have the meaning set forth in Section 6.1 hereof. "Subject Shares" means the 32,291 Paired Shares delivered by Starwood Lodging pursuant to Section 2.1 hereof. "Transfer" shall have the meaning set forth in the Registration Rights Agreement. "Transfer Agent" shall mean the transfer agent for the Paired Shares. "Unregistered Shares" means Subject Shares the issuance of which to Stock Purchaser has not been registered under the Securities Act. 1.2 Other Definitional Provisions. The terms "hereof," "hereto," "hereunder" and similar terms when used in this Agreement shall refer to this Agreement generally, rather than to the section in which such term is used, unless otherwise specifically provided. Unless the context otherwise requires, any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. SECTION 2 CALCULATION OF SUBJECT SHARES 2.1 Calculation of Subject Shares. Starwood Lodging shall deliver to Stock Purchaser on the Closing Date Paired Shares in an amount equal to the Equity Value divided by the Lock Price. Starwood Lodging shall have the option to deliver Registered Shares or Unregistered Shares on the Closing Date. 2.2 Delivery Requirements for Paired Shares. The Paired Shares to be delivered hereunder shall be properly endorsed and certificated Paired Shares in the amount required to be delivered in accordance with the provisions of this Agreement. If Registered Shares are delivered, such shares shall be unlegended and fully and freely transferable without any consent of, registration with or notice to any Person (except as provided for in Sections 3 and 4 hereof and in the Pairing Agreement). If Unregistered Shares are issued, each certificate evidencing Subject Shares shall be stamped or otherwise imprinted with a legend in substantially the following form (and no other restrictive legends): 4 6 THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT. THE SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE OR THE SHARES EVIDENCED HEREBY IS SUBJECT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF JANUARY 15, 1998 BETWEEN THE ISSUER AND THE HOLDER HEREOF. There shall be no legend on the Paired Shares reflecting the restrictions in Sections 3 or 4 hereof. 2.3 Other Deliveries. Concurrently with the delivery of the Paired Shares, Starwood Lodging shall deliver to Stock Purchaser any statements, such as a transfer or conveyance tax forms or returns required by applicable federal or New York law to be executed by Starwood Lodging, as may reasonably be requested by Stock Purchaser in order to effect the delivery of the Subject Shares to Stock Purchaser. 2.4 Registration Rights and Requirements. (a) If Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, Stock Purchaser and Starwood Lodging shall on the Closing Date execute and deliver to each other the Registration Rights Agreement and the parties thereto shall perform their respective obligations thereunder. If Starwood Lodging delivers Registered Shares pursuant to Section 2.1 hereof, the Registration Rights Agreement shall not be executed or delivered and none of the parties shall have any obligations thereunder. (b) If Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1 hereof, and if the Settlement Date shall not have occurred on or before the seventh Business Day after the Required Effectiveness Date, Starwood Lodging shall pay to each Restricted Holder, on the Settlement Date, an amount equal to the "Interest Factor." For each Restricted Holder, the "Interest Factor" shall be an amount equal to the product of (i) LIBOR plus 2% per annum for each day after the seventh Business Day after the Required Effectiveness Date to and including the earlier of the Settlement Date or the date that is 60 days after the Required Effectiveness Date, multiplied by (ii) the Market Price multiplied by the number of Subject Shares held by such Restricted Holder on the date of such payment. (c) In the event that the Settlement Date shall not have occurred by the date that is 60 days after the Required Effectiveness Date, each Person who is a Restricted Holder as of such date shall have the non-transferrable right (its "Put Right"), exercisable at any one time for each such Restricted Holder after such 60th day and through the earlier to occur of (i) the Settlement Date, and (ii) the day immediately prior to the first anniversary of the Closing, to "put" some or all of the Subject Shares held by such Restricted Holder to Starwood Lodging for an amount per share equal to the Put Price; provided, however, that the Put Right shall not be exercisable by any Restricted Holder for a number of Subject Shares that is less than the lesser of (i) 100,000, or (ii) the number of Subject Shares then held by such Restricted Holder. Such right shall be exercised by such Restricted Holder giving Starwood Lodging notice of its election to exercise its Put Right and the number of Subject Shares to be purchased by Starwood Lodging, whereupon Starwood Lodging shall purchase such shares at 5 7 9:00 a.m. (Eastern Time) on the second Business Day following its receipt of such notice, with payment to be delivered (against delivery to Starwood Lodging of such shares free of all rights of other Persons) on the third Business Day thereafter in cash or immediately available funds to such account as such Restricted Holder may designate in such notice. The Put Price shall be the Market Price determined as of the date such notice is given. Starwood Lodging shall have the right to satisfy its obligations under the Put Rights by designating another Person as the purchaser of such shares, and such obligations shall be deemed satisfied upon such other Person's purchase of such shares for the Put Price and at the time and in the manner set forth herein. Such designation shall not affect Starwood Lodging's obligation to pay the Interest Factor as provided herein. (d) The Interest Factor and the right of each Restricted Holder to receive the Put Price in the event it elects to exercise its Put Right shall be each Restricted Holder's sole and exclusive monetary remedies arising from Starwood Lodging's failure to cause the Settlement Date to occur on or before the seventh Business Day after the Required Effectiveness Date and shall be deemed liquidated damages in respect of such failure; and each Restricted Holder shall be deemed to have waived its other monetary remedies. However, from and after the seventh Business Day after the Required Effectiveness Date, each Holder shall at all times have such equitable remedies as may be available under applicable law. SECTION 3 NOTICE PROCEDURES REGARDING OPEN MARKET SALE OF STOCK AGREEMENTS SHARES 3.1 If, at any time any Restricted Holder or Restricted Group elects to Transfer, in an Open Market Sale, more than 100,000 Stock Agreements Shares on any single Business Day (300,000 Stock Agreements Shares from and after the first Business Day after the ITT Closing), prior to executing such Transfer the designated representative of such Restricted Holder or Restricted Group shall provide Starwood Lodging's representative, the Chief Financial Officer of the Trust (or any successor representative identified by a notice given hereunder), with telephonic notice at (602) 852-3900 along with a confirmation of such notice by telefacsimile to Starwood Lodging and Starwood Lodging's additional addressees as provided in Section 7.1 hereof. Such notice (the "Sale Notice") shall indicate the number of Stock Agreements Shares which such Restricted Holder or Restricted Group has determined to Transfer in an Open Market Sale (the "Proposed Disposition Shares") on such day or days and shall comply with Section 3.5 hereof (if applicable). Such notice shall be deemed given on the Business Day the telephonic notice described above is given so long as such notice is given by 5:00 P.M., Eastern time, on such day; if given after that time, it shall be deemed given on the next Business Day. In the event that, at any time while this Section 3.1 is in effect, the Corporation or the Trust effects any reclassification, stock split or stock dividend with respect to their stock, any change or conversion of stock into other securities, or any other dividend or distribution with respect to the Paired Shares, other than (i) dividends contemplated by the Starwood Lodging Disclosure as in effect on December 30, 1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the current rate (as of December 30, 1997) of their dividends (together with any increases in such rate in the ordinary course) and (b) the Trust's "real estate investment taxable income" (as such term is defined for purposes of the Internal Revenue Code) without regard to any net capital gains or the deduction for dividends paid, appropriate and proportionate adjustments shall be made to the numbers of Stock Agreements Shares set forth in the first sentence of this Section 3.1. 3.2 No later than noon, Eastern time, on the second Business Day after the Sale Notice is given as described above, Starwood Lodging may provide the representative(s) of such 6 8 Restricted Holder or Restricted Group with telephonic notice, along with a confirmation of such notice to such representatives by telefacsimile, that Starwood Lodging is irrevocably offering to purchase or place all of the Proposed Disposition Shares at a price per share equal to the average of the closing prices on the New York Stock Exchange on the first and second Business Days following the giving of the Sale Notice. Such notice shall be given as provided in Section 3.5 hereof. It shall be a condition to such notice and the consummation of such transaction that such transaction not constitute a violation of Regulation M promulgated by the SEC. If Starwood Lodging fails to make such an offer within such period, it shall have no further rights under this Section 3 with respect to any Orderly Market Disposition by such Restricted Holder or Restricted Group of Stock Agreements Shares up to the amount of the Proposed Disposition Shares that is commenced not later than the seventh Business Day after the Sale Notice is given. 3.3 If Starwood Lodging duly makes such an offer, such Restricted Holder or Restricted Group shall elect by telephonic notice to Starwood Lodging's representative delivered and confirmed as described above, given by 8:30 a.m. (Eastern Time) on the Business Day following receipt of Starwood Lodging's offer (such day is referred to herein as the "Response Date"), in their sole and absolute discretion, to either (i) proceed with such proposed disposition, in which instance Starwood Lodging shall purchase or place the Proposed Disposition Shares at 9:00 a.m. (Eastern Time), on the Response Date, with payment to be delivered (against delivery to Starwood Lodging of the Proposed Disposition Shares free of all rights of other Persons) on the third Business Day after the Response Date in cash or immediately available funds to such account as such Restricted Holder may designate by notice to Starwood Lodging, or (ii) not to proceed with such proposed disposition, in which instance the Sale Notice shall be withdrawn and such Restricted Holder shall continue to hold the Proposed Disposition Shares subject to the terms of this Section 3 (to the extent applicable). If such Restricted Holder shall fail to so elect by 8:30 a.m. (Eastern Time) on the Response Date, it shall irrevocably be deemed to have elected not to proceed with such proposed disposition. 3.4 On the first anniversary of the Settlement Date, the provisions of this Section 3 shall automatically lapse and be of no further force or effect with respect to each Restricted Holder that holds less than 500,000 Stock Agreements Shares (except (i) to the extent that such Restricted Holder acts on or after such date as a member of a Restricted Group that holds in the aggregate 500,000 or more Stock Agreements Shares, and (ii) to the extent such Restricted Holder, either alone or as a member of a Restricted Group, has given or was required to have given Starwood Lodging a Sale Notice prior to such date and as to which the procedures in this Section 3 have not been fully performed). 3.5 Any notice given by Starwood Lodging pursuant to Section 3.2 hereof to Stock Purchaser shall be given telephonically to Tarek Ayoubi at (310) 229-2929 and by telefacsimile to (310) 229-2927, or to such other telephone and telefacsimile numbers as may be set forth for such purpose in the Sale Notice. Any notice given by Starwood Lodging pursuant to Section 3.2 hereof to any other Restricted Holder or Restricted Group shall be given to the telephone and telefacsimile numbers as may be set forth for such purpose in the Sale Notice, and no Sale Notice from a Restricted Holder other than Stock Purchaser or from any Restricted Group shall be deemed properly given in accordance with Section 3.1 unless such numbers are set forth in such Sale Notice. 3.6 Time is of the essence in the performance by the parties of their obligations under this Section 3. SECTION 4 7 9 TRANSFERS NOT CONSTITUTING AN OPEN MARKET SALE; SHORT SALES 4.1 Each Restricted Holder covenants and agrees that, as a condition to any Transfer by a such Restricted Holder of Subject Shares in a transaction that does not constitute an Open Market Sale, such Restricted Holder will obtain and deliver to Starwood Lodging a Joinder Agreement duly executed by the transferee or the intended transferee; and any purported Transfer of Subject Shares made in breach of this provision shall be null and void ab initio. 4.2 Each Restricted Holder covenants and agrees that, prior to the effectiveness of the Registration Statement, it will not "sell short" (as such term is commonly understood in the brokerage industry) any Paired Shares, whether "against the box" or otherwise. SECTION 5 PAYMENT RIGHTS On the Settlement Date, Starwood Lodging shall pay to Stock Purchaser in cash or other immediately available funds an amount equal to the amount, if any, by which the Lock Price exceeds the Market Price as of the Settlement Date, multiplied by the number of Paired Shares delivered by Starwood Lodging to Stock Purchaser hereunder. Stock Purchaser's right to receive the payments from Starwood Lodging described in this section are referred to herein as the "Payment Rights." Pursuant to a written instrument a copy of which is delivered to Starwood Lodging promptly following its execution by Stock Purchaser, Stock Purchaser may distribute to its partners or their shareholders or assign to any other Person all or any portion of the Payment Rights either together with or separately from the Paired Shares delivered hereunder. SECTION 6 REPRESENTATIONS AND WARRANTIES 6.1 Stock Purchaser represents and warrants to Starwood Lodging as follows: (a) Stock Purchaser has the power and authority to enter into this Agreement and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. The execution and delivery hereof and thereof and the performance by Stock Purchaser of its obligations hereunder and thereunder will not violate or constitute an event of default under any material term or material provision of any agreement, document, instrument, judgment, order or decree to which Stock Purchaser is a party or by which it is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement on behalf of Stock Purchaser have the legal power, right and actual authority to bind Stock Purchaser to the terms and conditions hereof and thereof. Each of this Agreement and the Registration Rights Agreement is a valid and binding obligation of Stock Purchaser, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) Stock Purchaser is acquiring the Subject Shares to be issued to it for investment, solely for the account of itself, on behalf of its partners and Persons who are stockholders 8 10 of such partners, or on behalf of certain Persons each of whom is both an Affiliate of a partner of Stock Purchaser and a creditor of Stock Purchaser (collectively, such partners and other Persons the "Stock Purchaser Affiliates"). Neither Stock Purchaser nor any of the Affiliates of Stock Purchaser is acquiring Subject Shares with a view to or for sale in connection with any distribution of such Subject Shares in violation of applicable securities laws. (d) Stock Purchaser and each of the Stock Purchaser Affiliates is an Accredited Investor. (e) Stock Purchaser has obtained and reviewed the Starwood Lodging Disclosure and the SEC Documents that have been filed with the SEC through the date hereof. 6.2 By its execution of its Joinder Agreement, each Restricted Holder other than Stock Purchaser shall be deemed to have represented and warranted to Starwood Lodging, as of the date of its delivery of such Joinder Agreement, as follows: (a) Such Restricted Holder has the power and authority to enter into this Agreement, the Registration Rights Agreement and its Joinder Agreement and to perform its obligations hereunder and thereunder. The execution and delivery hereof and thereof and the performance by such Restricted Holder of its obligations hereunder and thereunder will not violate or constitute an event of default under any material term or material provision of any agreement, document, instrument, judgment, order or decree to which such Restricted Holder is a party or by which it is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement, the Registration Rights Agreement and its Joinder Agreement on behalf of such Restricted Holder have the legal power, right and actual authority to bind such Restricted Holder to the terms and conditions hereof and thereof. Each of this Agreement, the Registration Rights Agreement and its Joinder Agreement is a valid and binding obligation of such Restricted Holder, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) Such Restricted Holder is acquiring the Subject Shares Transferred or to be Transferred to it for investment, solely for the account of itself and not with a view to or for sale in connection with any distribution of such Subject Shares in violation of applicable securities laws; provided, however, that if such Restricted Holder is Stock Purchaser Affiliate, such Restricted Holder may acquire the Subject Shares on behalf of Persons who are stockholders of such Restricted Holder if each of such Persons is an Accredited Investor. (d) Such Restricted Holder is an Accredited Investor. (e) Such Restricted Holder has had the opportunity, prior to making the determination to acquire any Subject Shares, to obtain and review the Starwood Lodging Disclosure and the SEC Documents that have been filed with the SEC through the date of the execution of such Restricted Holder's Joinder Agreement. 6.3 The Trust hereby represents and warrants to Stock Purchaser as follows: 9 11 (a) The Trust has the power and authority to enter into this Agreement and the Registration Rights Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement or the Registration Rights Agreement by the Trust, nor the performance by the Trust of the Trust's obligations hereunder or thereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Trust is a party or by which the Trust is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement and the documents referenced herein on behalf of the Trust have the legal power, right and actual authority to bind the Trust to the terms and conditions hereof. This Agreement and the Registration Rights Agreement is a valid and binding obligation of Trust, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) All Paired Shares to be delivered in accordance with Section 2.1 hereof will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. (d) The Trust has filed all of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the Trust included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Trust and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Trust has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. (e) Except as disclosed in the SEC Documents or the Starwood Lodging Disclosure, since December 31, 1996 and through the date hereof, (i) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole, or (ii) there has not been any split, combination or reclassification of any of the capital stock or units of the Trust or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. 