AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

MS RESORT HOLDINGS LLC,

MS RESORT ACQUISITION LLC,

MS RESORT PURCHASER LLC,

ASHFORD SAPPHIRE ACQUISITION LLC

AND

CNL HOTELS & RESORTS, INC.

DATED AS OF JANUARY 18, 2007

TABLE OF CONTENTS

TABLE OF CONTENTS
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TABLE OF CONTENTS
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EXHIBITS

Exhibit A: Form of Guaranty
Exhibit B: Form of Tax Opinion
Exhibit C: Form of Parent Asset Purchase Agreement
Exhibit D: Form of Arizona Asset Purchase Agreement

  iv

AGREEMENT AND PLAN OF MERGER

      AGREEMENT AND PLAN OF MERGER , dated as of January 18, 2007 (this “ Agreement ”), by and among MS Resort Holdings LLC, a Delaware limited liability company (“ Parent ”), MS Resort Acquisition LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent (“ Sub ”), MS Resort Purchaser LLC, a Delaware limited liability company and wholly-owned subsidiary of Parent (“ Missouri ”), Ashford Sapphire Acquisition LLC, a Delaware limited liability company (“ Arizona ”), and CNL Hotels & Resorts, Inc., a Maryland corporation (the “ Company ”). Except as otherwise set forth herein, capitalized terms used herein shall have the meanings set forth in Section 1.1 . Parent, Sub, Missouri and Arizona are hereinafter collectively referred to as the “ Buyer Parties ”.

W I T N E S S E T H:

     WHEREAS, the board of directors of the Company (the “ Board ”), has declared that it is advisable and in the best interests of the Company and the stockholders of the Company, to enter into this Agreement to provide for the Merger (as defined below) and Asset Sales (as defined below) on the terms and conditions set forth in this Agreement;

     WHEREAS, on the next day immediately following completion of the Parent Asset Sale and Arizona Asset Sale (each as hereinafter defined) the Company and Sub wish to effect a business combination through a merger of Sub with and into the Company (the “ Merger ”), in accordance with the Maryland General Corporation Law (the “ MGCL ”) and the Delaware Limited Liability Company Act (the “ DLLCA ”), upon the terms and subject to the conditions set forth in this Agreement, whereby each issued and outstanding share of common stock, par value $0.01 per share, of the Company (the “ Company Common Stock ” or the “ Shares ”), other than Dissenting Shares (as defined herein) and Shares owned directly or indirectly by Parent, will be converted into the right to receive cash in an amount equal to the Per Share Merger Consideration;

     WHEREAS, the Board approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, the Parent Asset Sale and the Arizona Asset Sale (collectively, the “ Transactions ”), in accordance with the MGCL, upon the terms and subject to the conditions contained herein and resolved to recommend approval of the Merger by the stockholders of the Company;

     WHEREAS, the sole member of Parent and Parent, as the sole member of Sub and Missouri, have; (a) approved this Agreement and declared it advisable for Parent, Sub and Missouri to enter into this Agreement and (b) approved the execution, delivery and performance of this Agreement by Parent, Sub and Missouri and the consummation of the transactions contemplated hereby, including the Merger and the Parent Asset Sale, in accordance with the DLLCA, upon the terms and conditions contained herein;

     WHEREAS, the board of managers of Arizona has (a) approved this Agreement and declared it advisable for Arizona to enter into this Agreement and (b) approved the execution,

delivery and performance of this Agreement and the consummation of the Arizona Asset Sale upon the terms and conditions contained herein;

     WHEREAS, concurrently with the execution of this Agreement, the Guarantors have delivered to the Company a joint and several guaranty (the “ Guaranty ”) of the obligations arising under this Agreement of the Buyer Parties in the form attached as Exhibit A to this Agreement; and

     WHEREAS, the parties intend that for federal, and applicable state and local, income tax purposes the Merger will be treated as a taxable sale of the Shares.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, each of Parent, Sub, Missouri, Arizona and the Company hereby agrees as follows:

ARTICLE I
DEFINITIONS; INTERPRETATION

     Section 1.1 Definitions . As used in this Agreement, the following terms have the meanings specified or referred to in this Section 1.1 and shall be equally applicable to both the singular and plural forms. Any agreement referred to below shall mean such agreement as amended, supplemented or modified from time to time to the extent permitted by the applicable provisions thereof and by this Agreement.

     “ Access ” shall have the meaning set forth in Section 8.4 .

     “ Acquisition Proposal ” shall have the meaning set forth in Section 7.2(d) .

     “ Affiliate ” means, with respect to any Person, any other Person that, at the time of determination, directly or indirectly Controls, is Controlled by or is under common Control with such Person.

     “ Aggregate Award Amount ” shall have the meaning set forth in Section 8.2 .

     “ Agreement ” shall have the meaning set forth in the introductory paragraph of this Agreement.

     “ Arizona ” shall have the meaning set forth in the introductory paragraph of this Agreement.

     “ Arizona Asset Purchase Agreement ” shall have the meaning set forth in Section 12.2 .

     “ Arizona Asset Sale ” shall have the meaning set forth in Section 12.2 .

     “ Arizona Commitment Letters ” shall have the meaning set forth in Section 6.6 .

     “ Arizona Debt Financing ” shall have the meaning set forth in Section 6.6 .

     “ Articles of Merger ” shall have the meaning set forth in Section 2.3 .

     “ Asset Sale Time ” means the time at which the first of the Asset Sales is consummated.

     “ Asset Sales ” means the Parent Asset Sale and the Arizona Asset Sale.

     “ Benefit Plan ” means any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, deferred stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical, employee stock purchase, stock appreciation, restricted stock or other employee benefit plan, program, agreement or arrangement as to which the Company or any of its Subsidiaries sponsors, maintains, contributes or is obligated to contribute for the benefit of any current or former employee, officer, director, consultant or independent contractor of the Company or any of its Subsidiaries, including any ERISA Benefit Plan.

     “ Board ” shall have the meaning set forth in the first recital of this Agreement.

     “ Board Recommendation ” shall have the meaning set forth in Section 4.4(b) .

     “ Business Day ” means any day other than a Saturday or Sunday or a day on which banks are required or authorized to close in the City of New York.

     “ Buyer Parties ” shall have the meaning set forth in the introductory paragraph of this Agreement.

     “ Certificate ” shall have the meaning set forth in Section 3.1(c) .

     “ Change in Recommendation ” shall have the meaning set forth in Section 7.2(e) .

     “ Closing ” shall have the meaning set forth in Section 2.2 .

     “ Closing Date ” shall have the meaning set forth in Section 2.2 .

     “ Code ” means the U.S. Internal Revenue Code of 1986, as amended.

     “ Company ” shall have the meaning set forth in the introductory paragraph of this Agreement.

     “ Company Bylaws ” shall have the meaning set forth in Section 4.1(b) .

     “ Company Charter ” shall have the meaning set forth in Section 4.1(b) .

     “ Company Common Stock ” shall have the meaning set forth in the second recital of this Agreement.

     “ Company Expenses ” shall have the meaning set forth in Section 8.5(c) .

     “ Company Intellectual Property ” shall have the meaning set forth in Section 4.14 .

     “ Company Letter ” means the letter from the Company to the Buyer Parties dated the date hereof, which letter relates to this Agreement and is designated therein as the Company Letter.

     “ Company Preferred Stock ” shall have the meaning set forth in Section 4.3 .

     “ Company Properties ” means, collectively, the Leased Real Property and the Owned Real Property.

     “ Company Subsidiary REIT ” shall mean CNL Hotel Investors, Inc., a Maryland corporation.

     “ Company SEC Documents ” shall have the meaning set forth in Section 4.6(a) .

     “ Company Stock Plan ” shall have the meaning set forth in Section 4.3 .

     “ Company Stockholder Approval ” shall have the meaning set forth in Section 8.3(b) .

     “ Company Title Insurance Policies ” means policies of title insurance issued and insuring, as of the effective date of each such policy, the Company’s or its applicable Subsidiary’s title to or leasehold interest in the Company Properties.

     “ Confidentiality Agreement ” shall have the meaning set forth in Section 8.4 .

     “ Contract ” means any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other binding commitment, instrument or obligation.

     “ Control ” means, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The terms “Controlled by,” “under common Control with” and “Controlling” shall have correlative meanings.

     “ Counterproposal ” shall have the meaning set forth in Section 7.2(e) .

     “ Debt Financing ” means the Arizona Debt Financing and the Parent Financing.

