ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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ARLINGTON HOSPITALITY INC | SUNBURST HOTEL HOLDING, INC.

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Illinois Date: 10/31/2005
Industry: Hotels and Motels Law Firm: Jenner & Block LLP Sector: Services

ASSET PURCHASE AGREEMENT, Parties: arlington hospitality inc , sunburst hotel holding inc.

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EXHIBIT 2.1

EXECUTION COPY

ASSET PURCHASE AGREEMENT

DATED AS OF

OCTOBER 25, 2005

BY AND AMONG

ARLINGTON HOSPITALITY, INC. AND CERTAIN AFFILIATES,

AND

SUNBURST HOTEL HOLDING, INC. AND CERTAIN AFFILIATES

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TABLE OF CONTENTS

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DESCRIPTION PAGE

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ARTICLE I DEFINITIONS.................................................................. 2

Section 1.1 Definitions................................................... 2

Section 1.2 Construction.................................................. 6

ARTICLE II PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES........................... 7

Section 2.1 Purchase of Assets and Assumption of Liabilities.............. 7

Section 2.2 Purchased and Excluded Assets................................. 7

Section 2.3 Assumed and Excluded Liabilities.............................. 9

ARTICLE III PURCHASE PRICE AND CLOSING................................................. 10

Section 3.1 Closing....................................................... 10

Section 3.2 Purchase Price................................................ 10

Section 3.3 Purchase Price Adjustment..................................... 11

Section 3.4 Deposit....................................................... 11

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS............................... 11

Section 4.1 Organization.................................................. 11

Section 4.2 Authorization of Transaction.................................. 12

Section 4.3 Noncontravention; Consents.................................... 12

Section 4.4 Title......................................................... 12

Section 4.5 Brokers....................................................... 12

Section 4.6 LIMITATION ON WARRANTIES...................................... 12

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYERS................................. 13

Section 5.1 Organization.................................................. 13

Section 5.2 Authorization of Transaction.................................. 13

Section 5.3 Noncontravention; Consents.................................... 13

Section 5.4 Litigation.................................................... 14

Section 5.5 Availability of Funds......................................... 14

Section 5.6 LIMITATION ON THE WARRANTIES OF THE SELLERS................... 14

ARTICLE VI COVENANTS................................................................... 14

Section 6.1 General....................................................... 14

Section 6.2 Notices and Consents.......................................... 14

Section 6.3 Conduct of the Business....................................... 15

Section 6.4 Transfer Taxes................................................ 15

Section 6.5 Access to Business, Records and Documents..................... 15

Section 6.6 Bankruptcy Case............................................... 16

Section 6.7 Prorations.................................................... 16

ARTICLE VII EMPLOYEE MATTERS........................................................... 17

Section 7.1 Employment.................................................... 17

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ARTICLE VIII CLOSING CONDITIONS........................................................ 17

Section 8.1 Conditions to Obligations of the Buyers....................... 17

Section 8.2 Conditions to Obligations of the Sellers...................... 19

ARTICLE IX TERMINATION................................................................. 19

Section 9.1 Termination of Agreement...................................... 19

Section 9.2 Effect of Termination......................................... 20

Section 9.3 Expense Reimbursement; Break-Up Fee........................... 20

ARTICLE X MISCELLANEOUS................................................................ 21

Section 10.1 Notices....................................................... 21

Section 10.2 Expenses; No Offset........................................... 21

Section 10.3 Disclosure Schedules.......................................... 21

Section 10.4 Bulk Sales or Transfer Laws................................... 22

Section 10.5 Assignment; Successors and Assigns............................ 22

Section 10.6 Amendment; Waiver............................................. 22

Section 10.7 Severability; Specific Performance............................ 22

Section 10.8 Counterparts.................................................. 23

Section 10.9 Descriptive Headings.......................................... 23

Section 10.10 No Third-Party Beneficiaries.................................. 23

Section 10.11 Entire Agreement.............................................. 23

Section 10.12 Exhibits and Schedules........................................ 23

Section 10.13 GOVERNING LAW................................................. 23

Section 10.14 Public Announcement........................................... 23

Section 10.15 Recitals...................................................... 23

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EXHIBITS

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Exhibit A Bill of Sale and Assignment and Assumption Agreement