10 12 (f) Except as set forth in the SEC Documents or the Starwood Lodging Disclosure or in a separate writing provided to Stock Purchaser on or before the date hereof, as of the date hereof: there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Trust or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Trust or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole; and there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Trust, threatened against or involving the Trust or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Trust and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Trust, threatened against or affecting the Trust or any of its subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement and the Registration Rights Agreement. 6.4 The Corporation hereby represents and warrants to Stock Purchaser as follows: (a) The Corporation has the power and authority to enter into this Agreement and the Registration Rights Agreement and to consummate the transactions herein contemplated; neither the execution and delivery of this Agreement or the Registration Rights Agreement by the Corporation, nor the performance by the Corporation of the Corporation's obligations hereunder or thereunder will violate or constitute an event of default under any material terms or material provisions of any agreement, document, instrument, judgment, order or decree to which the Corporation is a party or by which the Corporation is bound, or violate any law, rule or regulation the violation of which would have a material adverse effect upon the principal benefits intended to be provided under this Agreement or the Registration Rights Agreement. (b) The individuals executing this Agreement and the Registration Rights Agreement and the documents referenced herein on behalf of the Corporation have the legal power, right and actual authority to bind the Corporation to the terms and conditions hereof. This Agreement and the Registration Rights Agreement is a valid and binding obligation of Corporation, enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally. (c) All Paired Shares to be delivered in accordance with Section 2.1 hereof will, when so issued, be duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights and will be paired with each other in the same ratio as all other shares are paired with each other pursuant to the Pairing Agreement. (d) The Corporation has filed all of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of applicable law, and, at the respective times they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements (including, in each case, any notes thereto) of the 11 13 Corporation included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of their respective dates of filing, were prepared in accordance with generally accepted accounting principles (except, in the case of the unaudited statements, as permitted by Regulation S-X of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented the consolidated financial position of the Corporation and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). Except as disclosed in the SEC Documents or as required by generally accepted accounting principles, the Corporation has not, since December 31, 1996, made any change in the accounting practices or policies applied in the preparation of their financial statements. (e) Except as disclosed in the SEC Documents or the Starwood Lodging Disclosure, since December 31, 1996 and through the date hereof, (i) there have not been any events, changes or developments that, individually or in the aggregate, have had or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole, or (ii) there has not been any split, combination or reclassification of any of the capital stock or units of the Corporation or its operating partnership or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for shares of such capital stock. (f) Except as set forth in the SEC Documents or the Starwood Lodging Disclosure or in a separate writing provided to Stock Purchaser on or before the date hereof, as of the date hereof: there are no outstanding orders, judgments, injunctions, awards or decrees of any governmental entity against or involving the Corporation or any of its subsidiaries, or against or involving any of the directors, officers or employees of the Corporation or any of its subsidiaries, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole; and there are no actions, suits or claims or legal, administrative or arbitrative proceedings or investigations pending or, to the knowledge of the Corporation, threatened against or involving the Corporation or any of its subsidiaries or any of their directors, officers or employees, as such, or any of its or their properties, assets or business that, individually or in the aggregate, have had, or would reasonably be expected to have, a material adverse change in or effect on the financial condition, properties, business, results of operations or prospects of the Corporation and its subsidiaries taken as a whole. As of the date hereof, there are no actions, suits or other litigation, legal or administrative proceedings or governmental investigations pending or, to the knowledge of the Corporation, threatened against or affecting the Corporation or any of its subsidiaries or any of their officers, directors or employees, as such, or any of their properties, assets or business relating to the transactions contemplated by this Agreement and the Registration Rights Agreement (other than those arising in connection with the Registration Statement or the performance by the Corporation of its obligations under the Registration Rights Agreement). SECTION 7 NOTICES 7.1 Addresses. Except for the notices given pursuant to Section 3, whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be 12 14 made in writing and shall be (a) sent via a nationally recognized overnight courier service fully prepaid, (b) deposited in the United States by mail, registered or certified, return receipt requested, postage prepaid, or (c) sent via telefacsimile, provided that the original of such notice, demand or request shall also be sent via one of the methods described in (a) and (b) above, in each case to the addressees (and individuals) set forth below: As to Stock Purchaser: c/o Al Anwa USA, Inc. 1925 Century Park East, Suite 1900 Los Angeles, CA 90067 Attn: Tarek Ayoubi Telefacsimile: (310) 229-2927 With a copy to Stock Purchaser's additional addressees: Morrison & Foerster LLP 555 West Fifth Street, Suite 3500 Los Angeles, CA 90013-1024 Attn: Thomas R. Fileti, Esq. Telefacsimile: (213) 892-5454 Gordon K. Eng, Esq. 19191 South Vermont Avenue, Suite 420 Torrance, California 90502 Telefacsimile: (310) 207-1066 As to Starwood Lodging: Starwood Lodging Hotels & Resorts Trust 2231 E. Camelback Rd., Suite 410 Phoenix, AZ 85016 Attn: Ronald C. Brown or Chief Financial Officer Telefacsimile: (602) 852-0115 Starwood Lodging Hotels & Resorts Worldwide, Inc. 2231 E. Camelback Rd., Suite 400 Phoenix, AZ 85016 Attn: Alan M. Schnaid or Vice President With a copy to Starwood Lodging's additional addressees: Greenberg Traurig Hoffman Lipoff Rosen & Quentel 153 East 53rd Street New York, NY 10022 Attn: Andrew E. Zobler, Esq. Telefacsimile: (212) 223-7161 13 15 Sidley & Austin 555 West Fifth Street, Suite 4000 Los Angeles, CA 90013 Attn: Sherwin L. Samuels, Esq. and Kenneth H. Levin, Esq. Telefacsimile: (213) 896-6600 If to any Restricted Holder other than Stock Purchaser: to the address and telefacsimile number set forth in such Restricted Holder's Joinder Agreement (or to any other address or telefacsimile number provided to Starwood Lodging in writing pursuant to a notice given by such Restricted Holder pursuant to this Section 7.1). 7.2 Receipt of Notices. Any notice, demand or request that shall be delivered to Starwood Lodging and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Starwood Lodging for all purposes hereunder, and any notice, demand or request that shall be delivered to Stock Purchaser and its Additional Addressee in the manner aforesaid shall be deemed sufficiently given to and received by Stock Purchaser for all purposes hereunder (i) the next business day following the day such notice, demand or request is delivered by a nationally recognized overnight courier service fully prepaid, to such party and its Additional Addressee, (ii) if sent via registered or certified mail, at the time of receipt by such party and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date and time stated upon confirmation reports generated by the sending party's telefacsimile machine confirming the delivery of such notice, demand or request to such party and its Additional Addressee. 7.3 Refusal of Delivery. The inability to deliver any notice, demand or request because the individual to whom it is properly addressed in accordance with this Section 7 refused delivery thereof or no longer can be located at that address shall constitute delivery thereof to such individual. 7.4 Change of Address. Each party shall have the right from time to time to designate by written notice to the other parties hereto such other Person or Persons and such other place or places as said party may desire written notices to be delivered or sent in accordance herewith. SECTION 8 GENERAL PROVISIONS 8.1 Amendment. No provision of this Agreement or of any documents or instrument entered into, given or made pursuant to this Agreement may be amended, changed, waived, discharged or terminated except by an instrument in writing, signed by the party against whom enforcement of the amendment, change, waiver, discharge or termination is sought. 8.2 Time of Essence. All times provided for in this Agreement for the performance of any act will be strictly construed, time being of the essence. 8.3 Entire Agreement. This Agreement and other documents delivered pursuant to this Agreement set forth the entire agreement and understanding of the parties in respect of the transactions contemplated by this Agreement, and supersede all prior agreements, arrangements and understandings relating to the subject matter hereof and thereof. No representation, promise, inducement or statement of intention with respect to the subject matter hereof has been made by Stock 14 16 Purchaser or Starwood Lodging which is not embodied in this Agreement, and neither Starwood Lodging nor Stock Purchaser shall be bound by or liable for any alleged representations, promise, inducement or statement of intention not therein so set forth. 8.4 No Waiver. No failure of any party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder shall constitute a waiver of any party's right to demand strict compliance with the terms of this Agreement. 8.5 Counterparts. This Agreement, any document or instrument entered into, given or made pursuant to this Agreement or authorized hereby, and any amendment or supplement thereto may be executed in two or more counterparts, and, when so executed, will have the same force and effect as though all signatures appeared on a single document. Any signature page of this Agreement or of such an amendment, supplement, document or instrument may be detached from any counterpart without impairing the legal effect of any signatures thereon, and may be attached to another counterpart identical in form thereto but having attached to it one or more additional signature pages. 8.6 Costs and Attorneys' Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement or because of an alleged dispute, default, or misrepresentation in connection with any of the provisions of this Agreement the successful or prevailing party shall be entitled to recover reasonable attorneys' fees, charges and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 8.7 Payments; Interests. Except as otherwise provided herein, payment of all amounts required by the terms of this Agreement shall be made in the United States and in immediately available funds of the United States of America which, at the time of payment, is accepted for the payment of all public and private obligations and debts. If any payment due under this Agreement is not paid when due, it shall thereafter bear interest at a variable rate equal to the rate announced from time to time by Citibank, N.A. as its prime or reference rate, plus five percent (5%) per annum, but in no event more than the maximum rate, if any, allowed by law to be charged by the party receiving the interest on such type of indebtedness. 8.8 Parties in Interest. The rights and obligations of the parties hereto shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, heirs and the legal representatives of their respective estates. However, none of Stock Purchaser's rights under this Agreement shall be assignable except (i) in the case of the Payment Rights, as provided in Section 5 hereof, and (ii) in the case of all other rights of Stock Purchaser or another Restricted Holder, to a transferee of Subject Shares in a transaction not constituting an Open Market Sale if such transferee delivers a Joinder Agreement in compliance with Section 4 hereof. Nothing in this Agreement is intended to confer any right or remedy under this Agreement on any Person other than the parties to this Agreement and their respective successors and assigns, or to relieve or discharge the obligation or liability of any Person to any party to this Agreement or to give any Person any right of subrogation or action over or against any party to this Agreement. 8.9 Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without giving effect to the conflict-of-law rules and principles of that state. 8.10 Incorporation of Recitals. The recitals of this Agreement are incorporated into and made a part of this Agreement. 15 17 8.11 Construction of Agreement. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any of the parties hereto. Headings at the beginning of sections of this Agreement are solely for the convenience of the parties and are not a part of this Agreement. When required by the context, whenever the singular number is used in this Agreement, the same shall include the plural, and the plural shall include the singular, the masculine gender shall include the feminine and neuter genders, and vice versa. As used in this Agreement, the term "Stock Purchaser" shall include the respective permitted successors and assigns of Stock Purchaser, and the term "Starwood Lodging" shall include the permitted successors and assigns of Starwood Lodging, if any. 8.12 Severability. If any term or provision of this Agreement is determined to be illegal, unconscionable or unenforceable, all of the other terms, provisions and sections hereof will nevertheless remain effective and be in force to the fullest extent permitted by law. 8.13 Further Assurances. Starwood Lodging and Stock Purchaser agree to execute upon the request of the other party such instruments and take such actions as may be reasonably necessary to carry out the provisions of this Agreement provided that no material additional cost or liability shall incurred thereby by the party of whom such request is made. 8.14 Starwood Hotels & Resorts Trust. The parties hereto understand and agree that the name "Starwood Hotels & Resorts Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. 16 18 IN WITNESS WHEREOF, Starwood Lodging and Stock Purchaser have caused this Agreement to be executed as of the day and year first above written. "Stock Purchaser" D.C. OVERNIGHT PARTNERS, L.P., a District of Columbia limited partnership By: D.C. OVERNIGHT, INC., a District of Columbia corporation, its sole General Partner By: /s/ Tarek Ayoubi -------------------------------- Tarek Ayoubi President "Starwood Lodging" STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust By: /s/ Steven R. Goldman -------------------------------- Steven R. Goldman Senior Vice President STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation By: /s/ Nir E. Margalit -------------------------------- Nir E. Margalit Secretary 17 19 ATTACHMENT A to Stock Agreement AGREEMENT TO BE BOUND BY THE STOCK AGREEMENT (JOINDER AGREEMENT) The undersigned, being the transferee or the intended transferee of ________________ Paired Shares (the "Subject Shares") of Starwood Hotels & Resorts Trust, a Maryland real estate investment trust, and Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (together, the "Company"), as a condition to the transfer to and acquisition by the undersigned of such Subject Shares, acknowledges that certain sales or other transfers of such Subject Shares are governed by the Stock Agreement (the "Stock Agreement"), dated as of January 15, 1998, initially among the Company and D.C. Overnight Partners, L.P., and the undersigned hereby (1) acknowledges receipt of a copy of the Stock Agreement, and (2) agrees to be bound as a "Restricted Holder" by the terms of the Stock Agreement, as the same has been or may be amended from time to time (including without limitation the representations and warranties of the undersigned set forth therein that will be deemed made by virtue hereof). The undersigned is hereby advised that the Subject Shares have not been registered under the Securities Act of 1933 and in such event cannot be resold unless they are registered under said act or unless an exemption from registration under said act is available. The following is the undersigned's representative and such representative's address, telephone number and fax number for all purposes under the Stock Agreement: _________________________________ _________________________________ _________________________________ Agreed to this ____ day of __________, ____. --------------------------------- By: _____________________________ Its: _____________________________ 18 EX-99.9 10 REGISTRATION RIGHTS AGREEMENT 1 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of January 15, 1998 among STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust (the "Trust"), STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the "Corporation" and, together with the Trust, the "Company"), and SAVANAH LIMITED PARTNERSHIP, a District of Columbia limited partnership ("Shareholder"). RECITALS WHEREAS, pursuant to a Stock Agreement of even date herewith and by and among the parties hereto (the "Stock Agreement"), the Company is issuing and delivering to Shareholder certain Paired Shares; and WHEREAS, the Stock Agreement provides that if such Paired Shares are Unregistered Shares, the Company shall effect the registration of such Paired Shares under the Securities Act; and WHEREAS, the parties desire to set forth their rights and obligations with respect to such registration and certain other matters; NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions. Each capitalized term used in this Agreement but not defined herein shall have the meaning ascribed to such term in the Stock Agreement; and as used in this Agreement the following terms shall have the following meanings: "Commission" means the Securities and Exchange Commission. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder Information" means, with respect to a Selling Holder, (i) such information regarding such Selling Holder as is required by Section 507 of Regulation S-K promulgated by the Commission under the Securities Act, (ii) information as to whether (and if so, in what manner) the intended method of disposition of such Holder's Registrable Shares differs from the Plan of Distribution, and (iii) any such additional information as may be required to be included in the Registration Statement by a Selling Holder; in each case as shall be required to effect the registration of such Registrable Shares pursuant to the Registration Statement, the disclosures required in the Prospectus with respect thereto and the offer and Transfer of such Registrable Shares pursuant to the Prospectus. "Holders" means (i) Shareholder, and (ii) any other Person who acquires any of the Registrable Shares from Shareholder or another Holder if (a) the Transferor and such Person shall have delivered to the Company a written notice of such Transfer setting forth the name of such Person, and (b) such Person shall have executed and delivered to the Company a properly completed Joinder Agreement; in each case at such times as such Persons shall own Registrable Shares. "ITT Closing" means the consummation of the acquisition of ITT Corporation by the Company. "ITT Termination" means the issuance by the Company of a press release stating that the Company will not consummate the acquisition of ITT Corporation. 2 "Joinder Agreement" means an agreement to be bound by this Agreement in the form of Annex A hereto. "Paired Shares" means (i) "paired shares" (as such term is defined in the Purchase and Sale Agreement), and (ii) shares of capital stock of the Trust or the Corporation issued by the Trust or the Corporation in respect of or in exchange for paired shares in connection with any stock dividend or distribution, stock split-up, recapitalization, recombination or exchange by the Trust or the Corporation generally of such paired shares. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or other entity, or government or other agency or political subdivision thereof. "Proposed Plan of Distribution" means a draft of the portion of the Registration Statement that describes the intended methods of disposition of the Registrable Shares by the Selling Holders. "Prospectus" means, with respect to the Registration Statement and each amendment thereto, the form of prospectus included therein. "Registrable Shares" means, as of any date of determination, (i) the Paired Shares that are Unregistered Shares and that constitute the Subject Shares; (ii) any shares or other securities issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange by the Trust or the Corporation generally for, or in replacement by the Trust or the Corporation generally of, such Paired Shares; and (iii) any securities issued in exchange for such Paired Shares in any merger or reorganization of the Company; in each case that continue to be owned by a Holder on such date of determination. "Registration Statement" means a registration statement on Form S-3, as amended from time to time, registering the offer and sale by the Selling Holders of such Selling Holders' Registrable Shares included therein for offer and Transfer on a delayed or continuous basis pursuant to Rule 415 under the Securities Act. "Required Effectiveness Date" means the later of (i) the 30th day after the Closing Date, or (ii) the earliest of: (a) The 30th day after the date of the ITT Closing; (b) The 30th day after the date of the ITT Termination; and (c) If neither the ITT Closing nor the ITT Termination has occurred prior to April 1, 1998, the 30th day after a demand for registration is made by notice given by Shareholder to the Company on or after April 1, 1998; provided, however, that in the event that, following the initial filing of the Registration Statement, the Company is advised by the Commission that the Registration Statement will be reviewed, each of the time periods set forth above shall be extended for 20 days. "Securities Act" shall mean the Securities Act of 1933, as amended. 2 3 "Selling Holders" means (a) each Holder (i) who complies with Sections 3.1.1 hereof, (ii) who holds not less than 100,000 Subject Shares at the both at the time such notice is given and the date the Registration Statement is declared effective (or such lesser number as the Company, in its sole and absolute discretion, shall determine for such Holder), and (iii) whose Registrable Shares are included in the Registration Statement; and (b) each Transferee of such a Holder who (x) provides such Transferee's Holder Information promptly after its acquisition of Subject Shares and prior to the Company's request for acceleration of the Registration Statement, and (y) satisfies the conditions set forth in clauses (ii) and (iii) above. "Transfer" means the act of selling, giving, transferring, creating a trust (voting or otherwise), assigning or otherwise disposing of (other than pledging, hypothecating or otherwise transferring as security) (and correlative words shall have correlative meanings). "Transferee" means a Person to whom Registerable Shares are Transferred. "Violation" shall have the meaning set forth in Section 5.1 hereof. 2. Registration Obligations of the Company. The Company shall: 2.1 File the Registration Statement with the Commission not later than 15 days rior to the Required Effectiveness Date (determined without reference to the proviso included in the definition of such term) and thereafter use its best efforts to cause the Registration Statement to be declared effective on the Required Effectiveness Date. 2.2 Furnish to the Shareholder a copy of the Registration Statement for its review and comment not later than concurrently with the filing of the Registration Statement with the Commission. 2.3 The Company shall give notice to the Shareholder of the expected effectiveness of the Registration Statement no later than the date acceleration of such effectiveness is requested of the Commission; provided, however, that in no event shall the Company have any liability for any failure to give such notice. 2.4 Include in the Registration Statement the number of each Holder's Registrable Shares for each Holder as shall be specified for such Holder pursuant to Section 3.1 hereof. 2.5 Use its best efforts to keep the Registration Statement effective until the earlier of (i) one year after the Closing Date, or (ii) such date as of which all the Selling Holders have completed the distribution or other disposition of the Registrable Shares registered under the Registration Statement. If the Registration Statement is terminated pursuant to clause (i) above, the Company shall timely file with the Commission all reports and other information required to enable all holders of Registrable Shares to Transfer such shares pursuant to Rule 144 promulgated by the Commission under the Exchange Act, as amended. 2.6 During the effectiveness of the Registration Statement, upon notice to the Company by a Selling Holder of a Transfer of Registrable Shares pursuant to the Registration Statement and receipt 3 4 (i) by the Company of a certificate from such Selling Holder in the form of Annex B attached hereto, and (ii) by counsel for the Company of a certificate from such Selling Holder in the form of Annex C attached hereto, in each case representing that such Registrable Shares were offered and have been Transferred by such Selling Holder in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus, the Company shall use its best efforts to cause such Registrable Shares to be reissued as soon as practicable (and not later than three Business Days following receipt by the Company and such counsel of such certificates) in the name of the transferee free of any restrictive legend under the Securities Act and to take all such actions as may be reasonably required to cause its transfer agent to comply with the undertakings set forth in this section. 2.7 Use its best efforts to amend the Registration Statement or supplement the Prospectus so that they will remain current and in compliance with the requirements of the Securities Act for the period specified in Section 2.4 hereof, and use its best efforts to give the Selling Holders notice of the happening of any event or development as a result of which the Registration Statement or Prospectus may contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein not misleading. In the event that any Registrable Shares included in the Registration Statement remain unsold at the end of the period during which the Company is obligated to use its best efforts to maintain the effectiveness of the Registration Statement, the Company may file a post-effective amendment to the Registration Statement for the purpose of de-registering such unsold Registrable Shares. 2.8 Furnish to each Selling Holder, without charge, such numbers of copies of the Registration Statement, any pre-effective or post-effective amendment thereto, the final Prospectus, and any amendments or supplements thereto, in each case in conformity with the requirements of the Securities Act, and such other related documents, as each Selling Holder may reasonably request in order to facilitate the Transfer of the Registrable Shares owned by such Selling Holder. 2.9 Use its best efforts to register and qualify the Registrable Shares covered by the Registration Statement under such securities laws of such states or jurisdictions as shall be reasonably requested by the Selling Holders; provided, however, that neither the Trust nor the Corporation shall be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 2.10 Promptly notify each Selling Holder of any stop order issued or threatened to be issued by the Commission or any of the jurisdictions referred to in Section 2.9 hereof in connection with the Registration Statement (and use its best efforts to prevent the entry of such stop order or to remove it if entered as promptly as practicable). 2.11 Use its best efforts to cause the Registrable Shares covered by the Registration Statement, if the Paired Shares are then listed on a securities exchange or included for quotation in a recognized trading market, to continue to be so listed or included. 3. The Holders' Obligations. 3.1 The obligations of the Company under Section 2 with respect to each Holder are subject to the satisfaction of each of the following conditions: 3.1.1 Not later than 10 days after the later of (i) the date hereof, or (ii) the date on which the Company delivers the Proposed Plan of Distribution to the Shareholder (or such later 4 5 date as the Company, in its sole and absolute discretion, shall determine), such Holder shall furnish all of its Holder Information to the Company, if such Holder Information discloses that such Holder holds not less than 100,000 Subject Shares (or such lesser number as the Company, in its sole and absolute discretion, shall determine for such Holder). 3.1.2 Prior to the effectiveness of the Registration Statement, such Holder shall furnish to the Company by a notice such amendments and supplements to its Holder Information provided pursuant to Section 3.1.1 hereof as may be necessary in order to assure that the Holder Information included in the Registration Statement for each Selling Holder does not include a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 3.1.3 Such Holder shall cooperate with the Company in the preparation of the Registration Statement in the manner and to the extent reasonably requested by the Company, including accurately and fully completing, executing and delivering to the Company such documents as the Company may reasonably request in order to permit the Company to obtain the Holder Information or to otherwise comply with all applicable laws or to obtain acceleration of the effectiveness of the Registration Statement. 3.1.4 Such Holder shall not have breached any of its obligations to the Company set forth in this Section 3.1 or in Sections 3 or 4 of the Stock Agreement; provided, however, that if such breach is one that is capable of being cured and is actually cured by such Holder in all material respects, the obligations of the Company to such Holder that arises, or which the Company is obligated to perform in whole or in part, after such cure shall be reinstated on the terms and subject to the conditions set forth herein. A Transferee of Subject Shares who is otherwise entitled to have such shares included in the Registration Statement shall be deemed not have breached its obligation to provide its Holder Information to the Company if it provides such information promptly after its acquisition of such shares and prior to the Company's request for acceleration of the Registration Statement 3.1.5 Such Holder shall not have made any material misrepresentation pursuant to Section 6 of the Stock Agreement. 3.2 No action taken or omitted to be taken by or on behalf of any Holder shall adversely affect the rights of any other Holder hereunder. 3.3 After the effectiveness of the Registration Statement, each Selling Holder (and each transferee thereof) shall furnish to the Company by a notice such amendments and supplements to its Holder Information provided pursuant to Section 3.1 hereof as may be necessary in order to assure that the Holder Information included in the Registration Statement for such Holder does not include a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 4. Expenses of Registration. The Company shall pay all expenses incurred in connection with the registration, filing and qualification of the Registrable Shares, including all registration, filing and NASD or securities exchange fees; all fees and expenses of complying with securities or blue sky laws; all word processing, duplicating and printing expenses; and the fees and disbursements of counsel and accountants for the Company; but excluding all discounts, commissions or fees of selling brokers or similar securities industry professionals and all fees and expenses of counsel and accountants for the Selling Holders. 5 6 5. Indemnification; Contribution. 5.1 To the extent permitted by applicable law, the Company shall indemnify and hold harmless each Selling Holder; each Person, if any, who controls such Selling Holder within the meaning of the Securities Act; and each officer, director, partner and employee of such Selling Holder and such controlling Person; against any and all losses, claims, damages, liabilities and expenses incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may become subject under the Securities Act, to the extent such losses, claims, damages, liabilities and expenses arise out of or are based upon any of the following (collectively a "Violation"): 5.1.1 Any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including any final Prospectus, or any amendments or supplements thereto; 5.1.2 The omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or 5.1.3 Any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any applicable state securities law; provided, however, that the indemnification required by this Section 5.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or expense incurred by a Selling Holder (or any Person, if any, who controls such Selling Holder within the meaning of the Securities Act, or any officer, director, partner and employee of such Selling Holder and such controlling Person) to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with the Holder Information or other information furnished to the Company by or on behalf of such Selling Holder expressly for use in connection with the Registration Statement. 5.2 To the extent permitted by applicable law, each Selling Holder shall indemnify and hold harmless the Company; each of its directors, each of its officers who shall have signed the Registration Statement; each Person, if any, who controls the Company within the meaning of the Securities Act; any other Selling Holder, any controlling Person of any such other Selling Holder and each officer, director, partner, and employee of such other Selling Holder and such controlling Person; against any and all losses, claims, damages, liabilities and expenses, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise become subject under the Securities Act, to the extent such losses, claims, damages, liabilities and expenses arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with the Holder Information or other information furnished to the Company by or on behalf of that Selling Holder expressly for use in connection with the Registration Statement. 5.3 Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, suit, proceeding, investigation or threat thereof made in writing for which such indemnified party may make a claim under this Section 5, such indemnified party shall deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to 6 7 the parties. The failure of an Indemnified Party to deliver written notice to the indemnifying party within a reasonable time following the commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Section 5 unless such failure is prejudicial to such indemnifying party's ability to defend such action. Any fees and expenses incurred by the indemnified party (including any fees and expenses incurred in connection with investigating or preparing to defend such action or proceeding) shall be paid to the indemnified party, as incurred, within 30 days of written notice thereof to the indemnifying party (regardless of whether it is ultimately determined that an indemnified party is not entitled to indemnification hereunder). Any such indemnified party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses, or (ii) the indemnifying party shall have failed to promptly assume the defense of such action, claim or proceeding, or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party and that the assertion of such defenses would create a conflict of interest such that counsel employed by the indemnifying party could not faithfully represent the indemnified party (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action, claim or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties, unless in the reasonable judgment of such indemnified party a conflict of interest would exist between such indemnified party and any other of such indemnified parties with respect to such action, claim or proceeding, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels). No indemnifying party shall be liable to an indemnified party for any settlement of any action, proceeding or claim without the written consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed. 5.4 If the indemnification required by this Section 5 from the indemnifying party is determined by a court of competent jurisdiction to be unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to in this Section 5: 5.4.1 The indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any Violation has been committed by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such Violation. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 5.1 and 5.2, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. 7 8 5.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.4 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 5.4.1. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of a fraudulent misrepre- sentation. 5.5 If indemnification is available under this Section 5, the indemnifying parties shall indemnify each indemnified party to the full extent provided in this Section 5 without regard to the relative fault of such indemnifying party or indemnified party or any other equitable consideration referred to in Section 5.4. 5.6 The obligations of the Company and the Selling Holders under this Section 5 shall survive the completion of any offering of Registrable Shares pursuant to the Registration Statement and any termination of this Agreement. 6. Amendment, Modification and Waivers; Further Assurances. 6.1 This Agreement may be amended with the consent of the Company and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it; in each case only if the Company shall have obtained the written consent of Holders holding more than 50% of the Registrable Shares. Such amendment, action or omission shall not require the consent of any other Holder. In addition, the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, that affects the rights hereunder of a specific Holder with the written consent of such Holder. 6.2 No waiver of any terms or conditions of this Agreement shall operate as a waiver of any other breach of such terms and conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. No written waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provisions being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. 6.3 Each of the parties hereto shall execute all such further instruments and documents and take all such further action as any other party hereto may reasonably require in order to effectuate the terms and purposes of this Agreement. 7. Miscellaneous. 7.1 Business Day. Whenever this Agreement requires that an action be taken or a notice be given on a date that would otherwise not be a Business Day, the time period for taking such action or giving such notice shall be extended to the first day thereafter that is a Business Day. 7.2 Governing Law. This agreement shall be governed by and construed in accordance with the laws of the state of New York, without giving regard to the conflict of laws principles thereof. 8 9 7.3 Notices. All notices, requests, demands, consents, approvals, designations and other deliveries and communications called for or contemplated by this Agreement shall be in writing and shall be given (i) in the case of Shareholder or the Company, to the address and in the manner set forth in Section 7 of the Stock Agreement, and (ii) in the case of any Holder other than Shareholder, in the manner set forth in Section 7 of the Stock Agreement and to the address provided to the Company in such Holder's Joinder Agreement. 7.4 Entire Agreement; Integration. This Agreement, together with the Stock Agreement, supersedes all prior agreements between or among any of the parties hereto with respect to the subject matter contained herein and therein, and such agreements embody the entire understanding among the parties relating to such subject matter. 7.5 Section Headings. Section headings are for convenience of reference only and shall not affect the meaning of any provision of this Agreement. 