     “ Deferred Share Awards ” means deferred shares of Company Common Stock granted under the Company Stock Plan.

     “ Delaware Certificate of Merger ” shall have the meaning set forth in Section 2.3 .

     “ Dissenting Shares ” shall have the meaning set forth in Section 3.1(d) .

     “ Dissenting Stockholder ” shall have the meaning set forth in Section 3.1(d) .

     “ DLLCA ” shall have the meaning set forth in the second recital of this Agreement.

     “ DSOS ” shall have the meaning set forth in Section 2.3 .

     “ Effective Time ” shall have the meaning set forth in Section 2.3 .

     “ Environmental Laws ” means all Laws relating to the protection of the environment, including the soil, subsurface strata, sediment, surface water or groundwater, or relating to the protection of human health from exposure to Hazardous Substances.

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

     “ ERISA Benefit Plan ” means a Benefit Plan that is also an “employee pension benefit plan” (as defined in Section 3(2) of ERISA) or that is also an “employee welfare benefit plan” (as defined in Section 3(1) of ERISA).

     “ Escrowed Amount ” shall have the meaning set forth in Section 8.5(e) .

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

     “ Exchange Fund ” shall have the meaning set forth in Section 3.2(a) .

     “ Excess Shares ” shall have the meaning set forth in Section 4.3 .

     “ Final Condition Satisfaction Date ” shall have the meaning set forth in Section 12.1 .

     “ GAAP ” means United States generally accepted accounting principles and practices as in effect from time to time consistently applied.

     “ Governmental Entity ” means any federal, state, provincial, local or foreign government, any governmental, regulatory or administrative authority, agency or commission, or any court, tribunal or other judicial body (including any political or other subdivision, department or branch of any of the foregoing).

     “ Guaranty ” shall have the meaning set forth in the sixth recital of this Agreement.

     “ Guarantors ” shall mean the guarantors under that certain Guaranty, dated as of the date hereof, the form of which is attached hereto as Exhibit A .

     “ Hazardous Substances ” means (i) regardless of whether subject to the jurisdiction of a Governmental Entity, those substances defined in or regulated under the following United States federal statutes and their state counterparts and all regulations thereunder, including the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Clean Air Act; the Oil Pollution Act and the Toxic Substances Control Act, (ii) natural gas, petroleum and petroleum products, including crude oil and any fractions thereof and waste oil; (iii) polychlorinated biphenyls, asbestos and radon; and (iv) any other pollutant, contaminant, substance, material, waste or condition regulated by any Governmental Entity pursuant to any Environmental Law.

     “ Hotel Contracts ” means all material service contracts, material maintenance contracts, and other material contracts or agreements, including material equipment leases capitalized for

accounting purposes, in each case with respect to the ownership, maintenance, operation, provisioning, or equipping of the Company Properties and material guaranties relating thereto, if any.

     “ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     “ Indebtedness ” means (a) indebtedness of the Company or any of its Subsidiaries for borrowed money (including the aggregate principal amount thereof and the aggregate amount of any accrued but unpaid interest thereon), (b) obligations of the Company or any of its Subsidiaries evidenced by bonds, notes, debentures, letters of credit or similar instruments and (c) all obligations of the Company or any of its Subsidiaries to guarantee any of the foregoing types of payment obligations on behalf of any Person other than the Company or any of its Subsidiaries.

     “ Indemnified Person ” shall have the meaning set forth in Section 8.9(a) .

     “ Intellectual Property ” means intellectual property or other proprietary rights of any kind, including (a) all patents, patent applications and patent disclosures, together with all reissuances, continuations, provisionals, continuations-in-part, divisions, revisions, extensions and reexaminations thereof (collectively, “ Patents ”), (b) all trademarks, service marks, logos, trade names, corporate names, domain names, trade dress, including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith (collectively, “ Marks ”), (c) all copyrights and copyrightable works and all applications, registrations and renewals in connection therewith (collectively, “ Copyrights ”), (d) all trade secrets and confidential business and technical information (including research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, methods, schematics, technology, technical data, designs, drawings, flowcharts, block diagrams, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals) (collectively, “ Trade Secrets ”) and (e) all computer data and software (including databases and related documentation).

     “ IRS ” means the U.S. Internal Revenue Service.

     “ Knowledge ” means, (i) with respect to the Company, the actual knowledge of the Company’s chief executive officer; president and chief operating officer; executive vice president, chief financial officer and treasurer; executive vice president of portfolio management & administration; executive vice president, chief general counsel and corporate secretary; and vice president of tax; (ii) with respect to Parent, the actual knowledge of Michael Franco and Michael Quinn; and (iii) with respect to Arizona, the actual knowledge of Ashford Hospitality Trust, Inc.’s chief executive officer; president; chief operating officer; chief financial officer; general counsel; and secretary.

     “ Law ” means any federal, state, provincial, municipal or local statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order.

     “ Lease Documents ” shall have the meaning set forth in Section 4.15(b) .

     “ Leased Real Property ” means all material real property leased or otherwise occupied (as lessee or sublessee) as of the date hereof by the Company or any Subsidiary from a third party other than the Company or any Subsidiary, including the improvements thereon.

     “ Liens ” means, with respect to any asset, any pledges, claims, liens, mortgages, charges, encumbrances or security interests of any kind in respect of such asset.

     “ Major Space Leases ” means all leases, subleases, licenses, concessions, and other similar agreements for the use or occupancy of more than 10,000 square feet of any of the Company Properties.

     “ Management Agreement Documents ” shall have the meaning set forth in Section 4.15(h) .

     “ Marketed Portfolio Purchase and Sale Agreement ” means that certain Agreement of Purchase and Sale made and entered into on December 17, 2006 between W2005 New Century Hotel Portfolio, L.P. and the Sellers identified therein.

     “ Marketed Portfolio Sale ” means, whether effected directly or indirectly or in one transaction or a series of related transactions, any sale, transfer or other business combination involving the 32 hotel properties owned by the Company and under contract for sale on the date hereof pursuant to the Marketed Portfolio Purchase and Sale Agreement.

     “ Material Adverse Effect ” means, (I) with respect to the Company, any change, development, circumstance, event or effect that, when considered either individually or in the aggregate together with all other changes, circumstances, developments, events or effects (a “ Change ”), (a) that would prevent or reasonably be expected to prevent the Company from consummating any of the Transactions or (b) is materially adverse to the properties, business, condition (financial or otherwise), liabilities or results of operations of the Company and its Subsidiaries taken as a whole, excluding any Change to the extent resulting from: (i) the execution or announcement of this Agreement or the performance of obligations under this Agreement, (ii) Changes affecting the United States economy or capital or financial markets generally (including Changes in interest rates) or Changes that are the result of factors generally affecting the industries in which the Company and its Subsidiaries conduct their respective business, except to the extent that such Changes have a materially disproportionate effect on the Company or the Company Properties relative to other similarly situated participants in the business or industry in which the Company operates, (iii) general Changes in conditions in or otherwise affecting hotel real estate properties or hotel operators (including diseases and epidemics), except to the extent that such Changes have a materially disproportionate effect on the Company or the Company Properties relative to other similarly situated participants in the business or industry in which the Company operates (it being understood that the phrase “similarly situated” shall take into account the geographical markets in which the Company operates), (iv) any Changes in applicable Law or GAAP or interpretation or application thereof, (v) earthquakes, hurricanes or other natural disasters, except to the extent that such Changes cause physical damage to a Company Property or have a materially disproportionate effect on the Company or the Company Properties relative to other similarly situated participants in the business or industry in which the Company operates (it being understood that the phrase

“similarly situated” shall take into account the geographical markets in which the Company operates), (vi) the commencement, occurrence, continuation or escalation of any war, armed hostilities or acts of terrorism involving or affecting the United States, its armed forces or any part thereof, except to the extent that such Changes cause physical damage to a Company Property or have a materially disproportionate effect on the Company or the Company Properties relative to other similarly situated participants in the business or industry in which the Company operates (it being understood that the phrase “similarly situated” shall take into account the geographical markets in which the Company operates) and (vii) any failure, but only in and of itself, by the Company to meet any financial projection of the Company’s revenues, earnings or other financial performance for any period (it being understood that the phrase “but only in and of itself” shall mean that any Change from such failure that could otherwise be described in clause (I)(a) or (b) , above, shall constitute a Material Adverse Effect); and (II) when used with respect to any of the Buyer Parties, any change, development, circumstance, event or effect that, when considered either individually or in the aggregate together with all other changes, developments, circumstances, events or effects, would, with the passage of time or otherwise, prevent the consummation of the Transactions following the satisfaction of all other conditions precedent thereto or prevent any of the Buyer Parties from performing their respective obligations under this Agreement.