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DISCLOSURE SCHEDULES

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Schedule 1.1 Sellers' Knowledge

Schedule 2.2(a)(i)(A) Hotels

Schedule 2.2(a)(i)(B) Vacant Land

Schedule 2.2(a)(iv) Permits

Schedule 2.2(a)(v) Leased Real Property

Schedule 2.2(a)(vi) Assumed Contracts

Schedule 2.2(a)(xi) Joint Ventures

Schedule 2.2(a)(xiv) Notes Receivables

Schedule 2.3(a)(ii) Other Secured Creditors

Schedule 4.5 Brokers

Schedule 6.6(b) Rejected Contracts

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iii

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this "Agreement") dated as of October

25, 2005 is entered into by and among Arlington Hospitality, Inc., a Delaware

corporation, Arlington Hospitality Development, Inc., an Illinois

corporation, Arlington Hospitality Management, Inc., an Illinois corporation,

Arlington Hospitality Staffing, Inc., an Illinois corporation, Arlington Inns

of America, Inc., a Delaware corporation, Arlington Inns of Ohio, Inc., an

Ohio corporation, Arlington Lodging Group, Inc., a Delaware corporation,

Arlington Office Group, Inc., an Illinois corporation, AP Hotels of Illinois,

Inc., an Illinois corporation, AP Hotels of Mississippi, Inc., a Mississippi

corporation, AP Hotels of Pennsylvania, Inc., a Pennsylvanian corporation, AP

Hotels of Wisconsin, Inc., a Wisconsin corporation, AP Hotels/Parkersburg,

WVA, Inc., a West Virginia corporation, AP Properties of Ohio, Inc., an Ohio

corporation, API/Athens, OH, Inc., an Ohio corporation, API/Lancaster, OH,

Inc., an Ohio corporation, API, Logan, OH, Inc., an Ohio corporation,

API/Metropolis, IL, Inc., an Illinois corporation, API/Washington C.H., OH,

Inc., an Ohio corporation, Shorewood Hotel Investments Inc., an Illinois

corporation, Athens Motel Associates Limited Partnership II, an Ohio limited

partnership, Batesville MS 595 Limited Partnership, a Mississippi limited

partnership, API/Hammond, IN, Inc., an Indiana corporation, and AP Hotels of

Missouri, Inc., a Missouri corporation, (collectively, the "Sellers"), and

Sunburst Hospitality Development, Inc., a Delaware corporation, Sunburst

Hospitality Management, Inc., a Delaware corporation, Boulevard Motel

Staffing Corp., a Delaware corporation, Sunburst Hotel Holdings, Inc., a

Delaware corporation, Sunburst Metropolis, IL, Inc., an Illinois corporation,

Sunburst Hammond, IN, Inc., an Indiana corporation, Sunburst Murray, KY,

Inc., a Kentucky corporation, Sunburst Lansing, MI, Inc., a Michigan

corporation, Sunburst Land, Mexico, MO, Inc., a Missouri corporation,

Sunburst Batesville, MS, Inc., a Mississippi corporation, Sunburst

Jeffersonville South, OH, Inc., an Ohio corporation, Sunburst Oxford, OH,

Inc., an Ohio corporation, Sunburst Land, Oxford, OH, Inc., an Ohio

corporation, Sunburst Lancaster, OH, Inc., an Ohio corporation, Sunburst

Logan, OH, Inc., an Ohio corporation, Sunburst Wilmington, OH, Inc., an Ohio

corporation, Sunburst Cambridge, OH, Inc., an Ohio corporation, Sunburst

Winchester OH, Inc., an Ohio corporation, Sunburst Land, Athens, OH, Inc., an

Ohio corporation, Sunburst Athens, OH, Inc., an Ohio corporation, Sunburst

Land Wisconsin, Inc., a Wisconsin corporation, and Sunburst Parkersburg WV,

Inc., a West Virginia corporation, (collectively, the "Buyers")

WHEREAS, the Sellers are in the business of (i) developing and

constructing limited service hotels, (ii) owning, leasing, operating,

managing, franchising and selling such hotels and (iii) participating in

joint venture ownership of such hotels (the "Business").