7.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which shall together constitute one and the same instrument. All signatures need not be on the same counterpart. 7.7 Severability. If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement, unless the result thereof would be unreasonable, in which case the parties hereto shall negotiate in good faith as to appropriate amendments hereto. 7.8 Termination. This Agreement may be terminated at any time by a written instrument signed by the parties hereto. Unless sooner terminated in accordance with the preceding sentence, this Agreement (other than Section 5 hereof) shall terminate in its entirety on such date as there shall be no Registrable Shares. 7.9 Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees (including any fees incurred in any appeal) in addition to its costs and expenses and any other available remedy. 7.10 No Third Party Beneficiaries or Assignees. Nothing herein expressed or implied is intended to confer upon any person, other than the parties hereto or the Holders (to the extent expressly provided herein) any rights, remedies, obligations or liabilities under or by reason of this Agreement. Neither this Agreement not the rights or obligations hereunder may be assigned or otherwise transferred by any Holder except as permitted herein with respect to a Transfer of Registrable Shares. 7.11 Starwood Lodging Trust. The parties hereto understand and agree that the name "Starwood Lodging Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. 9 10 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first written above. "Shareholder" SAVANAH LIMITED PARTNERSHIP, a District of Columbia limited partnership By: ASPEN ENTERPRISES INTERNATIONAL, INC., a Colorado corporation, its General Partner /s/ Mansor Dalaan By: ____________________________ Mansor Dalaan President STARWOOD HOTELS & RESORTS TRUST a Maryland real estate investment trust /s/ Steven R. Goldman By: _____________________________ Steven R. Goldman Senior Vice President STARWOOD HOTELS & RESORTS WORLDWIDE, INC. a Maryland corporation /s/ Nir E. Margalit By: _____________________________ Nir E. Margalit Secretary 10 11 ANNEX A to Registration Rights Agreement AGREEMENT TO BE BOUND BY THE REGISTRATION RIGHTS AGREEMENT The undersigned, being the transferee or the intended transferee of _________ Paired Shares (the "Registrable Shares") of Starwood Hotels & Resorts Trust, a Maryland real estate investment trust, and Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (together, the "Company"), as a condition to the transfer to and acquisition by the undersigned of such Registrable Shares, acknowledges that matters pertaining to the sale and registration of such Registrable Shares are governed by the Registration Rights Agreement (the "Registration Rights Agreement"), dated as of January 15, 1998, initially among the Company and Savanah Limited Partnership, a District of Columbia limited partnership, and the undersigned hereby (1) acknowledges receipt of a copy of such agreement, and (2) agrees to be bound as a "Holder" by the terms of the Registration Rights Agreement, as the same has been or may be amended from time to time. Agreed to this ____ day of __________, ____. ____________________________________ By: _______________________________ Its: _______________________________ Address, telephone number and telecopy number for notices: ____________________________________ ____________________________________ ____________________________________ ____________________________________ 12 ANNEX B to Registration Rights Agreement [Letterhead of Selling Holder] ____________, 199__ BY TELECOPIER Starwood Hotels & Resorts Trust 2231 E. Camelback Road, Suite 410 Phoenix, Arizona 85016 Attention: Ronald C. Brown or Chief Financial Officer Starwood Hotels & Resorts Worldwide, Inc. 2231 E. Camelback Road, Suite 400 Phoenix, Arizona 85016 Attention: Alan M. Schnaid or Vice President Re: Starwood Hotels & Resorts Ladies and Gentlemen: Reference is made to the prospectus (the "Prospectus") included in the Registration Statement on Form S-3 (Registration No. ___________) filed by Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company") with the Securities and Exchange Commission on _________, 1998, under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration for resale by the shareholders named therein of certain shares of beneficial interest, par value $.01 per share, of the Trust, and shares of common stock, par value $.01 per share, of the Corporation (the "Paired Shares"), including _______ Paired Shares held by the undersigned. ___________ of the Paired Shares held by the undersigned were offered for sale and have been sold by the undersigned in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus. Thus, the undersigned requests that new certificates evidencing such Paired Shares be issued in the name of _________________________, the transferee, free of any restrictive legend under the Securities Act. Very truly yours, [Name and signature of Selling Holder] 13 ANNEX C to Registration Rights Agreement [Letterhead of Selling Holder] ____________, 199__ BY TELECOPIER Sidley & Austin 555 West Fifth Street Los Angeles, California 90013 Attention: Sherwin L. Samuels, Esq., Kenneth H. Levin, Esq. and James V. Robertson, Esq. Re: Starwood Hotels & Resorts Ladies and Gentlemen: Reference is made to the prospectus (the "Prospectus") included in the Registration Statement on Form S-3 (Registration No. ___________) filed by Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company") with the Securities and Exchange Commission on _________, 1998, under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration for resale by the shareholders named therein of certain shares of beneficial interest, par value $.01 per share, of the Trust, and shares of common stock, par value $.01 per share, of the Corporation (the "Paired Shares"), including _______ Paired Shares held by the undersigned. The undersigned understands that you have been requested by the Company to deliver an opinion to the Company's transfer agent that, upon the sale by the undersigned of the Paired Shares, certificates evidencing such shares may be issued to the transferee(s) without any restrictive legend under the Securities Act. For the purpose of facilitating the delivery by you of such opinion, the undersigned, hereby represents that _______ of the Paired Shares held by the undersigned were offered for sale and have been sold in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus. The undersigned understands that you will be relying on the foregoing representations in rendering your opinion, and the undersigned consents to such reliance. Very truly yours, [Name and signature of Selling Holder] EX-99.10 11 REGISTRATION RIGHTS AGREEMENT 1 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of January 15, 1998 among STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust (the "Trust"), STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the "Corporation" and, together with the Trust, the "Company"), and NEW REMINGTON PARTNERS, a Texas general partnership ("Shareholder"). RECITALS WHEREAS, pursuant to a Stock Agreement of even date herewith and by and among the parties hereto (the "Stock Agreement"), the Company is issuing and delivering to Shareholder certain Paired Shares; and WHEREAS, the Stock Agreement provides that if such Paired Shares are Unregistered Shares, the Company shall effect the registration of such Paired Shares under the Securities Act; and WHEREAS, the parties desire to set forth their rights and obligations with respect to such registration and certain other matters; NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions. Each capitalized term used in this Agreement but not defined herein shall have the meaning ascribed to such term in the Stock Agreement; and as used in this Agreement the following terms shall have the following meanings: "Commission" means the Securities and Exchange Commission. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder Information" means, with respect to a Selling Holder, (i) such information regarding such Selling Holder as is required by Section 507 of Regulation S-K promulgated by the Commission under the Securities Act, (ii) information as to whether (and if so, in what manner) the intended method of disposition of such Holder's Registrable Shares differs from the Plan of Distribution, and (iii) any such additional information as may be required to be included in the Registration Statement by a Selling Holder; in each case as shall be required to effect the registration of such Registrable Shares pursuant to the Registration Statement, the disclosures required in the Prospectus with respect thereto and the offer and Transfer of such Registrable Shares pursuant to the Prospectus. "Holders" means (i) Shareholder, and (ii) any other Person who acquires any of the Registrable Shares from Shareholder or another Holder if (a) the Transferor and such Person shall have delivered to the Company a written notice of such Transfer setting forth the name of such Person, and (b) such Person shall have executed and delivered to the Company a properly completed Joinder Agreement; in each case at such times as such Persons shall own Registrable Shares. "ITT Closing" means the consummation of the acquisition of ITT Corporation by the Company. "ITT Termination" means the issuance by the Company of a press release stating that the Company will not consummate the acquisition of ITT Corporation. 2 "Joinder Agreement" means an agreement to be bound by this Agreement in the form of Annex A hereto. "Paired Shares" means (i) "paired shares" (as such term is defined in the Purchase and Sale Agreement), and (ii) shares of capital stock of the Trust or the Corporation issued by the Trust or the Corporation in respect of or in exchange for paired shares in connection with any stock dividend or distribution, stock split-up, recapitalization, recombination or exchange by the Trust or the Corporation generally of such paired shares. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or other entity, or government or other agency or political subdivision thereof. "Proposed Plan of Distribution" means a draft of the portion of the Registration Statement that describes the intended methods of disposition of the Registrable Shares by the Selling Holders. "Prospectus" means, with respect to the Registration Statement and each amendment thereto, the form of prospectus included therein. "Registrable Shares" means, as of any date of determination, (i) the Paired Shares that are Unregistered Shares and that constitute the Subject Shares; (ii) any shares or other securities issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange by the Trust or the Corporation generally for, or in replacement by the Trust or the Corporation generally of, such Paired Shares; and (iii) any securities issued in exchange for such Paired Shares in any merger or reorganization of the Company; in each case that continue to be owned by a Holder on such date of determination. "Registration Statement" means a registration statement on Form S-3, as amended from time to time, registering the offer and sale by the Selling Holders of such Selling Holders' Registrable Shares included therein for offer and Transfer on a delayed or continuous basis pursuant to Rule 415 under the Securities Act. "Required Effectiveness Date" means the later of (i) the 30th day after the Closing Date, or (ii) the earliest of: (a) The 30th day after the date of the ITT Closing; (b) The 30th day after the date of the ITT Termination; and (c) If neither the ITT Closing nor the ITT Termination has occurred prior to April 1, 1998, the 30th day after a demand for registration is made by notice given by Shareholder to the Company on or after April 1, 1998; provided, however, that in the event that, following the initial filing of the Registration Statement, the Company is advised by the Commission that the Registration Statement will be reviewed, each of the time periods set forth above shall be extended for 20 days. "Securities Act" shall mean the Securities Act of 1933, as amended. 2 3 "Selling Holders" means (a) each Holder (i) who complies with Sections 3.1.1 hereof, (ii) who holds not less than 100,000 Subject Shares at the both at the time such notice is given and the date the Registration Statement is declared effective (or such lesser number as the Company, in its sole and absolute discretion, shall determine for such Holder), and (iii) whose Registrable Shares are included in the Registration Statement; and (b) each Transferee of such a Holder who (x) provides such Transferee's Holder Information promptly after its acquisition of Subject Shares and prior to the Company's request for acceleration of the Registration Statement, and (y) satisfies the conditions set forth in clauses (ii) and (iii) above. "Transfer" means the act of selling, giving, transferring, creating a trust (voting or otherwise), assigning or otherwise disposing of (other than pledging, hypothecating or otherwise transferring as security) (and correlative words shall have correlative meanings). "Transferee" means a Person to whom Registerable Shares are Transferred. "Violation" shall have the meaning set forth in Section 5.1 hereof. 2. Registration Obligations of the Company. The Company shall: 2.1 File the Registration Statement with the Commission not later than 15 days prior to the Required Effectiveness Date (determined without reference to the proviso included in the definition of such term) and thereafter use its best efforts to cause the Registration Statement to be declared effective on the Required Effectiveness Date. 2.2 Furnish to the Shareholder a copy of the Registration Statement for its review and comment not later than concurrently with the filing of the Registration Statement with the Commission. 2.3 The Company shall give notice to the Shareholder of the expected effectiveness of the Registration Statement no later than the date acceleration of such effectiveness is requested of the Commission; provided, however, that in no event shall the Company have any liability for any failure to give such notice. 2.4 Include in the Registration Statement the number of each Holder's Registrable Shares for each Holder as shall be specified for such Holder pursuant to Section 3.1 hereof. 2.5 Use its best efforts to keep the Registration Statement effective until the earlier of (i) one year after the Closing Date, or (ii) such date as of which all the Selling Holders have completed the distribution or other disposition of the Registrable Shares registered under the Registration Statement. If the Registration Statement is terminated pursuant to clause (i) above, the Company shall timely file with the Commission all reports and other information required to enable all holders of Registrable Shares to Transfer such shares pursuant to Rule 144 promulgated by the Commission under the Exchange Act, as amended. 2.6 During the effectiveness of the Registration Statement, upon notice to the Company by a Selling Holder of a Transfer of Registrable Shares pursuant to the Registration Statement and receipt 3 4 (i) by the Company of a certificate from such Selling Holder in the form of Annex B attached hereto, and (ii) by counsel for the Company of a certificate from such Selling Holder in the form of Annex C attached hereto, in each case representing that such Registrable Shares were offered and have been Transferred by such Selling Holder in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus, the Company shall use its best efforts to cause such Registrable Shares to be reissued as soon as practicable (and not later than three Business Days following receipt by the Company and such counsel of such certificates) in the name of the transferee free of any restrictive legend under the Securities Act and to take all such actions as may be reasonably required to cause its transfer agent to comply with the undertakings set forth in this section. 2.7 Use its best efforts to amend the Registration Statement or supplement the Prospectus so that they will remain current and in compliance with the requirements of the Securities Act for the period specified in Section 2.4 hereof, and use its best efforts to give the Selling Holders notice of the happening of any event or development as a result of which the Registration Statement or Prospectus may contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein not misleading. In the event that any Registrable Shares included in the Registration Statement remain unsold at the end of the period during which the Company is obligated to use its best efforts to maintain the effectiveness of the Registration Statement, the Company may file a post-effective amendment to the Registration Statement for the purpose of deregistering such unsold Registrable Shares. 2.8 Furnish to each Selling Holder, without charge, such numbers of copies of the Registration Statement, any pre-effective or post-effective amendment thereto, the final Prospectus, and any amendments or supplements thereto, in each case in conformity with the requirements of the Securities Act, and such other related documents, as each Selling Holder may reasonably request in order to facilitate the Transfer of the Registrable Shares owned by such Selling Holder. 2.9 Use its best efforts to register and qualify the Registrable Shares covered by the Registration Statement under such securities laws of such states or jurisdictions as shall be reasonably requested by the Selling Holders; provided, however, that neither the Trust nor the Corporation shall be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 2.10 Promptly notify each Selling Holder of any stop order issued or threatened to be issued by the Commission or any of the jurisdictions referred to in Section 2.9 hereof in connection with the Registration Statement (and use its best efforts to prevent the entry of such stop order or to remove it if entered as promptly as practicable). 2.11 Use its best efforts to cause the Registrable Shares covered by the Registration Statement, if the Paired Shares are then listed on a securities exchange or included for quotation in a recognized trading market, to continue to be so listed or included. 3. The Holders' Obligations. 3.1 The obligations of the Company under Section 2 with respect to each Holder are subject to the satisfaction of each of the following conditions: 3.1.1 Not later than 10 days after the later of (i) the date hereof, or (ii) the date on which the Company delivers the Proposed Plan of Distribution to the Shareholder (or such later 4 5 date as the Company, in its sole and absolute discretion, shall determine), such Holder shall furnish all of its Holder Information to the Company, if such Holder Information discloses that such Holder holds not less than 100,000 Subject Shares (or such lesser number as the Company, in its sole and absolute discretion, shall determine for such Holder). 3.1.2 Prior to the effectiveness of the Registration Statement, such Holder shall furnish to the Company by a notice such amendments and supplements to its Holder Information provided pursuant to Section 3.1.1 hereof as may be necessary in order to assure that the Holder Information included in the Registration Statement for each Selling Holder does not include a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 3.1.3 Such Holder shall cooperate with the Company in the preparation of the Registration Statement in the manner and to the extent reasonably requested by the Company, including accurately and fully completing, executing and delivering to the Company such documents as the Company may reasonably request in order to permit the Company to obtain the Holder Information or to otherwise comply with all applicable laws or to obtain acceleration of the effectiveness of the Registration Statement. 3.1.4 Such Holder shall not have breached any of its obligations to the Company set forth in this Section 3.1 or in Sections 3 or 4 of the Stock Agreement; provided, however, that if such breach is one that is capable of being cured and is actually cured by such Holder in all material respects, the obligations of the Company to such Holder that arises, or which the Company is obligated to perform in whole or in part, after such cure shall be reinstated on the terms and subject to the conditions set forth herein. A Transferee of Subject Shares who is otherwise entitled to have such shares included in the Registration Statement shall be deemed not have breached its obligation to provide its Holder Information to the Company if it provides such information promptly after its acquisition of such shares and prior to the Company's request for acceleration of the Registration Statement 3.1.5 Such Holder shall not have made any material misrepresentation pursuant to Section 6 of the Stock Agreement. 