     “ Material Contract ” shall have the meaning set forth in Section 4.18(a) .

     “ Maximum Premium ” shall have the meaning set forth in Section 8.9(b) .

     “ Merger ” shall have the meaning set forth in the second recital of this Agreement.

     “ MGCL ” shall have the meaning set forth in the second recital of this Agreement.

     “ Missouri ” shall have the meaning set forth in the introductory paragraph of this Agreement.

     “ Owned Real Property ” means all real property owned by the Company or any Subsidiary as of the date hereof, together with all buildings, structures, other improvements and fixtures located on or under such real property and all easements, rights, and other appurtenances thereto.

     “ Parent ” shall have the meaning set forth in the introductory paragraph of this Agreement.

     “ Parent Asset Purchase Agreement ” shall have the meaning set forth in Section 12.1 .

     “ Parent Asset Sale ” shall have the meaning set forth in Section 12.1 .

     “ Parent Commitment Letter ” shall have the meaning set forth in Section 5.7 .

     “ Parent Debt Financing ” shall have the meaning set forth in Section 5.7 .

     “ Parent Expenses ” shall have the meaning set forth in Section 8.5(c) .

     “ Parent Financing ” shall have the meaning set forth in Section 5.7 .

     “ Parent Preferred Equity Funding Letter ” shall have the meaning set forth in Section 5.7 .

     “ Paying Agent ” shall have the meaning set forth in Section 3.2(a) .

     “ Per Share Merger Consideration ” means (i) $20.50 per Share, minus (ii) the Special Dividend Amount, divided by the number of Shares outstanding, on a fully diluted basis, on the Closing Date.

     “ Permits ” shall have the meaning set forth in Section 4.9 .

     “ Permitted Liens ” means (a) statutory liens for Taxes, assessments or other charges by Governmental Entities not yet due and payable or the amount or validity of which is being contested in good faith, (b) any matter disclosed in the Company Title Insurance Policies, (c) Liens and obligations under the Material Contracts, Management Agreement Documents, the Third Party Franchise Agreements and Lease Documents, (d) mortgages and deeds of trust granted as security for financings listed or described in the Company Letter or Company SEC Documents, (e) inchoate mechanics’, materialmen’s, carriers’, workmen’s, warehouseman’s, repairmen’s, landlords’ and similar liens granted or which arise in the ordinary course of business, (f) liens, charges, encumbrances and/or title exceptions or imperfections created by or resulting from the acts or omissions of the Buyer Parties or any of their Affiliates, employees, officers, directors, agents, representatives, contractors, invitees or licensees, (g) all matters that may be shown by a current, accurate survey or physical inspection of the Company Properties that do not adversely affect, in a material manner, the value or marketability of such property, (h) any applicable Laws, including building and zoning Laws, now or hereafter in effect and (i) such other easements, rights of way, restrictions, covenants, liens, encumbrances or imperfections that are not material in amount and do not materially detract from the value of or materially impair the existing use of the Company Property affected by such easement, right of way, restriction, covenant, lien, encumbrance or imperfection.

     “ Person ” means an individual, corporation, partnership, limited partnership, limited liability partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Entity or other entity (including any person as defined in Section 13(d)(3) of the Exchange Act).

     “ Proxy Statement ” shall have the meaning set forth in Section 4.8 .

     “ Qualifying Income ” shall have the meaning set forth in Section 8.5(e) .

     “ Redemption Plan ” means the Company’s Amended and Restated Redemption Plan, effective as of June 16, 2004, as the same may from time to time be amended or modified.

     “ Reinvestment Plan ” means the Company’s Amended and Restated Reinvestment Plan, as in effect as of the date hereof.

     “ REIT ” shall have the meaning set forth in Section 4.10(c) .

     “ Release ” means any spilling, leaking, pumping, pouring, emitting, discharging, injecting, escaping, leaching, dumping or disposing of a Hazardous Substance into the environment.

     “ Representatives ” shall have the meaning set forth in Section 7.2(a) .

     “ Required Vote ” shall have the meaning set forth in Section 4.4(a) .

     “ Retained Employees ” shall have the meaning set forth in Section 8.1(a) .

     “ SDAT ” shall have the meaning set forth in Section 2.3 .

     “ SEC ” means the Securities and Exchange Commission.

     “ Securities Act ” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

     “ Shares ” shall have the meaning set forth in the second recital of this Agreement.

     “ Significant Subsidiary ” of any Person means a Subsidiary of such Person that would constitute a “significant subsidiary” of such Person within the meaning of Rule 1.02(w) of Regulation S-X as promulgated by the SEC.

     “ Special Dividend ” shall have the meaning set forth in Section 12.3 .

     “ Special Dividend Amount ” shall have the meaning set forth in Section 12.3 .

     “ Stockholders’ Meeting ” shall have the meaning set forth in Section 8.3(b) .

     “ Sub ” shall have the meaning set forth in the introductory paragraph of this Agreement.

     “ Subsidiary ” of any Person means another Person, of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions is owned or controlled, directly or indirectly, by such first Person and/or by one or more of its Subsidiaries.

     “ Superior Proposal ” shall have the meaning set forth in Section 7.2(d) .

     “ Surviving Entity ” shall have the meaning set forth in Section 2.1 .

     “ Tax ” and “ Taxes ” means any federal, state, local or foreign income, property, sales, hotel room sales, restaurant sales, excise, franchise, employment, withholding, or other like assessment, together with any interest or penalty, imposed by any Governmental Entity.

     “ Tax Protection Agreement ” shall have the meaning set forth in Section 4.10(j) .

     “ Tax Sharing Agreement ” shall have the meaning set forth in Section 4.10(j) .

     “ Tax Return ” means any return, report or similar statement filed or required to be filed with respect to any Tax including any information return, claim for refund, amended return or declaration of estimated Tax.

     “ Termination Date ” shall have the meaning set forth in Section 10.1(b)(i) .

     “ Termination Fee ” shall have the meaning set forth in Section 8.5(b) .

     “ Third Party Franchise Agreements ” shall have the meaning set forth in Section 4.15(g) .

     “ Transactions ” shall have the meaning set forth in the third recital of this Agreement.

     “ Transfer Taxes ” shall have the meaning set forth in Section 8.7 .

     “ Treasury Regulations ” means the regulations promulgated by the U.S. Treasury Department pursuant to the Code.

     “ Uncertificated Share ” shall have the meaning set forth in Section 3.1(c) .

     “ WARN ” shall have the meaning set forth in Section 4.17(d) .

     Section 1.2 Interpretation . When a reference is made in this Agreement to an Article, Section or clause, such reference shall be to an Article, Section or clause of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” All references to “dollars” or “$” means United States dollars.

ARTICLE II
THE MERGER

     Section 2.1 The Merger . Upon the terms and subject to the conditions hereof, and in accordance with the DLLCA and the MGCL, Sub shall be merged with and into the Company at the Effective Time. Following the Effective Time, the separate existence of Sub shall cease and the Company shall continue as the surviving entity (the “ Surviving Entity ”) and shall succeed to and assume all the rights, privileges, franchises, powers and obligations of Sub and the Company in accordance with Subtitle 1 of Title 3 of the MGCL and Section 18-209(g) of the DLLCA. The Company shall cause the opinion described in Section 9.3(d) to be brought down and dated as of the Closing; provided , that the bringdown of such opinion shall not be a condition to the consummation of the Merger.

     Section 2.2 Closing . The closing of the Merger (the “ Closing ”) will take place at 10:00 a.m. on the day following the consummation of the Asset Sales or such other date as mutually agreed to by Parent and the Company, at the offices of Sidley Austin LLP, 787 Seventh Avenue, New York, New York 10019, unless another date, time or place is agreed to in writing by the parties hereto (the date upon which the Closing occurs shall be referred to herein as the “ Closing Date ”).

     Section 2.3 Effective Time . The Merger shall become effective when Articles of Merger (the “ Articles of Merger ”), executed in accordance with the relevant provisions of the MGCL, are duly filed with and accepted for record by the State Department of Assessments and Taxation in the State of Maryland (the “ SDAT ”) and a certificate of merger (the “ Delaware Certificate of Merger ”) has been duly filed with the Secretary of State of Delaware (the “ DSOS ”) in accordance with the DLLCA, or at such later time (not to exceed 30 days from the date of the acceptance for record of the Articles of Merger) as Sub and the Company shall agree and is specified in the Articles of Merger and the Delaware Certificate of Merger. When used in this Agreement, the term “ Effective Time ” shall mean the later of the date and time at which the Articles of Merger are duly filed with and accepted for record by the SDAT and the Delaware Certificate of Merger has been filed with the DSOS, or such later time (not to exceed 30 days from the date of the acceptance for record of the Articles of Merger) established by the Articles of Merger and the Delaware Certificate of Merger. The filing of the Articles of Merger and the Delaware Certificate of Merger shall be made at the Closing.