WHEREAS, this Agreement contemplates a transaction in which the Buyers

will acquire substantially all of the assets of the Business and assume

certain of the liabilities of the Business, all on the terms and subject to

the conditions set forth in this Agreement.

WHEREAS, each of the Sellers has filed a voluntary petition in the

United States Bankruptcy Court for the Northern District of Illinois, Eastern

Division (the "Bankruptcy Court") for relief in a bankruptcy case

(collectively, the "Bankruptcy Case") filed under Chapter 11 of Title 11 of

the United States Code (the "Bankruptcy Code") and Athens Motel Associates

Limited Partnership II, Batesville MS 595 Limited Partnership, API/Hammond,

IN, Inc., AP Hotels of Missouri, Inc., and Freeport IL 899 L.L.C. shall file

under Chapter 11 of Title 11 of the

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United States Code a voluntary petition in the Bankruptcy Court for

relief in the Bankruptcy Case on or before October 28, 2005 and shall seek

Bankruptcy Court approval of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual

agreements contained herein, and for other good and valuable consideration,

the value, receipt and sufficiency of which are acknowledged, the Parties

hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. For purposes of this Agreement, the following

terms have the meanings set forth below:

"Accounts Receivable" has the meaning set forth in SECTION 2.2(b)(ii).

"Affiliates" has the meaning set forth in Rule l2b-2 of the regulations

promulgated under the Securities Exchange Act of 1934, as amended.

"Agreement" has the meaning set forth in the Preamble.

"Alternative Transaction" means the sale, transfer or other disposition

of all or substantially all of the Purchased Assets to a third party

unaffiliated with the Buyers, the Sellers or any of their respective

Affiliates.

"Ancillary Documents" means the Bill of Sale and Assignment and

Assumption Agreement and each certificate and other document to be delivered

pursuant to ARTICLE VIII.

"Apportioned Obligations" has the meaning set forth in SECTION 6.7.

"Approval Order" means an order from the Bankruptcy Court (i) approving

the sale of all of the Purchased Assets under the terms and conditions of

this Agreement free and clear of all Liens, except Permitted Liens, pursuant

to Section 363 of the Bankruptcy Code, (ii) approving the assignment to and

assumption by the Buyers of the Assumed Contracts and unexpired leases with

respect to the Leased Real Property pursuant to Section 365 of the Bankruptcy

Code, (iii) approving the assignment and assumption by the Buyers of the

Nonexcludable Mortgage Agreements, (iv) approving the sale of the interests

of the Sellers in the Joint Ventures in the same percentage of ownership

interests as held by the Sellers prior to the filing of the Bankruptcy case,

(v) containing findings of fact and rulings that each of the Buyers is a good

faith purchaser entitled to the protections of Section 363(m) of the

Bankruptcy Code and (vi) which is otherwise reasonably acceptable to the

Buyers; provided that the inability of the Sellers to have the Bankruptcy

Court apply Section 1146(c) of the Bankruptcy Code to the transactions

contemplated hereby shall not be a basis for the Buyers to withhold their

acceptance of the Approval Order.

"Assumed Contracts" has the meaning set forth in SECTION 2.2(a)(vi).

"Assumed Liabilities" has the meaning set forth in SECTION 2.3(a).

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"Avoidance Actions" means all avoidance claims under the Bankruptcy

Code, including all rights, claims, causes of actions and remedies arising

under Bankruptcy Code Sections 329, 502(d), 541, 542, 544, 545, 547, 548,

549, 550, 551 and 553.

"Bankruptcy Case" has the meaning set forth in the Recitals.

"Bankruptcy Code" has the meaning set forth in the Recitals.

"Bankruptcy Court" has the meaning set forth in the Recitals.

"Bill of Sale and Assignment and Assumption Agreement" has the meaning

set forth in SECTION 8.1(c)(i).

"Break-Up Fee" has the meaning set forth in SECTION 9.3(a).

"Business" has the meaning set forth in the Recitals.

"Buyer Material Adverse Effect" has the meaning set forth in SECTION

5.1.

"Buyers" has the meaning set forth in the Preamble.

"Cash Portion" has the meaning set forth in SECTION 3.2(a).