3.2 No action taken or omitted to be taken by or on behalf of any Holder shall adversely affect the rights of any other Holder hereunder. 3.3 After the effectiveness of the Registration Statement, each Selling Holder (and each transferee thereof) shall furnish to the Company by a notice such amendments and supplements to its Holder Information provided pursuant to Section 3.1 hereof as may be necessary in order to assure that the Holder Information included in the Registration Statement for such Holder does not include a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 4. Expenses of Registration. The Company shall pay all expenses incurred in connection with the registration, filing and qualification of the Registrable Shares, including all registration, filing and NASD or securities exchange fees; all fees and expenses of complying with securities or blue sky laws; all word processing, duplicating and printing expenses; and the fees and disbursements of counsel and accountants for the Company; but excluding all discounts, commissions or fees of selling brokers or similar securities industry professionals and all fees and expenses of counsel and accountants for the Selling Holders. 5 6 5. Indemnification; Contribution. 5.1 To the extent permitted by applicable law, the Company shall indemnify and hold harmless each Selling Holder; each Person, if any, who controls such Selling Holder within the meaning of the Securities Act; and each officer, director, partner and employee of such Selling Holder and such controlling Person; against any and all losses, claims, damages, liabilities and expenses incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may become subject under the Securities Act, to the extent such losses, claims, damages, liabilities and expenses arise out of or are based upon any of the following (collectively a "Violation"): 5.1.1 Any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including any final Prospectus, or any amendments or supplements thereto; 5.1.2 The omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or 5.1.3 Any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any applicable state securities law; provided, however, that the indemnification required by this Section 5.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or expense incurred by a Selling Holder (or any Person, if any, who controls such Selling Holder within the meaning of the Securities Act, or any officer, director, partner and employee of such Selling Holder and such controlling Person) to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with the Holder Information or other information furnished to the Company by or on behalf of such Selling Holder expressly for use in connection with the Registration Statement. 5.2 To the extent permitted by applicable law, each Selling Holder shall indemnify and hold harmless the Company; each of its directors, each of its officers who shall have signed the Registration Statement; each Person, if any, who controls the Company within the meaning of the Securities Act; any other Selling Holder, any controlling Person of any such other Selling Holder and each officer, director, partner, and employee of such other Selling Holder and such controlling Person; against any and all losses, claims, damages, liabilities and expenses, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise become subject under the Securities Act, to the extent such losses, claims, damages, liabilities and expenses arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with the Holder Information or other information furnished to the Company by or on behalf of that Selling Holder expressly for use in connection with the Registration Statement. 5.3 Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, suit, proceeding, investigation or threat thereof made in writing for which such indemnified party may make a claim under this Section 5, such indemnified party shall deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other 6 7 indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties. The failure of an Indemnified Party to deliver written notice to the indemnifying party within a reasonable time following the commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Section 5 unless such failure is prejudicial to such indemnifying party's ability to defend such action. Any fees and expenses incurred by the indemnified party (including any fees and expenses incurred in connection with investigating or preparing to defend such action or proceeding) shall be paid to the indemnified party, as incurred, within 30 days of written notice thereof to the indemnifying party (regardless of whether it is ultimately determined that an indemnified party is not entitled to indemnification hereunder). Any such indemnified party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses, or (ii) the indemnifying party shall have failed to promptly assume the defense of such action, claim or proceeding, or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party and that the assertion of such defenses would create a conflict of interest such that counsel employed by the indemnifying party could not faithfully represent the indemnified party (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action, claim or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties, unless in the reasonable judgment of such indemnified party a conflict of interest would exist between such indemnified party and any other of such indemnified parties with respect to such action, claim or proceeding, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels). No indemnifying party shall be liable to an indemnified party for any settlement of any action, proceeding or claim without the written consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed. 5.4 If the indemnification required by this Section 5 from the indemnifying party is determined by a court of competent jurisdiction to be unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to in this Section 5: 5.4.1 The indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any Violation has been committed by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such Violation. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 5.1 and 5.2, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. 7 8 5.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.4 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 5.4.1. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of a fraudulent misrepresentation. 5.5 If indemnification is available under this Section 5, the indemnifying parties shall indemnify each indemnified party to the full extent provided in this Section 5 without regard to the relative fault of such indemnifying party or indemnified party or any other equitable consideration referred to in Section 5.4. 5.6 The obligations of the Company and the Selling Holders under this Section 5 shall survive the completion of any offering of Registrable Shares pursuant to the Registration Statement and any termination of this Agreement. 6. Amendment, Modification and Waivers; Further Assurances. 6.1 This Agreement may be amended with the consent of the Company and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it; in each case only if the Company shall have obtained the written consent of Holders holding more than 50% of the Registrable Shares. Such amendment, action or omission shall not require the consent of any other Holder. In addition, the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, that affects the rights hereunder of a specific Holder with the written consent of such Holder. 6.2 No waiver of any terms or conditions of this Agreement shall operate as a waiver of any other breach of such terms and conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. No written waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provisions being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. 6.3 Each of the parties hereto shall execute all such further instruments and documents and take all such further action as any other party hereto may reasonably require in order to effectuate the terms and purposes of this Agreement. 7. Miscellaneous. 7.1 Business Day. Whenever this Agreement requires that an action be taken or a notice be given on a date that would otherwise not be a Business Day, the time period for taking such action or giving such notice shall be extended to the first day thereafter that is a Business Day. 7.2 Governing Law. This agreement shall be governed by and construed in accordance with the laws of the state of New York, without giving regard to the conflict of laws principles thereof. 8 9 7.3 Notices. All notices, requests, demands, consents, approvals, designations and other deliveries and communications called for or contemplated by this Agreement shall be in writing and shall be given (i) in the case of Shareholder or the Company, to the address and in the manner set forth in Section 7 of the Stock Agreement, and (ii) in the case of any Holder other than Shareholder, in the manner set forth in Section 7 of the Stock Agreement and to the address provided to the Company in such Holder's Joinder Agreement. 7.4 Entire Agreement; Integration. This Agreement, together with the Stock Agreement, supersedes all prior agreements between or among any of the parties hereto with respect to the subject matter contained herein and therein, and such agreements embody the entire understanding among the parties relating to such subject matter. 7.5 Section Headings. Section headings are for convenience of reference only and shall not affect the meaning of any provision of this Agreement. 7.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which shall together constitute one and the same instrument. All signatures need not be on the same counterpart. 7.7 Severability. If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement, unless the result thereof would be unreasonable, in which case the parties hereto shall negotiate in good faith as to appropriate amendments hereto. 7.8 Termination. This Agreement may be terminated at any time by a written instrument signed by the parties hereto. Unless sooner terminated in accordance with the preceding sentence, this Agreement (other than Section 5 hereof) shall terminate in its entirety on such date as there shall be no Registrable Shares. 7.9 Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees (including any fees incurred in any appeal) in addition to its costs and expenses and any other available remedy. 7.10 No Third Party Beneficiaries or Assignees. Nothing herein expressed or implied is intended to confer upon any person, other than the parties hereto or the Holders (to the extent expressly provided herein) any rights, remedies, obligations or liabilities under or by reason of this Agreement. Neither this Agreement not the rights or obligations hereunder may be assigned or otherwise transferred by any Holder except as permitted herein with respect to a Transfer of Registrable Shares. 7.11 Starwood Lodging Trust. The parties hereto understand and agree that the name "Starwood Lodging Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. 9 10 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first written above. "Shareholder" NEW REMINGTON PARTNERS, a Texas general partnership By: REMINGTON VENTURERS, INC., a Texas corporation, a General Partner By: /s/ Mansor Dalaan ----------------------------- Mansor Dalaan President By: REMINGTON VENTURERS II, INC., a Texas corporation, a General Partner By: /s/ Mansor Dalaan ----------------------------- Mansor Dalaan President STARWOOD HOTELS & RESORTS TRUST a Maryland real estate investment trust By: /s/ Steven R. Goldman ----------------------------- Steven R. Goldman Senior Vice President STARWOOD HOTELS & RESORTS WORLDWIDE, INC. a Maryland corporation By: /s/ Nir E. Margalit ----------------------------- Nir E. Margalit Secretary 10 11 ANNEX A to Registration Rights Agreement AGREEMENT TO BE BOUND BY THE REGISTRATION RIGHTS AGREEMENT The undersigned, being the transferee or the intended transferee of _________ Paired Shares (the "Registrable Shares") of Starwood Hotels & Resorts Trust, a Maryland real estate investment trust, and Starwood Lodging Corporation, a Maryland corporation (together, the "Company"), as a condition to the transfer to and acquisition by the undersigned of such Registrable Shares, acknowledges that matters pertaining to the sale and registration of such Registrable Shares are governed by the Registration Rights Agreement (the "Registration Rights Agreement"), dated as of January 15, 1998, initially among the Company and New Remington Partners, a Texas general partnership, and the undersigned hereby (1) acknowledges receipt of a copy of such agreement, and (2) agrees to be bound as a "Holder" by the terms of the Registration Rights Agreement, as the same has been or may be amended from time to time. Agreed to this ____ day of __________, ____. --------------------------------- By: ----------------------------- Its: ---------------------------- Address, telephone number and telecopy number for notices: _________________________________ _________________________________ _________________________________ _________________________________ 12 ANNEX B to Registration Rights Agreement [Letterhead of Selling Holder] ____________, 199__ BY TELECOPIER Starwood Hotels & Resorts Trust 2231 E. Camelback Road, Suite 410 Phoenix, Arizona 85016 Attention: Ronald C. Brown or Chief Financial Officer Starwood Hotels & Resorts Worldwide, Inc. 2231 E. Camelback Road, Suite 400 Phoenix, Arizona 85016 Attention: Alan M. Schnaid or Vice President Re: Starwood Hotels & Resorts Ladies and Gentlemen: Reference is made to the prospectus (the "Prospectus") included in the Registration Statement on Form S-3 (Registration No. ___________) filed by Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company") with the Securities and Exchange Commission on _________, 1998, under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration for resale by the shareholders named therein of certain shares of beneficial interest, par value $.01 per share, of the Trust, and shares of common stock, par value $.01 per share, of the Corporation (the "Paired Shares"), including _______ Paired Shares held by the undersigned. ___________ of the Paired Shares held by the undersigned were offered for sale and have been sold by the undersigned in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus. Thus, the undersigned requests that new certificates evidencing such Paired Shares be issued in the name of _________________________, the transferee, free of any restrictive legend under the Securities Act. Very truly yours, [Name and signature of Selling Holder] 13 ANNEX C to Registration Rights Agreement [Letterhead of Selling Holder] ____________, 199__ BY TELECOPIER Sidley & Austin 555 West Fifth Street Los Angeles, California 90013 Attention: Sherwin L. Samuels, Esq., Kenneth H. Levin, Esq. and James V. Robertson, Esq. Re: Starwood Hotels & Resorts Ladies and Gentlemen: Reference is made to the prospectus (the "Prospectus") included in the Registration Statement on Form S-3 (Registration No. ___________) filed by Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company") with the Securities and Exchange Commission on _________, 1998, under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration for resale by the shareholders named therein of certain shares of beneficial interest, par value $.01 per share, of the Trust, and shares of common stock, par value $.01 per share, of the Corporation (the "Paired Shares"), including _______ Paired Shares held by the undersigned. The undersigned understands that you have been requested by the Company to deliver an opinion to the Company's transfer agent that, upon the sale by the undersigned of the Paired Shares, certificates evidencing such shares may be issued to the transferee(s) without any restrictive legend under the Securities Act. For the purpose of facilitating the delivery by you of such opinion, the undersigned, hereby represents that _______ of the Paired Shares held by the undersigned were offered for sale and have been sold in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus. The undersigned understands that you will be relying on the foregoing representations in rendering your opinion, and the undersigned consents to such reliance. Very truly yours, [Name and signature of Selling Holder] EX-99.11 12 REGISTRATION RIGHTS AGREEMENT 1 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of January 15, 1998 among STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust (the "Trust"), STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the "Corporation" and, together with the Trust, the "Company"), and N.Y. OVERNIGHT PARTNERS, L.P., a New York limited partnership ("Shareholder"). RECITALS WHEREAS, pursuant to a Stock Agreement of even date herewith and by and among the parties hereto (the "Stock Agreement"), the Company is issuing and delivering to Shareholder certain Paired Shares; and WHEREAS, the Stock Agreement provides that if such Paired Shares are Unregistered Shares, the Company shall effect the registration of such Paired Shares under the Securities Act; and WHEREAS, the parties desire to set forth their rights and obligations with respect to such registration and certain other matters; NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions. Each capitalized term used in this Agreement but not defined herein shall have the ribed to such term in the Stock Agreement; and as used in this Agreement the following terms shall have the following meanings: "Commission" means the Securities and Exchange Commission. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder Information" means, with respect to a Selling Holder, (i) such information regarding such Selling Holder as is required by Section 507 of Regulation S-K promulgated by the Commission under the Securities Act, (ii) information as to whether (and if so, in what manner) the intended method of disposition of such Holder's Registrable Shares differs from the Plan of Distribution, and (iii) any such additional information as may be required to be included in the Registration Statement by a Selling Holder; in each case as shall be required to effect the registration of such Registrable Shares pursuant to the Registration Statement, the disclosures required in the Prospectus with respect thereto and the offer and Transfer of such Registrable Shares pursuant to the Prospectus. "Holders" means (i) Shareholder, and (ii) any other Person who acquires any of the Registrable Shares from Shareholder or another Holder if (a) the Transferor and such Person shall have delivered to the Company a written notice of such Transfer setting forth the name of such Person, and (b) such Person shall have executed and delivered to the Company a properly completed Joinder Agreement; in each case at such times as such Persons shall own Registrable Shares. 2 "ITT Closing" means the consummation of the acquisition of ITT Corporation by the Company. "ITT Termination" means the issuance by the Company of a press release stating that the Company will not consummate the acquisition of ITT Corporation. "Joinder Agreement" means an agreement to be bound by this Agreement in the form of Annex A hereto. "Paired Shares" means (i) "paired shares" (as such term is defined in the Purchase and Sale Agreement), and (ii) shares of capital stock of the Trust or the Corporation issued by the Trust or the Corporation in respect of or in exchange for paired shares in connection with any stock dividend or distribution, stock split-up, recapitalization, recombination or exchange by the Trust or the Corporation generally of such paired shares. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or other entity, or government or other agency or political subdivision thereof. "Proposed Plan of Distribution" means a draft of the portion of the Registration Statement that describes the intended methods of disposition of the Registrable Shares by the Selling Holders. "Prospectus" means, with respect to the Registration Statement and each amendment thereto, the form of prospectus included therein. "Registrable Shares" means, as of any date of determination, (i) the Paired Shares that are Unregistered Shares and that constitute the Subject Shares; (ii) any shares or other securities issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange by the Trust or the Corporation generally for, or in replacement by the Trust or the Corporation generally of, such Paired Shares; and (iii) any securities issued in exchange for such Paired Shares in any merger or reorganization of the Company; in each case that continue to be owned by a Holder on such date of determination. "Registration Statement" means a registration statement on Form S-3, as amended from time to time, registering the offer and sale by the Selling Holders of such Selling Holders' Registrable Shares included therein for offer and Transfer on a delayed or continuous basis pursuant to Rule 415 under the Securities Act. "Required Effectiveness Date" means the later of (i) the 30th day after the Closing Date, or (ii) the earliest of: (a) The 30th day after the date of the ITT Closing; (b) The 30th day after the date of the ITT Termination; and 2 3 (c) If neither the ITT Closing nor the ITT Termination has occurred prior to April 1, 1998, the 30th day after a demand for registration is made by notice given by Shareholder to the Company on or after April 1, 1998; provided, however, that in the event that, following the initial filing of the Registration Statement, the Company is advised by the Commission that the Registration Statement will be reviewed, each of the time periods set forth above shall be extended for 20 days. "Securities Act" shall mean the Securities Act of 1933, as amended. "Selling Holders" means (a) each Holder (i) who complies with Sections 3.1.1 hereof, (ii) who holds not less than 100,000 Subject Shares at the both at the time such notice is given and the date the Registration Statement is declared effective (or such lesser number as the Company, in its sole and absolute discretion, shall determine for such Holder), and (iii) whose Registrable Shares are included in the Registration Statement; and (b) each Transferee of such a Holder who (x) provides such Transferee's Holder Information promptly after its acquisition of Subject Shares and prior to the Company's request for acceleration of the Registration Statement, and (y) satisfies the conditions set forth in clauses (ii) and (iii) above. "Transfer" means the act of selling, giving, transferring, creating a trust (voting or otherwise), assigning or otherwise disposing of (other than pledging, hypothecating or otherwise transferring as security) (and correlative words shall have correlative meanings). "Transferee" means a Person to whom Registerable Shares are Transferred. "Violation" shall have the meaning set forth in Section 5.1 hereof. 2. Registration Obligations of the Company. The Company shall: 2.1 File the Registration tatement with the Commission not later than 15 days prior to the Required Effectiveness Date (determined without reference to the proviso included in the definition of such term) and thereafter use its best efforts to cause the Registration Statement to be declared effective on the Required Effectiveness Date. 2.2 Furnish to the Shareholder a copy of the Registration Statement for its review and comment not later than concurrently with the filing of the Registration Statement with the Commission. 2.3 The Company shall give notice to the Shareholder of the expected effectiveness of the Registration Statement no later than the date acceleration of such effectiveness is requested of the Commission; provided, however, that in no event shall the Company have any liability for any failure to give such notice. 3 4 2.4 Include in the Registration Statement the number of each Holder's Registrable Shares for each Holder as shall be specified for such Holder pursuant to Section 3.1 hereof. 2.5 Use its best efforts to keep the Registration Statement effective until the earlier of (i) one year after the Closing Date, or (ii) such date as of which all the Selling Holders have completed the distribution or other disposition of the Registrable Shares registered under the Registration Statement. If the Registration Statement is terminated pursuant to clause (i) above, the Company shall timely file with the Commission all reports and other information required to enable all holders of Registrable Shares to Transfer such shares pursuant to Rule 144 promulgated by the Commission under the Exchange Act, as amended. 2.6 During the effectiveness of the Registration Statement, upon notice to the Company by a Selling Holder of a Transfer of Registrable Shares pursuant to the Registration Statement and receipt (i) by the Company of a certificate from such Selling Holder in the form of Annex B attached hereto, and (ii) by counsel for the Company of a certificate from such Selling Holder in the form of Annex C attached hereto, in each case representing that such Registrable Shares were offered and have been Transferred by such Selling Holder in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus, the Company shall use its best efforts to cause such Registrable Shares to be reissued as soon as practicable (and not later than three Business Days following receipt by the Company and such counsel of such certificates) in the name of the transferee free of any restrictive legend under the Securities Act and to take all such actions as may be reasonably required to cause its transfer agent to comply with the undertakings set forth in this section. 2.7 Use its best efforts to amend the Registration Statement or supplement the Prospectus so that they will remain current and in compliance with the requirements of the Securities Act for the period specified in Section 2.4 hereof, and use its best efforts to give the Selling Holders notice of the happening of any event or development as a result of which the Registration Statement or Prospectus may contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein not misleading. In the event that any Registrable Shares included in the Registration Statement remain unsold at the end of the period during which the Company is obligated to use its best efforts to maintain the effectiveness of the Registration Statement, the Company may file a post-effective amendment to the Registration Statement for the purpose of deregistering such unsold Registrable Shares. 2.8 Furnish to each Selling Holder, without charge, such numbers of copies of the Registration Statement, any pre-effective or post-effective amendment thereto, the final Prospectus, and any amendments or supplements thereto, in each case in conformity with the requirements of the Securities Act, and such other related documents, as each Selling Holder may reasonably request in order to facilitate the Transfer of the Registrable Shares owned by such Selling Holder. 2.9 Use its best efforts to register and qualify the Registrable Shares covered by the Registration Statement under such securities laws of such states or jurisdictions as shall be reasonably requested by the Selling Holders; provided, however, that neither the Trust nor the Corporation shall be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 4 5 2.10 Promptly notify each Selling Holder of any stop order issued or threatened to be issued by the Commission or any of the jurisdictions referred to in Section 2.9 hereof in connection with the Registration Statement (and use its best efforts to prevent the entry of such stop order or to remove it if entered as promptly as practicable). 2.11 Use its best efforts to cause the Registrable Shares covered by the Registration Statement, if the Paired Shares are then listed on a securities exchange or included for quotation in a recognized trading market, to continue to be so listed or included. 3. The Holders' Obligations. 3.1 The obligations of the Company under Section 2 with respect to each Holder are subject to the satisfaction of each of the following conditions: 3.1.1 Not later than 10 days after the later of (i) the date hereof, or (ii) the date on which the Company delivers the Proposed Plan of Distribution to the Shareholder (or such later date as the Company, in its sole and absolute discretion, shall determine), such Holder shall furnish all of its Holder Information to the Company, if such Holder Information discloses that such Holder holds not less than 100,000 Subject Shares (or such lesser number as the Company, in its sole and absolute discretion, shall determine for such Holder). 3.1.2 Prior to the effectiveness of the Registration Statement, such Holder shall furnish to the Company by a notice such amendments and supplements to its Holder Information provided pursuant to Section 3.1.1 hereof as may be necessary in order to assure that the Holder Information included in the Registration Statement for each Selling Holder does not include a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 3.1.3 Such Holder shall cooperate with the Company in the preparation of the Registration Statement in the manner and to the extent reasonably requested by the Company, including accurately and fully completing, executing and delivering to the Company such documents as the Company may reasonably request in order to permit the Company to obtain the Holder Information or to otherwise comply with all applicable laws or to obtain acceleration of the effectiveness of the Registration Statement. 3.1.4 Such Holder shall not have breached any of its obligations to the Company set forth in this Section 3.1 or in Sections 3 or 4 of the Stock Agreement; provided, however, that if such breach is one that is capable of being cured and is actually cured by such Holder in all material respects, the obligations of the Company to such Holder that arises, or which the Company is obligated to perform in whole or in part, after such cure shall be reinstated on the terms and subject to the conditions set forth herein. A Transferee of Subject Shares who is otherwise entitled to have such shares included in the Registration Statement shall be deemed not have breached its obligation to provide its Holder Information to the Company if it provides such information promptly after its acquisition of such shares and prior to the Company's request for acceleration of the Registration Statement 5 6 3.1.5 Such Holder shall not have made any material misrepresentation pursuant to Section 6 of the Stock Agreement. 3.2 No action taken or omitted to be taken by or on behalf of any Holder shall adversely affect the rights of any other Holder hereunder. 3.3 After the effectiveness of the Registration Statement, each Selling Holder (and each transferee thereof) shall furnish to the Company by a notice such amendments and supplements to its Holder Information provided pursuant to Section 3.1 hereof as may be necessary in order to assure that the Holder Information included in the Registration Statement for such Holder does not include a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 4. Expenses of Registration. The Company shall pay all expenses incurred in connection with the registration, filing and qualification of the Registrable Shares, including all registration, filing and NASD or securities exchange fees; all fees and expenses of complying with securities or blue sky laws; all word processing, duplicating and printing expenses; and the fees and disbursements of counsel and accountants for the Company; but excluding all discounts, commissions or fees of selling brokers or similar securities industry professionals and all fees and expenses of counsel and accountants for the Selling Holders. 5. Indemnification; Contribution. 5.1 To the extent permitted by applicable law, the Company shall indemnify and hold harmless each Selling Holder; each Person, if any, who controls such Selling Holder within the meaning of the Securities Act; and each officer, director, partner and employee of such Selling Holder and such controlling Person; against any and all losses, claims, damages, liabilities and expenses incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may become subject under the Securities Act, to the extent such losses, claims, damages, liabilities and expenses arise out of or are based upon any of the following (collectively a "Violation"): 5.1.1 Any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including any final Prospectus, or any amendments or supplements thereto; 5.1.2 The omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or 5.1.3 Any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any applicable state securities law; provided, however, that the indemnification required by this Section 5.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or expense incurred by a Selling Holder (or any Person, if any, who controls such Selling Holder within the meaning of the 6 7 Securities Act, or any officer, director, partner and employee of such Selling Holder and such controlling Person) to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with the Holder Information or other information furnished to the Company by or on behalf of such Selling Holder expressly for use in connection with the Registration Statement. 5.2 To the extent permitted by applicable law, each Selling Holder shall indemnify and hold harmless the Company; each of its directors, each of its officers who shall have signed the Registration Statement; each Person, if any, who controls the Company within the meaning of the Securities Act; any other Selling Holder, any controlling Person of any such other Selling Holder and each officer, director, partner, and employee of such other Selling Holder and such controlling Person; against any and all losses, claims, damages, liabilities and expenses, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise become subject under the Securities Act, to the extent such losses, claims, damages, liabilities and expenses arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with the Holder Information or other information furnished to the Company by or on behalf of that Selling Holder expressly for use in connection with the Registration Statement. 5.3 Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, suit, proceeding, investigation or threat thereof made in writing for which such indemnified party may make a claim under this Section 5, such indemnified party shall deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties. The failure of an Indemnified Party to deliver written notice to the indemnifying party within a reasonable time following the commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Section 5 unless such failure is prejudicial to such indemnifying party's ability to defend such action. Any fees and expenses incurred by the indemnified party (including any fees and expenses incurred in connection with investigating or preparing to defend such action or proceeding) shall be paid to the indemnified party, as incurred, within 30 days of written notice thereof to the indemnifying party (regardless of whether it is ultimately determined that an indemnified party is not entitled to indemnification hereunder). Any such indemnified party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses, or (ii) the indemnifying party shall have failed to promptly assume the defense of such action, claim or proceeding, or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party and that the assertion of such defenses would create a conflict of interest such that counsel employed by the indemnifying party could not faithfully represent the indemnified party (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action, claim 7 8 or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties, unless in the reasonable judgment of such indemnified party a conflict of interest would exist between such indemnified party and any other of such indemnified parties with respect to such action, claim or proceeding, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels). No indemnifying party shall be liable to an indemnified party for any settlement of any action, proceeding or claim without the written consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed. 5.4 If the indemnification required by this Section 5 from the indemnifying party is determined by a court of competent jurisdiction to be unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to in this Section 5: 5.4.1 The indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any Violation has been committed by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such Violation. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 5.1 and 5.2, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. 5.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.4 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 5.4.1. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of a fraudulent misrepre- sentation. 5.5 If indemnification is available under this Section 5, the indemnifying parties shall indemnify each indemnified party to the full extent provided in this Section 5 without regard to the relative fault of such indemnifying party or indemnified party or any other equitable consideration referred to in Section 5.4. 5.6 The obligations of the Company and the Selling Holders under this Section 5 shall survive the completion of any offering of Registrable Shares pursuant to the Registration Statement and any termination of this Agreement. 8 9 6. Amendment, Modification and Waivers; Further Assurances. 6.1 This Agreement may be amended with the consent of the Company and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it; in each case only if the Company shall have obtained the written consent of Holders holding more than 50% of the Registrable Shares. Such amendment, action or omission shall not require the consent of any other Holder. In addition, the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, that affects the rights hereunder of a specific Holder with the written consent of such Holder. 6.2 No waiver of any terms or conditions of this Agreement shall operate as a waiver of any other breach of such terms and conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. No written waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provisions being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. 6.3 Each of the parties hereto shall execute all such further instruments and documents and take all such further action as any other party hereto may reasonably require in order to effectuate the terms and purposes of this Agreement. 7. Miscellaneous. 7.1 Business Day. Whenever this Agreement requires that an action be taken or a notice be given on a date that would otherwise not be a Business Day, the time period for taking such action or giving such notice shall be extended to the first day thereafter that is a Business Day. 7.2 Governing Law. This agreement shall be governed by and construed in accordance with the laws of the state of New York, without giving regard to the conflict of laws principles thereof. 7.3 Notices. All notices, requests, demands, consents, approvals, designations and other deliveries and communications called for or contemplated by this Agreement shall be in writing and shall be given (i) in the case of Shareholder or the Company, to the address and in the manner set forth in Section 7 of the Stock Agreement, and (ii) in the case of any Holder other than Shareholder, in the manner set forth in Section 7 of the Stock Agreement and to the address provided to the Company in such Holder's Joinder Agreement. 7.4 Entire Agreement; Integration. This Agreement, together with the Stock Agreement, supersedes all prior agreements between or among any of the parties hereto with respect to the subject matter contained herein and therein, and such agreements embody the entire understanding among the parties relating to such subject matter. 9 10 7.5 Section Headings. Section headings are for convenience of reference only and shall not affect the meaning of any provision of this Agreement. 7.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which shall together constitute one and the same instrument. All signatures need not be on the same counterpart. 7.7 Severability. If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement, unless the result thereof would be unreasonable, in which case the parties hereto shall negotiate in good faith as to appropriate amendments hereto. 