     Section 2.4 Effects of the Merger . The Merger shall have the effects set forth in Section 3-114 of the MGCL, Section 18-209(g) of the DLLCA and this Agreement.

     Section 2.5 Charter and Bylaws; Officers and Directors .

     (a) The Company Charter, as in effect immediately prior to the Effective Time, shall be the charter of the Surviving Entity until thereafter changed or amended as provided therein or by applicable Law.

     (b) The Company Bylaws, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Entity until thereafter changed or amended as provided by the charter or bylaws of the Surviving Entity or by applicable Law.

     (c) The managers of Parent, if any, immediately prior to the Effective Time shall be the directors of the Surviving Entity, until the earlier of their resignation or removal or until their respective successors are duly elected and qualify, as the case may be, in accordance with the Surviving Entity’s charter and bylaws.

     (d) The officers of Parent immediately prior to the Effective Time shall be the officers of the Surviving Entity until the earlier of their resignation or removal or until their respective successors are duly elected and qualify, as the case may be, in accordance with the charter and bylaws of the Surviving Entity.

     Section 2.6 Tax Treatment . The parties hereto (i) intend that for federal, and applicable state and local, income tax purposes, the Merger will be treated as a taxable purchase by Parent of all of the Company’s outstanding Shares and (ii) shall prepare and file their applicable Tax Returns based on such treatment.

ARTICLE III
EFFECT OF THE MERGER

     Section 3.1 Effect on Stock . As of the Effective Time, by virtue of the Merger and without any action on the part of any of Parent, Sub, the Company or the holders of shares of Company Common Stock or holders of any membership interest in Sub:

          (a) Stock of Sub . Each membership interest of Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Entity.

          (b) Parent Owned Stock . Each Share that is owned by Parent, Sub, Missouri or any other wholly-owned Subsidiary of Parent immediately prior to the Effective Time shall automatically be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.

          (c) Conversion of Shares . Subject to Section 3.1(d) , each Share issued and outstanding immediately prior to the Effective Time (other than Shares to be cancelled in accordance with Section 3.1(b) and Dissenting Shares) shall be cancelled and be converted into the right to receive in cash, without interest, the Per Share Merger Consideration. As of the Effective Time, all such Shares shall be cancelled in accordance with this Section 3.1(c) , and when so cancelled, shall no longer be outstanding and shall automatically cease to exist, and (x) each holder of a certificate (a “ Certificate ”) representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Per Share Merger Consideration for each such Share, without interest and (y) each holder of shares of Company Common Stock not represented by a Certificate (each an “ Uncertificated Share ”) shall thereafter only have the right to receive the Per Share Merger Consideration for each such Uncertificated Share, without interest.

          (d) Shares of Dissenting Stockholders . Notwithstanding anything in this Agreement to the contrary, any issued and outstanding Shares held by a Person who has filed with the Company a written objection to the Merger, has not voted in favor of or consented to the approval of the Merger (a “ Dissenting Stockholder ”) and has properly exercised and perfected appraisal rights under Title 3, Subtitle 2, of the MGCL (“ Dissenting Shares ”) shall not be converted into the right to receive the Per Share Merger Consideration as described in Section 3.1(c) , but shall be converted into the right to receive such consideration from the Surviving Entity as may be determined to be due to such Dissenting Stockholder pursuant to the procedures set forth in Title 3, Subtitle 2, of the MGCL. If such Dissenting Stockholder withdraws its demand for appraisal or fails to perfect or otherwise loses its right of appraisal and payment, in any case pursuant to the MGCL, such holder’s Shares shall be deemed to be converted as of the Effective Time into the right to receive the Per Share Merger Consideration for each such Share, without interest, and such Shares shall no longer be Dissenting Shares. The Company shall give Parent (i) prompt notice of any demands received by the Company for appraisal of any Shares, withdrawals or such demands and any other instruments served pursuant to Title 3, Subtitle 2, of the MGCL and received by the Company and (ii) the opportunity to participate in all negotiations with respect to demands for appraisals under the MGCL.

     Section 3.2 Paying Agent; Exchange Procedures .

          (a) Paying Agent . Prior to the consummation of the Asset Sales, Parent shall designate a bank or trust company, that shall be reasonably satisfactory to the Company, to act as paying agent with respect to the Per Share Merger Consideration and the Special Dividend (the “ Paying Agent ”). At or before the Effective Time, Parent shall deposit, or cause Sub to deposit, with the Paying Agent a cash amount in immediately available funds equal to the product of (x) the Per Share Merger Consideration and (y) the number of Shares issued and outstanding immediately prior to the Effective Time (exclusive of any Dissenting Shares and Shares to be cancelled pursuant to Section 3.1(b) ). At or following the consummation of the Asset Sales, the Company shall deposit, or cause the escrow agent under the Parent Asset Purchase Agreement and the Arizona Asset Purchase Agreement to deposit, with the Paying Agent the Special Dividend Amount. The amounts deposited pursuant to the prior two sentences shall be referred to collectively as the “ Exchange Fund ”. Funds made available to the Paying Agent shall be invested (if at all) by the Paying Agent as directed by Parent or, after the Effective Time, the Surviving Entity; provided , however , that such investments shall only be in obligations of or guaranteed by the United States (it being understood that any and all interest or income earned on funds made available to the Paying Agent pursuant to this Agreement shall become a part of the Exchange Fund, and any amounts in excess of the amounts payable under Section 3.1(c) shall be promptly returned to the Surviving Entity).

          (b) Exchange Procedure . As soon as practicable after the Effective Time (and in any event within four (4) Business Days thereof), the Surviving Entity or Parent shall cause the Paying Agent to mail to each holder of record of one or more Shares (other than holders of Dissenting Shares and Shares to be cancelled pursuant to Section 3.1(b) ), (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates (or affidavits of loss in lieu thereof) to the Paying Agent and shall be in a form and have such other provisions as Parent and the Company may reasonably agree) and (ii) instructions for use in effecting the surrender of the Certificates (or affidavits of loss in lieu thereof) in exchange for the Per Share Merger Consideration as provided in Section 3.1 . Upon surrender of a Certificate (or affidavits of loss in lieu thereof) for cancellation to the Paying Agent, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Paying Agent or, in the case of Uncertificated Shares, at or promptly following the receipt by the Paying Agent of a duly executed letter of transmittal and such other documents as may be required by the Paying Agent, the holder of such Certificate or Uncertificated Shares shall be entitled to receive in exchange therefor the amount of cash (after giving effect to any required Tax withholdings as provided in Section 3.2(g) ) equal to (x) the number of Shares held by such stockholder multiplied by (y) the Per Share Merger Consideration, and any Certificates surrendered shall forthwith be cancelled. No interest will be paid or will accrue on the cash payable upon the surrender of any Certificate (or affidavits of loss in lieu thereof) or in exchange for Uncertificated Shares. In the event of a transfer of ownership of Shares that is not registered in the transfer records of the Company, payment may be made to a Person other than the Person in whose name the Certificate so surrendered (or affidavits of loss in lieu thereof) is registered, if such Certificate (or affidavits of loss in lieu thereof) shall be properly endorsed or otherwise be in proper form for transfer and the Person requesting such payment shall pay any transfer or other Taxes required by reason of the payment to a Person other than the registered holder of

such Certificate (or affidavits of loss in lieu thereof) or establish to the satisfaction of the Surviving Entity or the Paying Agent that such Tax has been paid or is not applicable. Until exchanged or surrendered as contemplated by this Section 3.2 , Uncertificated Shares and Shares represented by Certificates (other than Shares to be cancelled in accordance with Section 3.1(b) and Dissenting Shares) shall be deemed at any time after the Effective Time to represent only the right to receive upon such exchange or surrender the amount of cash, without interest, into which the Shares theretofore represented shall have been converted pursuant to Section 3.1 .