7.8 Termination. This Agreement may be terminated at any time by a written instrument signed by the parties hereto. Unless sooner terminated in accordance with the preceding sentence, this Agreement (other than Section 5 hereof) shall terminate in its entirety on such date as there shall be no Registrable Shares. 7.9 Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees (including any fees incurred in any appeal) in addition to its costs and expenses and any other available remedy. 7.10 No Third Party Beneficiaries or Assignees. Nothing herein expressed or implied is intended to confer upon any person, other than the parties hereto or the Holders (to the extent expressly provided herein) any rights, remedies, obligations or liabilities under or by reason of this Agreement. Neither this Agreement not the rights or obligations hereunder may be assigned or otherwise transferred by any Holder except as permitted herein with respect to a Transfer of Registrable Shares. 7.11 Starwood Hotels & Resorts Trust. The parties hereto understand and agree that the name "Starwood Hotels & Resorts Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. 10 11 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first written above. "Shareholder" N.Y. OVERNIGHT PARTNERS, L.P., a New York limited partnership By: N.Y. OVERNIGHT, INC. a New York corporation, its sole General Partner /s/ Tarek Ayoubi By: _____________________________ Tarek Ayoubi President STARWOOD HOTELS & RESORTS TRUST a Maryland real estate investment trust /s/ Steven R. Goldman By: _____________________________, Steven R. Goldman Senior Vice President STARWOOD HOTELS & RESORTS WORLDWIDE, INC. a Maryland corporation /s/ Nir E. Margalit By: _____________________________, Nir E. Margalit Secretary 11 12 ANNEX A to Registration Rights Agreement AGREEMENT TO BE BOUND BY THE REGISTRATION RIGHTS AGREEMENT The undersigned, being the transferee or the intended transferee of _________ Paired Shares (the "Registrable Shares") of Starwood Hotels & Resorts Trust, a Maryland real estate investment trust, and Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (together, the "Company"), as a condition to the transfer to and acquisition by the undersigned of such Registrable Shares, acknowledges that matters pertaining to the sale and registration of such Registrable Shares are governed by the Registration Rights Agreement (the "Registration Rights Agreement"), dated as of January 15, 1998 initially among the Company and N.Y. Overnight Partners, L.P., and the undersigned hereby (1) acknowledges receipt of a copy of such agreement, and (2) agrees to be bound as a "Holder" by the terms of the Registration Rights Agreement, as the same has been or may be amended from time to time. Agreed to this ____ day of __________, ____. ____________________________________ By: _______________________________ Its: _______________________________ Address, telephone number and telecopy number for notices: ____________________________________ ____________________________________ ____________________________________ ____________________________________ 13 ANNEX B to Registration Rights Agreement [Letterhead of Selling Holder] ____________, 199__ BY TELECOPIER Starwood Hotels & Resorts Trust 2231 E. Camelback Road, Suite 410 Phoenix, Arizona 85016 Attention: Ronald C. Brown or Chief Financial Officer Starwood Hotels & Resorts Worldwide, Inc. 2231 E. Camelback Road, Suite 400 Phoenix, Arizona 85016 Attention: Alan M. Schnaid or Vice President Re: Starwood Hotels & Resorts Ladies and Gentlemen: Reference is made to the prospectus (the "Prospectus") included in the Registration Statement on Form S-3 (Registration No. ___________) filed by Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company") with the Securities and Exchange Commission on _________, 1998, under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration for resale by the shareholders named therein of certain shares of beneficial interest, par value $.01 per share, of the Trust, and shares of common stock, par value $.01 per share, of the Corporation (the "Paired Shares"), including _______ Paired Shares held by the undersigned. ___________ of the Paired Shares held by the undersigned were offered for sale and have been sold by the undersigned in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus. Thus, the undersigned requests that new certificates evidencing such Paired Shares be issued in the name of _________________________, the transferee, free of any restrictive legend under the Securities Act. Very truly yours, [Name and signature of Selling Holder] 14 ANNEX C to Registration Rights Agreement [Letterhead of Selling Holder] ____________, 199__ BY TELECOPIER Sidley & Austin 555 West Fifth Street Los Angeles, California 90013 Attention: Sherwin L. Samuels, Esq., Kenneth H. Levin, Esq. and James V. Robertson, Esq. Re: Starwood Hotels & Resorts Ladies and Gentlemen: Reference is made to the prospectus (the "Prospectus") included in the Registration Statement on Form S-3 (Registration No. ___________) filed by Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company") with the Securities and Exchange Commission on _________, 1998, under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration for resale by the shareholders named therein of certain shares of beneficial interest, par value $.01 per share, of the Trust, and shares of common stock, par value $.01 per share, of the Corporation (the "Paired Shares"), including _______ Paired Shares held by the undersigned. The undersigned understands that you have been requested by the Company to deliver an opinion to the Company's transfer agent that, upon the sale by the undersigned of the Paired Shares, certificates evidencing such shares may be issued to the transferee(s) without any restrictive legend under the Securities Act. For the purpose of facilitating the delivery by you of such opinion, the undersigned, hereby represents that _______ of the Paired Shares held by the undersigned were offered for sale and have been sold in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus. The undersigned understands that you will be relying on the foregoing representations in rendering your opinion, and the undersigned consents to such reliance. Very truly yours, 15 [Name and signature of Selling Holder] 15 EX-99.12 13 REGISTRATION RIGHTS AGREEMENT 1 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of January 15, 1998 among STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust (the "Trust"), STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the "Corporation" and, together with the Trust, the "Company"), and D.C. OVERNIGHT PARTNERS, L.P., a District of Columbia limited partnership ("Shareholder"). RECITALS WHEREAS, pursuant to a Stock Agreement of even date herewith and by and among the parties hereto (the "Stock Agreement"), the Company is issuing and delivering to Shareholder certain Paired Shares; and WHEREAS, the Stock Agreement provides that if such Paired Shares are Unregistered Shares, the Company shall effect the registration of such Paired Shares under the Securities Act; and WHEREAS, the parties desire to set forth their rights and obligations with respect to such registration and certain other matters; NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions. Each capitalized term used in this Agreement but not defined herein shall have the meaning ascribed to such term in the Stock Agreement; and as used in this Agreement the following terms shall have the following meanings: "Commission" means the Securities and Exchange Commission. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder Information" means, with respect to a Selling Holder, (i) such information regarding such Selling Holder as is required by Section 507 of Regulation S-K promulgated by the Commission under the Securities Act, (ii) information as to whether (and if so, in what manner) the intended method of disposition of such Holder's Registrable Shares differs from the Plan of Distribution, and (iii) any such additional information as may be required to be included in the Registration Statement by a Selling Holder; in each case as shall be required to effect the registration of such Registrable Shares pursuant to the Registration Statement, the disclosures required in the Prospectus with respect thereto and the offer and Transfer of such Registrable Shares pursuant to the Prospectus. "Holders" means (i) Shareholder, and (ii) any other Person who acquires any of the Registrable Shares from Shareholder or another Holder if (a) the Transferor and such Person shall have delivered to the Company a written notice of such Transfer setting forth the name of such Person, and (b) such Person shall have executed and delivered to the Company a properly completed Joinder Agreement; in each case at such times as such Persons shall own Registrable Shares. "ITT Closing" means the consummation of the acquisition of ITT Corporation by the Company. "ITT Termination" means the issuance by the Company of a press release stating that the Company will not consummate the acquisition of ITT Corporation. 2 "Joinder Agreement" means an agreement to be bound by this Agreement in the form of Annex A hereto. "Paired Shares" means (i) "paired shares" (as such term is defined in the Purchase and Sale Agreement), and (ii) shares of capital stock of the Trust or the Corporation issued by the Trust or the Corporation in respect of or in exchange for paired shares in connection with any stock dividend or distribution, stock split-up, recapitalization, recombination or exchange by the Trust or the Corporation generally of such paired shares. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or other entity, or government or other agency or political subdivision thereof. "Proposed Plan of Distribution" means a draft of the portion of the Registration Statement that describes the intended methods of disposition of the Registrable Shares by the Selling Holders. "Prospectus" means, with respect to the Registration Statement and each amendment thereto, the form of prospectus included therein. "Registrable Shares" means, as of any date of determination, (i) the Paired Shares that are Unregistered Shares and that constitute the Subject Shares; (ii) any shares or other securities issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange by the Trust or the Corporation generally for, or in replacement by the Trust or the Corporation generally of, such Paired Shares; and (iii) any securities issued in exchange for such Paired Shares in any merger or reorganization of the Company; in each case that continue to be owned by a Holder on such date of determination. "Registration Statement" means a registration statement on Form S-3, as amended from time to time, registering the offer and sale by the Selling Holders of such Selling Holders' Registrable Shares included therein for offer and Transfer on a delayed or continuous basis pursuant to Rule 415 under the Securities Act. "Required Effectiveness Date" means the later of (i) the 30th day after the Closing Date, or (ii) the earliest of: (a) The 30th day after the date of the ITT Closing; (b) The 30th day after the date of the ITT Termination; and (c) If neither the ITT Closing nor the ITT Termination has occurred prior to April 1, 1998, the 30th day after a demand for registration is made by notice given by Shareholder to the Company on or after April 1, 1998; provided, however, that in the event that, following the initial filing of the Registration Statement, the Company is advised by the Commission that the Registration Statement will be reviewed, each of the time periods set forth above shall be extended for 20 days. "Securities Act" shall mean the Securities Act of 1933, as amended. 2 3 "Selling Holders" means (a) each Holder (i) who complies with Sections 3.1.1 hereof, (ii) who holds not less than 100,000 Subject Shares at the both at the time such notice is given and the date the Registration Statement is declared effective (or such lesser number as the Company, in its sole and absolute discretion, shall determine for such Holder), and (iii) whose Registrable Shares are included in the Registration Statement; and (b) each Transferee of such a Holder who (x) provides such Transferee's Holder Informa tion promptly after its acquisition of Subject Shares and prior to the Company's request for acceleration of the Registration Statement, and (y) satisfies the conditions set forth in clauses (ii) and (iii) above. "Transfer" means the act of selling, giving, transferring, creating a trust (voting or otherwise), assigning or otherwise disposing of (other than pledging, hypothecating or otherwise transferring as security) (and correlative words shall have correlative meanings). "Transferee" means a Person to whom Registerable Shares are Transferred. "Violation" shall have the meaning set forth in Section 5.1 hereof. 2. Registration Obligations of the Company. The Company shall: 2.1 File the Registration Statement with the Commission not later than 15 days prior to the Required Effectiveness Date (determined without reference to the proviso included in the definition of such term) and thereafter use its best efforts to cause the Registration Statement to be declared effective on the Required Effectiveness Date. 2.2 Furnish to the Shareholder a copy of the Registration Statement for its review and comment not later than concurrently with the filing of the Registration Statement with the Commission. 2.3 The Company shall give notice to the Shareholder of the expected effectiveness of the Registration Statement no later than the date acceleration of such effectiveness is requested of the Commission; provided, however, that in no event shall the Company have any liability for any failure to give such notice. 2.4 Include in the Registration Statement the number of each Holder's Registrable Shares for each Holder as shall be specified for such Holder pursuant to Section 3.1 hereof. 2.5 Use its best efforts to keep the Registration Statement effective until the earlier of (i) one year after the Closing Date, or (ii) such date as of which all the Selling Holders have completed the distribution or other disposition of the Registrable Shares registered under the Registration Statement. If the Registration Statement is terminated pursuant to clause (i) above, the Company shall timely file with the Commission all reports and other information required to enable all holders of Registrable Shares to Transfer such shares pursuant to Rule 144 promulgated by the Commission under the Exchange Act, as amended. 2.6 During the effectiveness of the Registration Statement, upon notice to the Company by a Selling Holder of a Transfer of Registrable Shares pursuant to the Registration Statement and receipt 3 4 (i) by the Company of a certificate from such Selling Holder in the form of Annex B attached hereto, and (ii) by counsel for the Company of a certificate from such Selling Holder in the form of Annex C attached hereto, in each case representing that such Registrable Shares were offered and have been Transferred by such Selling Holder in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus, the Company shall use its best efforts to cause such Registrable Shares to be reissued as soon as practicable (and not later than three Business Days following receipt by the Company and such counsel of such certificates) in the name of the transferee free of any restrictive legend under the Securities Act and to take all such actions as may be reasonably required to cause its transfer agent to comply with the undertakings set forth in this section. 2.7 Use its best efforts to amend the Registration Statement or supplement the Prospectus so that they will remain current and in compliance with the requirements of the Securities Act for the period specified in Section 2.4 hereof, and use its best efforts to give the Selling Holders notice of the happening of any event or development as a result of which the Registration Statement or Prospectus may contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein not misleading. In the event that any Registrable Shares included in the Registration Statement remain unsold at the end of the period during which the Company is obligated to use its best efforts to maintain the effectiveness of the Registration Statement, the Company may file a post-effective amendment to the Registration Statement for the purpose of deregistering such unsold Registrable Shares. 2.8 Furnish to each Selling Holder, without charge, such numbers of copies of the Registration Statement, any pre-effective or post-effective amendment thereto, the final Prospectus, and any amendments or supplements thereto, in each case in conformity with the requirements of the Securities Act, and such other related documents, as each Selling Holder may reasonably request in order to facilitate the Transfer of the Registrable Shares owned by such Selling Holder. 2.9 Use its best efforts to register and qualify the Registrable Shares covered by the Registration Statement under such securities laws of such states or jurisdictions as shall be reasonably requested by the Selling Holders; provided, however, that neither the Trust nor the Corporation shall be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 2.10 Promptly notify each Selling Holder of any stop order issued or threatened to be issued by the Commission or any of the jurisdictions referred to in Section 2.9 hereof in connection with the Registration Statement (and use its best efforts to prevent the entry of such stop order or to remove it if entered as promptly as practicable). 2.11 Use its best efforts to cause the Registrable Shares covered by the Registration Statement, if the Paired Shares are then listed on a securities exchange or included for quotation in a recognized trading market, to continue to be so listed or included. 3. The Holders' Obligations. 3.1 The obligations of the Company under Section 2 with respect to each Holder are subject to the satisfaction of each of the following conditions: 3.1.1 Not later than 10 days after the later of (i) the date hereof, or (ii) the date on which the Company delivers the Proposed Plan of Distribution to the Shareholder (or such later 4 5 date as the Company, in its sole and absolute discretion, shall determine), such Holder shall furnish all of its Holder Information to the Company, if such Holder Information discloses that such Holder holds not less than 100,000 Subject Shares (or such lesser number as the Company, in its sole and absolute discretion, shall determine for such Holder). 3.1.2 Prior to the effectiveness of the Registration Statement, such Holder shall furnish to the Company by a notice such amendments and supplements to its Holder Information provided pursuant to Section 3.1.1 hereof as may be necessary in order to assure that the Holder Information included in the Registration Statement for each Selling Holder does not include a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 3.1.3 Such Holder shall cooperate with the Company in the preparation of the Registration Statement in the manner and to the extent reasonably requested by the Company, including accurately and fully completing, executing and delivering to the Company such documents as the Company may reasonably request in order to permit the Company to obtain the Holder Information or to otherwise comply with all applicable laws or to obtain acceleration of the effectiveness of the Registration Statement. 3.1.4 Such Holder shall not have breached any of its obligations to the Company set forth in this Section 3.1 or in Sections 3 or 4 of the Stock Agreement; provided, however, that if such breach is one that is capable of being cured and is actually cured by such Holder in all material respects, the obligations of the Company to such Holder that arises, or which the Company is obligated to perform in whole or in part, after such cure shall be reinstated on the terms and subject to the conditions set forth herein. A Transferee of Subject Shares who is otherwise entitled to have such shares included in the Registration Statement shall be deemed not have breached its obligation to provide its Holder Information to the Company if it provides such information promptly after its acquisition of such shares and prior to the Company's request for acceleration of the Registration Statement 3.1.5 Such Holder shall not have made any material misrepresentation pursuant to Section 6 of the Stock Agreement. 