          (c) No Further Ownership Rights in Shares . All Per Share Merger Consideration paid upon the surrender of Certificates (or affidavits of loss in lieu thereof) or in exchange for Uncertificated Shares in accordance with the terms of this Article III shall be deemed to have been paid in full satisfaction of all rights pertaining to such Shares. At the Effective Time, (i) holders of Certificates or Uncertificated Shares shall cease to have any rights as stockholders of the Company, (ii) the stock transfer books of the Company shall be closed and (iii) there shall be no further registration of transfers on the stock transfer books of the Surviving Entity of the Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Entity or the Paying Agent for any reason, they shall be cancelled and exchanged as provided in this Article III .

          (d) Termination of Exchange Fund . Any portion of the Exchange Fund that remains undistributed to the holders of Shares for nine months after the Effective Time shall be delivered to the Surviving Entity, upon demand, and any holders of Shares (other than Shares to be cancelled in accordance with Section 3.1(b) and Dissenting Shares) who have not theretofore complied with this Article III and the instructions set forth in the letter of transmittal mailed to such holders after the Effective Time shall, after such funds have been delivered to the Surviving Entity, look only to the Surviving Entity (subject to abandoned property, escheat or other similar Laws) for payment of the Per Share Merger Consideration (after giving effect to any required Tax withholdings as provided in Section 3.2(g) ) due upon surrender of their Certificates (or affidavits of loss in lieu thereof as provided in Section 3.2(f) ) or exchange of their Uncertificated Shares, without any interest thereon.

          (e) No Liability . None of the Buyer Parties, the Company or the Paying Agent or any of their respective officers, employees, stockholders, directors, agents or Affiliates shall be liable to any Person in respect of any Per Share Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

          (f) Lost, Stolen or Destroyed Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Entity, the posting by such Person of a bond in customary amount and upon such terms as may be required by the Surviving Entity as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will issue a check in the amount (after giving effect to any required Tax withholdings as provided in Section 3.2(g) ) equal to the number of Shares represented by such lost, stolen or destroyed Certificate multiplied by the Per Share Merger Consideration.

          (g) Withholding Rights . The Surviving Entity and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this

Agreement to any holder of Shares such amounts as the Surviving Entity or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Code or under any provision of state, local or foreign Tax Law. To the extent that amounts are so withheld by the Surviving Entity or the Paying Agent, such withheld amounts (i) shall be remitted by the Surviving Entity or the Paying Agent, as applicable, to the applicable Governmental Entity, and (ii) shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by the Surviving Entity or the Paying Agent, as the case may be. The parties acknowledge that this Section 3.2(g) is not intended to, and shall not, amend the terms of any Deferred Share Award or employment agreement related thereto.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as set forth in the Company Letter (it being agreed that disclosure of any item in any section or subsection of the Company Letter shall be deemed disclosure with respect to any other section or subsection to which the relevance of such item is reasonably apparent), the Company hereby represents and warrants to the Buyer Parties as follows:

     Section 4.1 Organization; Minute Books .

          (a) The Company is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization and has the requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each of the Company’s Subsidiaries is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization and has the requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such corporate or similar power and authority have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. The Company and each of its Subsidiaries are duly qualified or licensed to do business and in good standing in each jurisdiction in which the nature of their business or the ownership or leasing of their properties makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing has not had and would not reasonably be expected to have a Material Adverse Effect on the Company.

          (b) The Company has made available to the Buyer Parties complete and correct copies of its Articles of Amendment and Restatement, dated August 7, 2006 (the “ Company Charter ”), and its Amended and Restated Bylaws, dated August 30, 2006 (the “ Company Bylaws ”), and has made available to the Buyer Parties the charter and bylaws (or similar organizational documents) of each of its Significant Subsidiaries. The charter and bylaws (or similar organizational documents) of the Company and each of its Subsidiaries are in full force and effect and no dissolution, revocation or forfeiture proceeding regarding the Company or any of its Subsidiaries has been commenced. Neither the Company nor any of its Subsidiaries is in violation of any of the provisions of its charter or bylaws (or similar organizational documents), except, in each case, for such violations that would not have a Material Adverse Effect on the Company.

          (c) The Company has made available to the Buyer Parties materially correct and complete copies of the minute books of the Company of meetings of the Board and committees of the Board held since January 1, 2004, except that the Company shall not be obligated to make available those portions of any minutes of meetings of the Board or committees of the Board related to the deliberations by the Board or such committee with respect to the consideration of strategic alternatives.

     Section 4.2 Subsidiaries . A correct and complete list of all of the Subsidiaries of the Company, together with the jurisdiction of organization of each such Subsidiary, and the percentage, if any, of the outstanding equity of each such Subsidiary not owned, directly or indirectly, by the Company is set forth in Item 4.2 of the Company Letter. All of the outstanding shares of stock of each Subsidiary of the Company that is a corporation have been duly authorized and validly issued and are fully paid and nonassessable. All of the outstanding shares of stock or equity interests and other ownership interests of each Subsidiary of the Company are owned by the Company, by one or more Subsidiaries of the Company or by the Company and one or more Subsidiaries of the Company, free and clear of all Liens. The Company does not own, directly or indirectly, any stock or other voting or equity securities or interests (or any interests convertible into or exchangeable or exercisable for any equity or similar interests) in any other Person.

     Section 4.3 Capital Structure . The authorized stock of the Company consists of 3,000,000,000 shares of Company Common Stock, 75,000,000 shares of preferred stock, $0.01 par value per share (the “ Company Preferred Stock ”), and 600,000,000 excess shares, $0.01 par value per share (the “ Excess Shares ”). At the close of business on January 17, 2007, (a) 156,968,775.0187 shares of Company Common Stock were issued and outstanding, all of which were duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights, (b) 2,872,743 shares of Company Common Stock were reserved for issuance pursuant to Deferred Share Awards granted under the Company’s 2004 Omnibus Long-Term Incentive Plan (the “ Company Stock Plan ”), (c) no shares of Company Preferred Stock were issued and outstanding, and (d) no Excess Shares were issued and outstanding. As of the date of this Agreement, except as set forth above, no shares of stock of the Company or options, warrants, convertible or exchangeable securities or other rights to purchase stock of the Company are issued, reserved for issuance or outstanding. There are no outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter on which the Company’s stockholders may vote. As of the date of this Agreement, except as set forth above, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company or any of its Subsidiaries is a party or by which any of them is bound obligating the Company or any of its Subsidiaries to issue, deliver or sell or create, or cause to be issued, delivered or sold or created, additional shares of stock or other voting or equity securities or interests of the Company or of any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking relating to the voting of stock or equity securities or interests of the Company or any of its Subsidiaries. As of the date of this Agreement, other than pursuant to this Agreement, there are no outstanding contractual obligations or rights of the Company or any of its Subsidiaries to register or repurchase, redeem or otherwise acquire, vote, dispose of or otherwise transfer or register

pursuant to any securities Laws any shares of stock or equity interests of the Company or any of its Subsidiaries. There are no agreements or understandings to which the Company is a party with respect to the voting of any shares of Company Common Stock and, to the Knowledge of the Company, as of the date of this Agreement, there are no third party agreements or understandings with respect to the voting of any shares of Company Common Stock.

     Section 4.4 Authority . (a) The Company has the requisite corporate power and authority to execute and deliver this Agreement and, subject to approval by the Company’s stockholders of the Merger, to consummate the transactions contemplated hereby, including the Asset Sales. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the Merger and the other transactions contemplated hereby, including the Asset Sales, have been duly authorized by all necessary corporate action on the part of the Company, subject to approval of the Merger and the other transactions contemplated hereby, by the holders of a majority of the outstanding Shares entitled to vote thereon (the “ Required Vote ”). This Agreement has been duly executed and delivered by the Company and (assuming the valid authorization, execution and delivery of this Agreement by the Buyer Parties) constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

          (b) The Board, at a meeting duly called and held has unanimously (i) approved and declared advisable and in the best interests of the Company and its stockholders this Agreement, the Merger, the Parent Asset Purchase Agreement, the Arizona Asset Purchase Agreement and the Asset Sales and (ii) resolved to recommend approval by the stockholders of the Company of the Merger and the transactions contemplated by the Merger Agreement, which resolutions, subject to Section 7.2 , have not been subsequently rescinded, modified or withdrawn in any way (collectively, the “ Board Recommendation ”). Approval of the Merger and the other transactions contemplated hereby, by the stockholders of the Company by the Required Vote is the only vote of the holders of any class or series of stock of the Company required to approve the Merger and the transactions contemplated hereby.