3.2 No action taken or omitted to be taken by or on behalf of any Holder shall adversely affect the rights of any other Holder hereunder. 3.3 After the effectiveness of the Registration Statement, each Selling Holder (and each transferee thereof) shall furnish to the Company by a notice such amendments and supplements to its Holder Information provided pursuant to Section 3.1 hereof as may be necessary in order to assure that the Holder Information included in the Registration Statement for such Holder does not include a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 4. Expenses of Registration. The Company shall pay all expenses incurred in connection with the registration, filing and qualification of the Registrable Shares, including all registration, filing and NASD or securities exchange fees; all fees and expenses of complying with securities or blue sky laws; all word processing, duplicating and printing expenses; and the fees and disbursements of counsel and accountants for the Company; but excluding all discounts, commissions or fees of selling brokers or similar securities industry professionals and all fees and expenses of counsel and accountants for the Selling Holders. 5 6 5. Indemnification; Contribution. 5.1 To the extent permitted by applicable law, the Company shall indemnify and hold harmless each Selling Holder; each Person, if any, who controls such Selling Holder within the meaning of the Securities Act; and each officer, director, partner and employee of such Selling Holder and such controlling Person; against any and all losses, claims, damages, liabilities and expenses incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may become subject under the Securities Act, to the extent such losses, claims, damages, liabilities and expenses arise out of or are based upon any of the following (collectively a "Violation"): 5.1.1 Any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including any final Prospectus, or any amendments or supplements thereto; 5.1.2 The omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or 5.1.3 Any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any applicable state securities law; provided, however, that the indemnification required by this Section 5.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or expense incurred by a Selling Holder (or any Person, if any, who controls such Selling Holder within the meaning of the Securities Act, or any officer, director, partner and employee of such Selling Holder and such controlling Person) to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with the Holder Information or other information furnished to the Company by or on behalf of such Selling Holder expressly for use in connection with the Registration Statement. 5.2 To the extent permitted by applicable law, each Selling Holder shall indemnify and hold harmless the Company; each of its directors, each of its officers who shall have signed the Registration Statement; each Person, if any, who controls the Company within the meaning of the Securities Act; any other Selling Holder, any controlling Person of any such other Selling Holder and each officer, director, partner, and employee of such other Selling Holder and such controlling Person; against any and all losses, claims, damages, liabilities and expenses, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise become subject under the Securities Act, to the extent such losses, claims, damages, liabilities and expenses arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with the Holder Information or other information furnished to the Company by or on behalf of that Selling Holder expressly for use in connection with the Registration Statement. 5.3 Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, suit, proceeding, investigation or threat thereof made in writing for which such indemnified party may make a claim under this Section 5, such indemnified party shall deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to 6 7 the parties. The failure of an Indemnified Party to deliver written notice to the indemnifying party within a reasonable time following the commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Section 5 unless such failure is prejudicial to such indemnifying party's ability to defend such action. Any fees and expenses incurred by the indemnified party (including any fees and expenses incurred in connection with investigating or preparing to defend such action or proceeding) shall be paid to the indemnified party, as incurred, within 30 days of written notice thereof to the indemnifying party (regardless of whether it is ultimately determined that an indemnified party is not entitled to indemnification hereunder). Any such indemnified party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses, or (ii) the indemnifying party shall have failed to promptly assume the defense of such action, claim or proceeding, or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party and that the assertion of such defenses would create a conflict of interest such that counsel employed by the indemnifying party could not faithfully represent the indemnified party (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action, claim or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties, unless in the reasonable judgment of such indemnified party a conflict of interest would exist between such indemnified party and any other of such indemnified parties with respect to such action, claim or proceeding, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels). No indemnifying party shall be liable to an indemnified party for any settlement of any action, proceeding or claim without the written consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed. 5.4 If the indemnification required by this Section 5 from the indemnifying party is determined by a court of competent jurisdiction to be unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to in this Section 5: 5.4.1 The indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any Violation has been committed by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such Violation. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 5.1 and 5.2, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. 7 8 5.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.4 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 5.4.1. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of a fraudulent misrepre- sentation. 5.5 If indemnification is available under this Section 5, the indemnifying parties shall indemnify each indemnified party to the full extent provided in this Section 5 without regard to the relative fault of such indemnifying party or indemnified party or any other equitable consideration referred to in Section 5.4. 5.6 The obligations of the Company and the Selling Holders under this Section 5 shall survive the completion of any offering of Registrable Shares pursuant to the Registration Statement and any termination of this Agreement. 6. Amendment, Modification and Waivers; Further Assurances. 6.1 This Agreement may be amended with the consent of the Company and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it; in each case only if the Company shall have obtained the written consent of Holders holding more than 50% of the Registrable Shares. Such amendment, action or omission shall not require the consent of any other Holder. In addition, the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, that affects the rights hereunder of a specific Holder with the written consent of such Holder. 6.2 No waiver of any terms or conditions of this Agreement shall operate as a waiver of any other breach of such terms and conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. No written waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provisions being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. 6.3 Each of the parties hereto shall execute all such further instruments and documents and take all such further action as any other party hereto may reasonably require in order to effectuate the terms and purposes of this Agreement. 7. Miscellaneous. 7.1 Business Day. Whenever this Agreement requires that an action be taken or a notice be given on a date that would otherwise not be a Business Day, the time period for taking such action or giving such notice shall be extended to the first day thereafter that is a Business Day. 7.2 Governing Law. This agreement shall be governed by and construed in accordance with the laws of the state of New York, without giving regard to the conflict of laws principles thereof. 8 9 7.3 Notices. All notices, requests, demands, consents, approvals, designations and other deliveries and communications called for or contemplated by this Agreement shall be in writing and shall be given (i) in the case of Shareholder or the Company, to the address and in the manner set forth in Section 7 of the Stock Agreement, and (ii) in the case of any Holder other than Shareholder, in the manner set forth in Section 7 of the Stock Agreement and to the address provided to the Company in such Holder's Joinder Agreement. 7.4 Entire Agreement; Integration. This Agreement, together with the Stock Agreement, supersedes all prior agreements between or among any of the parties hereto with respect to the subject matter contained herein and therein, and such agreements embody the entire understanding among the parties relating to such subject matter. 7.5 Section Headings. Section headings are for convenience of reference only and shall not affect the meaning of any provision of this Agreement. 7.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which shall together constitute one and the same instrument. All signatures need not be on the same counterpart. 7.7 Severability. If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement, unless the result thereof would be unreasonable, in which case the parties hereto shall negotiate in good faith as to appropriate amendments hereto. 7.8 Termination. This Agreement may be terminated at any time by a written instrument signed by the parties hereto. Unless sooner terminated in accordance with the preceding sentence, this Agreement (other than Section 5 hereof) shall terminate in its entirety on such date as there shall be no Registrable Shares. 7.9 Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees (including any fees incurred in any appeal) in addition to its costs and expenses and any other available remedy. 7.10 No Third Party Beneficiaries or Assignees. Nothing herein expressed or implied is intended to confer upon any person, other than the parties hereto or the Holders (to the extent expressly provided herein) any rights, remedies, obligations or liabilities under or by reason of this Agreement. Neither this Agreement not the rights or obligations hereunder may be assigned or otherwise transferred by any Holder except as permitted herein with respect to a Transfer of Registrable Shares. 7.11 Starwood Hotels & Resorts Trust. The parties hereto understand and agree that the name "Starwood Hotels & Resorts Trust" is a designation of the Trust and its trustees (as trustees but not personally) under the Trust's Declaration of Trust, and all persons dealing with the Trust shall look solely to the Trust's assets for the enforcement of any claims against the Trust, and that the Trustees, officers, agents and security holders of the Trust assume no personal liability for obligations entered into on behalf of the Trust, and their respective individual assets shall not be subject to the claims of any person relating to such obligations. 9 10 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first written above. "Shareholder" D.C. OVERNIGHT PARTNERS, L.P., a District of Columbia limited partnership By: D.C. OVERNIGHT, INC., a District of Columbia corporation, its sole General Partner /s/ Tarek Ayoubi _____________________________ Tarek Ayoubi President STARWOOD HOTELS & RESORTS TRUST a Maryland real estate investment trust /s/ Steven R. Goldman By: _____________________________ Steven R. Goldman Senior Vice President STARWOOD HOTELS & RESORTS WORLDWIDE, INC. a Maryland corporation /s/ Nir E. Margalit By: _____________________________ Nir E. Margalit Secretary 10 11 ANNEX A to Registration Rights Agreement AGREEMENT TO BE BOUND BY THE REGISTRATION RIGHTS AGREEMENT The undersigned, being the transferee or the intended transferee of _________ Paired Shares (the "Registrable Shares") of Starwood Hotels & Resorts Trust, a Maryland real estate investment trust, and Starwood Lodging Corporation, a Maryland corporation (together, the "Company"), as a condition to the transfer to and acquisition by the undersigned of such Registrable Shares, acknowledges that matters pertaining to the sale and registration of such Registrable Shares are governed by the Registration Rights Agreement (the "Registration Rights Agreement"), dated as of January 15, 1998, initially among the Company and D.C. Overnight Partners, L.P., a District of Columbia limited partnership, and the undersigned hereby (1) acknowledges receipt of a copy of such agreement, and (2) agrees to be bound as a "Holder" by the terms of the Registration Rights Agreement, as the same has been or may be amended from time to time. Agreed to this ____ day of __________, _____. ____________________________________ By: _______________________________ Its: _______________________________ Address, telephone number and telecopy number for notices: ____________________________________ ____________________________________ ____________________________________ ____________________________________ 12 ANNEX B to Registration Rights Agreement [Letterhead of Selling Holder] ____________, 199__ BY TELECOPIER Starwood Hotels & Resorts Trust 2231 E. Camelback Road, Suite 410 Phoenix, Arizona 85016 Attention: Ronald C. Brown or Chief Financial Officer Starwood Hotels & Resorts Worldwide, Inc. 2231 E. Camelback Road, Suite 400 Phoenix, Arizona 85016 Attention: Alan M. Schnaid or Vice President Re: Starwood Hotels & Resorts Ladies and Gentlemen: Reference is made to the prospectus (the "Prospectus") included in the Registration Statement on Form S-3 (Registration No. ___________) filed by Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company") with the Securities and Exchange Commission on _________, 1998, under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration for resale by the shareholders named therein of certain shares of beneficial interest, par value $.01 per share, of the Trust, and shares of common stock, par value $.01 per share, of the Corporation (the "Paired Shares"), including _______ Paired Shares held by the undersigned. ___________ of the Paired Shares held by the undersigned were offered for sale and have been sold by the undersigned in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus. Thus, the undersigned requests that new certificates evidencing such Paired Shares be issued in the name of _________________________, the transferee, free of any restrictive legend under the Securities Act. Very truly yours, [Name and signature of Selling Holder] 13 ANNEX C to Registration Rights Agreement [Letterhead of Selling Holder] ____________, 199__ BY TELECOPIER Sidley & Austin 555 West Fifth Street Los Angeles, California 90013 Attention: Sherwin L. Samuels, Esq., Kenneth H. Levin, Esq. and James V. Robertson, Esq. Re: Starwood Hotels & Resorts Ladies and Gentlemen: Reference is made to the prospectus (the "Prospectus") included in the Registration Statement on Form S-3 (Registration No. ___________) filed by Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company") with the Securities and Exchange Commission on _________, 1998, under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration for resale by the shareholders named therein of certain shares of beneficial interest, par value $.01 per share, of the Trust, and shares of common stock, par value $.01 per share, of the Corporation (the "Paired Shares"), including _______ Paired Shares held by the undersigned. The undersigned understands that you have been requested by the Company to deliver an opinion to the Company's transfer agent that, upon the sale by the undersigned of the Paired Shares, certificates evidencing such shares may be issued to the transferee(s) without any restrictive legend under the Securities Act. For the purpose of facilitating the delivery by you of such opinion, the undersigned, hereby represents that _______ of the Paired Shares held by the undersigned were offered for sale and have been sold in a manner consistent with the description set under the caption "Plan of Distribution" in the Prospectus. The undersigned understands that you will be relying on the foregoing representations in rendering your opinion, and the undersigned consents to such reliance. Very truly yours, [Name and signature of Selling Holder] EX-99.13 14 POWER OF ATTORNEY 1 POWER OF ATTORNEY The undersigned, Sheikh Abdulaziz bin Ibrahim Al Ibrahim, hereby constitutes and appoints Tarek Ayoubi, with full power of substitution, his true and lawful attorney-in-fact and agent, in any and all capacities, with full power and authority to execute, deliver and file any reports to be filed with the United States Securities and Exchange Commission pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, with respect to the acquisition, ownership or disposition of shares of Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc., granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or other substitutes, may lawfully do or cause to be done. Polestar Limited /s/ Sheikh Abdulaziz bin Ibrahim Al Ibrahim ------------------------------------------- Name: Sheik Abdulaziz bin Ibrahim Al Ibraham Title: Authorized Signatory Date: January 24, 1998 2 POWER OF ATTORNEY The undersigned, Aspen Enterprises International Holdings, Ltd., a Cayman Islands corporation, hereby constitutes and appoints Tarek Ayoubi, with full power of substitution, its true and lawful attorney-in-fact and agent, in any and all capacities, with full power and authority to execute, deliver and file any reports to be filed with the United States Securities and Exchange Commission pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, with respect to the acquisition, ownership or disposition of shares of Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc., granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or other substitutes, may lawfully do or cause to be done. Aspen Enterprises International Holdings, Ltd. By: /s/ Sheikh Abdulaziz bin Ibrahim Al Ibrahim ------------------------------------------------ Name: Sheikh Abdulaziz bin Ibrahim Al Ibrahim Title: Authorized Signatory Date: January 24, 1998 3 POWER OF ATTORNEY The undersigned, Polestar Limited, a Cayman Islands corporation, hereby constitutes and appoints Tarek Ayoubi, with full power of substitution, its true and lawful attorney-in-fact and agent, in any and all capacities, with full power and authority to execute, deliver and file any reports to be filed with the United States Securities and Exchange Commission pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, with respect to the acquisition, ownership or disposition of shares of Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc., granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or other substitutes, may lawfully do or cause to be done. Polestar Limited By: /s/ Sheikh Abdulaziz bin Ibrahim Al Ibrahim ------------------------------------------ Name: Sheikh Abdulaziz bin Ibrahim Al Ibrahim Title: Authorized Signatory Date: January 24, 1998 4 POWER OF ATTORNEY The undersigned, Moonbeam Enterprises International, Ltd., a Cayman Islands corporation, hereby constitutes and appoints Tarek Ayoubi, with full power of substitution, its true and lawful attorney-in-fact and agent, in any and all capacities, with full power and authority to execute, deliver and file any reports to be filed with the United States Securities and Exchange Commission pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, with respect to the acquisition, ownership or disposition of shares of Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc., granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or other substitutes, may lawfully do or cause to be done. Moonbeam Enterprises International, Ltd. By: /s/ Sheikh Abdulaziz bin Ibrahim Al Ibrahim -------------------------------------------- Name: Sheikh Abdulaziz bin Ibrahim Al Ibrahim Title: Authorized Signatory Date: January 24, 1998 -----END PRIVACY-ENHANCED MESSAGE-----