     Section 4.5 Consents and Approvals; No Violations . Except (a) for filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Securities Act, Exchange Act, the HSR Act, the MGCL, the DLLCA, state securities Laws and other applicable competition Law clearances, if any, and (b) as may be required in connection with the Taxes described in Section 8.7 , neither the execution, delivery or performance of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the Company Charter or Company Bylaws or of the similar organizational documents of any of the Significant Subsidiaries, (ii) require any filing with, or permit, authorization, consent or approval of, any Governmental Entity, (iii) conflict with or result in a breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, or result in a loss of benefit under or give rise to a right of purchase, first offer or forced sale under, any of the terms, conditions or provisions of any Contract to which the Company or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound, (iv) violate any Law applicable to the Company, any of its Subsidiaries or any of their properties or assets, (v) result in the creation of any Lien on any properties or assets of the Company or any of its Subsidiaries,

except for Permitted Liens or (vi) require the Company or any of its Subsidiaries to make any payment to any third Person, except in the case of clause (ii) where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or, in the case of clauses (iii) , (iv) , (v) or (vi) , for breaches, defaults, terminations, amendments, cancellations, accelerations, losses of benefits, violations, Liens or payments that have not had and would not reasonably be expected to have a Material Adverse Effect on the Company.

     Section 4.6 SEC Documents and Other Reports . (a) The Company has filed with the SEC all forms, reports, statements, schedules, certifications, exhibits thereto and other documents required to be filed by it since December 31, 2004 under the Securities Act or the Exchange Act (collectively, the “ Company SEC Documents ”). As of their respective filing dates, the Company SEC Documents (including any documents or information incorporated by reference therein) complied, and all documents filed by the Company with the SEC under the Securities Act or the Exchange Act between the date of this Agreement and the date of Closing will comply, in each case subject to the accuracy of the representations and warranties set forth in Sections 5.4 and 6.4 , in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, each as in effect on the date so filed. At the time filed with the SEC, none of the Company SEC Documents (including any documents or information incorporated by reference therein) contained, or, in the case of documents filed on or after the date hereof will contain, in each case subject to the accuracy of the representations and warranties set forth in Sections 5.4 and 6.4 , any untrue statement of a material fact or omitted, or, in the case of documents filed on or after the date hereof will omit, in each case subject to the accuracy of the representations and warranties set forth in Sections 5.4 and 6.4 , 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 of the Company included in the Company SEC Documents (including the related notes and schedules thereto) complied as of their respective dates in all material respects with the then applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except in the case of the unaudited statements, as permitted by Form 10-Q under the Exchange Act) during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the 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).

          (b) The Company has made available to the Buyer Parties correct and complete copies of all material written correspondence between the SEC, on the one hand, and the Company and any of its Subsidiaries, on the other hand, occurring since December 31, 2004 and prior to the date hereof and will, promptly following the receipt thereof, make available to the Buyer Parties any such material correspondence sent or received after the date hereof. To the Knowledge of the Company, none of the Company SEC Documents is the subject of ongoing SEC review or outstanding SEC comment.

          (c) Neither the Company nor any of the Subsidiaries has any liability or obligation of any nature (whether accrued, absolute, contingent or otherwise) which would be required to be reflected, reserved for or disclosed in a consolidated balance sheet of the Company

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and its consolidated Subsidiaries, including the notes thereto, prepared in accordance with GAAP except (i) as reflected, reserved for or disclosed in the consolidated balance sheet of the Company and its consolidated Subsidiaries as of September 30, 2006, including the notes thereto, (ii) as incurred since September 30, 2006 in the ordinary course of business consistent with past practice, (iii) as incurred or to be incurred by the Company or any Subsidiary pursuant to, in connection with, or as a result of, the Merger and the other transactions contemplated by this Agreement, or (iv) as would not, or would not reasonably be expected to, have a Material Adverse Effect on the Company.

          (d) The Company has (i) implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) designed to ensure that material information relating to the Company, including the consolidated Subsidiaries of the Company, is made known to the management of the Company, and (ii) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Board (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial data and (B) any fraud whether or not material, that involves management or other employees who have a significant role in the Company’s or any of Subsidiary of the Company’s internal controls over financial reporting.

          (e) The Company has not identified, based on its most recent evaluation, any material weaknesses in the design or operation of internal controls over financial reporting.

     Section 4.7 Absence of Material Adverse Effect . Since September 30, 2006 and prior to the date hereof, the Company and its Subsidiaries have conducted their respective businesses in all material respects in the ordinary course consistent with past practice, and, other than in connection with the Marketed Portfolio Sale, there has not been (a) any effect, event, development, change or circumstance that, individually or in the aggregate, with all other effects, events, developments and changes, has resulted in a Material Adverse Effect on the Company, (b) except for regular quarterly distributions to the Company’s stockholders with customary record and payment dates, any declaration, setting aside or payment of any dividend or other distribution with respect to its stock or equity interests or, except for regular redemptions of Shares pursuant to the Redemption Plan, any redemption, purchase or other acquisition of any of its stock or equity interests, (c) any change in accounting methods, principles or practices used by the Company or any of its Subsidiaries materially affecting its assets, liabilities or business, except insofar as may have been required by a change in GAAP, (d) any material damage, destruction or loss not covered by insurance to the Owned Real Property, (e) any material amendment of any term of any material outstanding debt or equity security of the Company or any of its Subsidiaries other than in the ordinary course of business, (f) any material amendment of any material employment, consulting, severance, incentive stock, stock option, deferred compensation, bonus, retirement, retention or any other agreement, or the adoption of any material new such agreement, between (i) the Company or any Company Subsidiary, on the one hand and (ii) any officer, trustee or director of the Company or any Company Subsidiary, on the other hand, earning more than $200,000 per year, other than as required by any contract, agreement or Benefit Plan, (g) any incurrence of indebtedness for borrowed money or guarantee for such indebtedness, in each case by the Company or any Subsidiary of the Company in excess

of $1,000,000, other than (i) to meet the current cash needs of the Company and any Subsidiary of the Company not exceeding the amount contemplated by the Company’s capital budget for such period, a copy of which has been previously provided to the Buyer Parties and (ii) for projects currently under construction in amounts disclosed in the Company’s capital budget for such period, or (h) any agreement by the Company or any of its Subsidiaries involving any of the foregoing since September 30, 2006 and prior to the date hereof, except as disclosed on Item 4.7 of the Company Letter.

     Section 4.8 Information Supplied . None of the information supplied or to be supplied by the Company or any of its Subsidiaries or representatives specifically for inclusion or incorporation by reference in the proxy statement relating to the Stockholders’ Meeting (together with any amendments or supplements thereto and including any related filings required pursuant to the Exchange Act, the “ Proxy Statement ”) will, at the time the Proxy Statement is first mailed to the Company’s stockholders or at the time of the Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by any Buyer Party or any of their respective representatives specifically for inclusion or incorporation by reference therein.

     Section 4.9 Compliance with Laws . The businesses and assets of the Company and its Subsidiaries are not and, since December 31, 2005, have not been, conducted or held in violation of any Law of any Governmental Entity, except for any violations that have not had a Material Adverse Effect on the Company. Each of the Company and its Subsidiaries has in effect all federal, state, local and provincial governmental licenses, authorizations, consents, permits and approvals (collectively, “ Permits ”) necessary for it to own, lease or operate its properties and assets and to carry on its business as now conducted, and no violation or default has occurred under any such Permit, except for the absence of Permits and for violations or defaults under Permits that have not had and would not reasonably be expected to have a Material Adverse Effect on the Company.

     Section 4.10 Tax Matters .

          (a) The Company and each of its Subsidiaries has timely filed or caused to be filed (after taking into account all applicable extensions) all material Tax Returns required to be filed by them, except where the failure to timely file would not reasonably be expected to have a Material Adverse Effect on the Company, and all such Tax Returns are true, correct and complete in all material respects.

          (b) Each of the Company and its Subsidiaries has paid or caused to be paid all material Taxes required to be paid (whether or not shown on any Tax return).

          (c) The Company and the Company Subsidiary REIT (i) for all taxable years commencing in the year in which the Company or the Company Subsidiary REIT, as applicable, first made an election to be subject to taxation as a real estate investment trust within the meaning of Section 856 of the Code (a “ REIT ”), through the most recent December 31, has

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qualified and been subject to taxation as a REIT and (ii) has operated, and intends to continue to operate until the Effective Time, in such a manner as would permit it to continue to qualify as a REIT, from the most recent December 31 and through the Effective Time, without, however, taking into account the effect on the Company or the Company Subsidiary REIT, as applicable, of any of the Transactions required to be entered into, or distributions required to be made, by the Company or the Company Subsidiary REIT under this Agreement, and without any express or implied representation being made that the Company or the Company Subsidiary REIT will have satisfied as of the Effective Time any requirement to make dividend distributions as a REIT with respect to 2007 that would have existed if the Company’s and the Company Subsidiary REIT’s 2007 taxable years were to have closed at the Effective Time. The Company has no Subsidiary classified as a REIT for federal income tax purposes other than the Company Subsidiary REIT. To the Company’s Knowledge, no challenge to the Company’s or the Company Subsidiary REIT’s status as a REIT is pending or threatened in writing. Each Subsidiary of the Company and each Subsidiary of the Company Subsidiary REIT that is a partnership, joint venture, or limited liability company and that has not elected for federal income tax purposes to be a corporation or a “taxable REIT subsidiary” within the meaning of Section 856 of the Code is treated for federal income tax purposes as a partnership or disregarded entity, as the case may be, and not as a corporation or an association taxable as a corporation. Each Subsidiary of the Company or the Company Subsidiary REIT that is a corporation for federal income tax purposes is a “qualified REIT subsidiary” pursuant to Section 856(i) of the Code, a “taxable REIT subsidiary” pursuant to Section 856(l) of the Code or a corporation which qualifies under the transitional rules set forth in Section 546(b) of the Tax Relief Extension Act of 1999. Neither the Company, the Company Subsidiary REIT nor any of their Subsidiaries holds any assets the disposition of which would be subject to rules similar to Section 1374 of the Code as a result of (A) an election under IRS Notice 88-19 or Treasury Regulations Section 1.337(d)-5 or Section 1.337(d)-6 or (B) the application of Treasury Regulations Section 1.337(d)-7.

          (d) No written requests for waivers of the time to assess any material Taxes of the Company or its Subsidiaries are pending.

          (e) There are no material pending or threatened audits, examinations, investigations or other proceedings in respect of Taxes of the Company or any of its Subsidiaries with respect to which the Company or any of its Subsidiaries has been notified in writing. To the Knowledge of the Company, there are no pending or threatening audits, examinations, investigations or other proceedings in respect of Taxes of the Company or any of its Subsidiaries.

          (f) All Taxes which the Company or any of its Subsidiaries are required by Law to withhold or to collect for payment have been withheld and collected except as would not reasonably be expected to have a Material Adverse Effect on the Company.

          (g) Neither the Company nor any of its Subsidiaries is a party to any agreement, arrangement, understanding or plan that has resulted, or would result in connection with the transactions contemplated by this Agreement or any change in control, in the payment of any amount that would, by operation of Section 280G of the Code, not be deductible by the entity making such payment.

          (h) Neither the Company nor any Subsidiary has made or is obligated to make any payment that would not be deductible pursuant to Section 162(m) of the Code.

          (i) There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company or any of its Subsidiaries.

          (j) Neither the Company nor any of its Subsidiaries is a party to any Tax Sharing Agreement or Tax Protection Agreement, other than any agreement or arrangement solely between the Company and any of its Subsidiaries, pursuant to which it will have any obligation to make any payments after the Closing. For purposes of this Section 4.10(j) , a “ Tax Sharing Agreement ” means any written agreement for the allocation or payment of Tax liabilities or payment for Tax benefits with respect to a consolidated, combined or unitary Tax Return which Tax Return includes or included the Company or any of its Subsidiaries. For purposes of this Section 4.10(j) , a “ Tax Protection Agreement ” means any written agreement to which the Company or any of its Subsidiaries is a party pursuant to which, in connection with the deferral of income Taxes of a third party partner in any Subsidiary of the Company that is classified as a partnership for federal income Tax purposes, the Company nor any of its Subsidiaries has agreed to (i) maintain a minimum level of debt or provide rights to guarantee debt, (ii) retain or not dispose of assets for a period of time that has not since expired, (iii) make or refrain from making Tax elections, and/or (iv) only dispose of assets in a particular manner.

          (k) Neither the Company nor any Subsidiary (other than a “taxable REIT subsidiary” or a subsidiary of a “taxable REIT subsidiary”) has engaged at any time in any “prohibited transactions” within the meaning of Section 857(b)(6) of the Code. Neither the Company nor any of its Subsidiaries has engaged in any transaction that would give rise to “redetermined rents,” “redetermined deductions” or “excess interest” described in Section 857(b)(7) of the Code.

          (l) To the Knowledge of the Company, no claim has been made in writing by a taxing authority in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the Company or any such Subsidiary is or may be subject to taxation by that jurisdiction.

          (m) Neither the Company nor any of its Subsidiaries has requested a private letter ruling from the IRS or comparable rulings from other taxing authorities.

          (n) Neither the Company nor any of its Subsidiaries is a party to any “listed transaction” described in Treasury Regulations Section 1.6011-4(b).

          (o) Neither the Company nor any of its Subsidiaries has entered into any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law).

          (p) Neither the Company nor any of its Subsidiaries has recognized taxable gain or loss from the disposition of any property transferred or received in an exchange that was reported as a “like kind exchange” under Section 1031 of the Code.

          (q) As of the date hereof, neither the Company nor the Company Subsidiary REIT has any earnings and profits attributable to any non-REIT year of the Company or the Company Subsidiary REIT, as applicable, or any other corporation within the meaning of Section 857 of the Code and the Treasury Regulations thereunder.

          (r) The dividends paid deduction of the Company and the Company Subsidiary REIT for each taxable year of each such entity ending with the taxable year ended December 31, 2006, will equal or exceed the sum of (i) the amount determined under Code Section 857(a)(1) with respect to the Company or the Company Subsidiary REIT, as applicable, but computed with the modifications described in the next sentence, and (ii) the net capital gain of the Company or the Company Subsidiary REIT, as applicable, for such taxable year; provided , however , that such dividends paid deduction of the Company for the taxable year ended December 31, 2006 takes into account any Section 858 dividend made by the Company prior to the Closing Date. The amount described under clause (i) above shall be computed by substituting “100%” for “90%” in each place it appears in Code Section 857(a)(1).

          (s) The Special Dividend Amount will equal or exceed the sum of (i) the amount determined under Code Section 857(a)(1) with respect to the Company’s current taxable year, computed with the modifications described in the next sentence and, and (ii) the net capital gain of the Company for such taxable year, assuming for purposes of clauses (i) and (ii) that the current taxable year of the Company will end on the date of the Closing. The amount described under clause (i) above shall be computed by substituting “100%” for “90%” in each place it appears in Code Section 857(a)(1).

          (t) The net proceeds received by the Company Subsidiary REIT from the Asset Sales will equal or exceed the sum of (i) the amount determined under Code Section 857(a)(1) with respect to the Company Subsidiary REIT’s current taxable year, computed with the modifications described in the next sentence and, and (ii) the net capital gain of the Company Subsidiary REIT for such taxable year, assuming for purposes of clauses (i) and (ii) that the current taxable year of the Company will end on the date of the Closing. The amount described under clause (i) above shall be computed by substituting “100%” for “90%” in each place it appears in Code Section 857(a)(1).

          (u) As of the Effective Time, the net operating loss for federal income tax purposes carried over to the Company in its acquisition of KSL Recreation Corp. in April 2004 that remained unused, based on the Company’s information and belief, was not less than $125 million, with the use of such net operating losses in 2007 and thereafter being subject to the limitations of Section 382 of the Code.

     Section 4.11 Benefit Plans . (a) With respect to each Benefit Plan, the Company has made available to the Buyer Parties a true and correct copy of (i) each such Benefit Plan that has been reduced to writing and all amendments thereto and a summary of any unwritten Benefit Plan; (ii) each trust, insurance or administrative agreement or insurance policy or other funding medium relating to each such Benefit Plan; (iii) the most recent written explanation of each Benefit Plan provided to participants, and, if applicable, the most recent summary plan description provided to participants; (iv) if applicable, the three most recent annual reports (Form 5500) filed with the IRS, including all schedules and accountants’ opinions; (v) the most recent

determination letter and/or application thereof, if any, issued by the IRS with respect to any Benefit Plan intended to be qualified under Section 401(a) of the Code, and (vi) all correspondence to and from any state or federal agency within the last six years with respect to any Benefit Plan. Except as required or deemed advisable by Law, neither the Company nor any of its Subsidiaries has adopted or amended in any material respect any Benefit Plan since September 30, 2006 and copies of any such amendments or Benefit Plans have been provided to Parent.

          (b) Except as would not reasonably be expected to have a Material Adverse Effect on the Company, (i) each Benefit Plan has been maintained in compliance with its terms and, both as to form and in operation, with the requirements of applicable Law and (ii) all employer or employee contributions, premiums and expenses to or in respect of each Benefit Plan have been paid in full or, to the extent not yet due, have been adequately accrued on the applicable financial statements of the Company included in the Company SEC Documents in accordance with GAAP. Each asset held under any such Benefit Plan (other than assets held in the Company’s 401(k) plan for the benefit of the participants) may be liquidated or terminated without the imposition of any redemption fee, surrender charge or comparable liability. There is no Person (other than the Company or any of its Subsidiaries) that together with the Company or any of its Subsidiaries would be treated as a single employer under Section 414 of the Code or Section 4001(b) of ERISA. Neither the Company nor any of its Subsidiaries has at any time during the six-year period preceding the date hereof maintained, contributed to or incurred any liability under any “multiemployer plan” (as defined in Section 3(37) of ERISA) or any ERISA Benefit Plan that is subject to Title IV of ERISA or Section 412 of the Code.

          (c) As of the date of this Agreement there are no pending or, to the Knowledge of the Company, threatened disputes, arbitrations, claims, suits, grievances, governmental proceedings or, to the Knowledge of the Company, investigations involving a Benefit Plan (other than routine claims for benefits payable under any such Benefit Plan) that would reasonably be expected to have a Material Adverse Effect on the Company.

          (d) All Benefit Plans that are intended by their terms to be qualified under Section 401(a) of the Code have been determined by the IRS to be so qualified, or a timely application for such determination is now pending and, except as would not reasonably be expected to have a Material Adverse Effect on the Company, the Company has no Knowledge of any reason why any such Benefit Plan is not so qualified in operation. Except as set forth on Item 4.11 of the Company Letter, neither the Company nor any of its Subsidiaries has any liability or obligation under any welfare plan or agreement to provide benefits after termination of employment or service to any employee, director, consultant or dependent other than as required by Section 4980B of the Code. Each Benefit Plan may be amended, terminated, or otherwise modified by the Company to the greatest extent permitted by applicable Law, including the elimination of any and all future benefit accruals and no employee communications or provision of any relevant document has failed to effectively reserve the right of the Company to so amend, terminate or otherwise modify such Benefit Plan.

          (e) Neither the execution and delivery of this Agreement by the Company nor the consummation of the transactions contemplated hereby will or may (either alone or in connection with the occurrence of any additional or subsequent events) (i) result in the

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acceleration or creation of any rights of any Person to compensation or benefits under any Benefit Plan or other compensatory arrangement, loan forgiveness or result in an obligation to fund benefits with respect to any Benefit Plan or other compensatory arrangement; or (ii) constitute an event under any Benefit Plan or other arrangement that will or may result in any payment of deferred compensation subject to Section 409A of the Code.

          (f) The Company has made available to the Buyer Parties (or as described in Item 4.11(f) of the Company Letter) all of the employment agreements, bonus agreements, severance agreements, severance plans and similar obligations that include amounts that are payable as a result of consummation transactions contemplated hereby. Item 4.11(f) of the Company Letter sets forth a good faith estimate of the amounts that will become payable to employees of the Company under the terms of any employment agreements, bonus agreements, severance agreements, severance plans and similar obligations as a result of the consummation of the transactions contemplated by this Agreement.

     Section 4.12 Litigation . As of the date hereof, there is no outstanding judgment, order, writ, injunction or decree and no suit, claim, audit, action, proceeding, arbitration or investigation pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect on the Company or that seeks to materially delay or prevent the consummation of the transactions contemplated hereby. Except as set forth in Item 4.12 of the Company Letter, none of the Company or any of its Subsidiaries is subject to any order, judgment, writ, injunction or decree, except as would not have a Material Adverse Effect on the Company.

     Section 4.13 State Takeover Statutes . The Company has taken all action required to be taken by it in order to exempt this Agreement, the Parent Asset Purchase Agreement, the Arizona Asset Purchase Agreement and the Merger from, and this Agreement, the Parent Asset Purchase Agreement, the Arizona Asset Purchase Agreement and the Merger are exempt from, the requirements of any “fair price,” “moratorium,” “control share acquisition” or other similar antitakeover statute or regulation enacted under state or federal Laws in the United States, including the Maryland Business Combination Act and the Maryland Control Share Acquisition Act, or any takeover provision in the Company Charter or Company Bylaws.

     Section 4.14 Intellectual Property . Item 4.14 of the Company Letter contains a complete and accurate list of all registered Marks and material unregistered Marks and issued Patents and pending applications for Patents or pending registrations for Marks, in each case owned or purported to be owned by the Company and/or used in the conduct of the business of the Company. The Company and its Subsidiaries own, or are validly licensed or otherwise have the right to use, in each case free and clear of all Liens, except for Permitted Liens, all Intellectual Property purported to be owned by the Company and/or used in the conduct of the business of the Company and its Subsidiaries as currently conducted, except for such Intellectual Property where the failure to so own, be validly licensed or have the right to use would not reasonably be expected to have a Material Adverse Effect on the Company (the “ Company Intellectual Property ”). Except as would not reasonably be expected to have a Material Adverse Effect on the Company, all registrations and applications filed by the Company or its Subsidiaries with respect to Intellectual Property owned or purported to be owned by the Company or any Subsidiary have been duly maintained (including payment of maintenance fees) and are valid,

enforceable, subsisting and unexpired. No claims are pending or, to the Knowledge of the Company, threatened, (a) challenging the ownership, enforceability, validity, or use by the Company or any Subsidiary of any Company Intellectual Property, or (b) alleging that the Company or any of its Subsidiaries is violating, misappropriating or infringing or otherwise adversely affecting the rights of any Person with regard to any Company Intellectual Property, other than claims that would not reasonably be expected to have a Material Adverse Effect on the Company. Except as would not reasonably be expected to have a Material Adverse Effect on the Company, (i) to the Knowledge of the Company, no Person is infringing the rights of the Company or any of its Subsidiaries with respect to any Company Intellectual Property and (ii) the operation of the business of the Company and its Subsidiaries as currently conducted does not violate, misappropriate or infringe (or has since December 31, 2004 violated, misappropriated or infringed) the Intellectual Property of any other Person, other than the rights of any other Person under any Patent, and to the Knowledge of the Company, the operation of the business of the Company and its Subsidiaries as currently conducted does not violate, misappropriate or infringe (or has since December 31, 2004 violated, misappropriated or infringed) the Intellectual Property of any other Person under any Patent. To the Knowledge of the Company, no other Person is violating, misappropriating or infringing any of the Company Intellectual Property. The Company has taken reasonable security measures to protect the secrecy, confidentiality and value of any Trade Secrets owned by the Company that are used in and material to the conduct of the business of the Company.

     Section 4.15 Properties .

          (a) Item 4.15(a) of the Company Letter sets forth a correct and complete list of all the Owned Real Property owned or held by the Company and its Subsidiaries as of the date of this Agreement.

          (b) Item 4.15(b) of the Company Letter sets forth a correct and complete list as of the date of this Agreement of (i) all the Leased Real Property and (ii) each ground lease with a third party pursuant to which the Company or any of its Subsidiaries is a lessee and, in each case, the Subsidiary of the Company holding the leasehold interest, the date of the lease and each material amendment or guaranty or other material agreement relating thereto (the leases referred to in clauses (i) and (ii) , collectively, the “ Lease Documents ”). True, correct and complete copies of all Lease Documents have been made available to Parent. Each of the Lease Documents is valid, binding and in full force and effect, in all material respects, as against the Company or its applicable Subsidiary and, to the Company’s Knowledge, as against the other party thereto. As of the date hereof, neither the Company nor any of its Subsidiaries or, to the Company’s Knowledge, other party is in material breach or violation of, or material default (in each case, with or without notice or lapse of time or both) under, any of the Lease Documents and none of the Company or any of its Subsidiaries has received or given any written notice of material default under any such agreement which remains uncured.

          (c) Except as would not reasonably be expected to have a Material Adverse Effect on the Company, (i) the Company or one of its Subsidiaries has good fee simple title to all Owned Real Property and valid leasehold estates in all Leased Real Property, free and clear of all Liens, except for Permitted Liens and (ii) there are no pending or, to the Knowledge of the Company, threatened condemnation, eminent domain or similar proceedings or actions affecting

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any portion of the Company Properties, and, neither the Company nor any of its Subsidiaries has received any written notice of the intention of any Governmental Entity or other Person to take or use