"Cendant Agreements" means (a) that certain Development Agreement,

dated as of September 30, 2000, by and among Arlington Hospitality, Inc., a

Delaware corporation (as successor to Amerihost Properties, Inc., a Delaware

corporation), Arlington Hospitality Management, Inc., an Illinois corporation

(as successor to Amerihost Management Inc., an Illinois corporation),

Arlington Hospitality Development, Inc., an Illinois corporation (as

successor to Amerihost Development, Inc., an Illinois corporation) and

Cendant Finance Holding Corporation, a Delaware corporation, and its

subsidiary, AmeriHost Franchise Systems, Inc., a Delaware corporation (the

"Development Agreement"); (b) that certain Royalty Sharing Agreement, dated

as of September 30, 2000, by and among Arlington Hospitality, Inc. (as

successor to Amerihost Properties, Inc.), Cendant Finance Holding Corporation

and AmeriHost Franchise Systems, Inc. (the "Royalty Sharing Agreement"); and

affiliates of Cendant Finance Holding Corporation set forth on Schedule

2.2(a)(vi).

"Closing" has the meaning set forth in SECTION 3.1.

"Closing Date" has the meaning set forth in SECTION 3.1.

"Deposit" has the meaning set forth in SECTION 3.4.

"Disclosure Schedules" means, collectively, all of the Schedules

accompanying this Agreement, as updated and supplemented in accordance

herewith.

"ERISA" means the Employee Retirement Income Security Act of 1974, as

amended.

"Escrow Agent" means Chicago Title and Trust Company.

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"Excludable Mortgage Agreements" means the mortgages identified as

items 9 and 10 listed on Schedule 2.3(a)(ii).

"Excluded Assets" has the meaning set forth in SECTION 2.2(b).

"Excluded Liabilities" has the meaning set forth in SECTION 2.3(b).

"Expense Reimbursement" has the meaning set forth in SECTION 9.3(b).

"Governmental Entity" means the United States, any state or other

political subdivision thereof and any other foreign or domestic entity

exercising executive, legislative, judicial, regulatory or administrative

functions of or pertaining to government, including any government authority,

agency, department, board, commission, court, tribunal or instrumentality of

the United States or any foreign entity, any state of the United States or

any political subdivision of any of the foregoing.

"Hotels" has the meaning set forth in SECTION 2.2(a)(i).

"Income Tax Return" means, with respect to any Income Tax, any

information return for such Income Tax, and any return, report, statement,

declaration, claim for refund or document filed or required to be filed under

the Law for such Income Tax.

"Income Taxes" means any income, alternative minimum, accumulated

earnings, personal holding company, franchise, capital stock, net worth or

gross receipts taxes, including any estimated tax, interest, penalties or

additions to tax or additional amounts in respect to the foregoing, including

any transferee or secondary liability for any such tax and any liability

assumed by agreement or arising as a result of being or ceasing to be a

member of any affiliated group, or being included or required to be included

in any Income Tax Return relating thereto.

"Joint Ventures" has the meaning set forth in SECTION 2.2(a)(xi).

"Law" means any applicable federal, state, local or foreign law,

statute, common law, rule, regulation, ordinance, permit, order, writ,

injunction, judgment or decree of any Governmental Entity.

"Leased Real Property" has the meaning set forth in SECTION 2.2(a)(v).

"Lien" means any pledge, security interest, charge, claim or other

encumbrance.

"Material Adverse Effect" means any event, change or effect which is

materially adverse to the business, operations (including results of

operations), condition (financial or otherwise), assets of the Business taken

as a whole, including the Sellers failure to obtain an order from the

Bankruptcy Court permitting the Sellers to transfer to the Buyers the (1)

Royalty Sharing Agreement and (2) the Nonexcludable Mortgage Agreements; and

(3) ownership interests of the Sellers in the Joint Ventures in the same

percentage of ownership interest and same membership/partnership status as

held by the Sellers prior to the filing of the Bankruptcy Case provided,

however, that "Material Adverse Effect" will not include, and the

determination of the existence of a Material Adverse Effect shall not take

into account, any of the following: (a)

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changes or effects that generally affect the industries in which the

Business operates, (b) changes in or effects from securities markets or

general economic, regulatory or political conditions in the United States not

uniquely related to the Sellers or the Business (including terrorism or the

escalation of any war whether declared or undeclared or other hostilities),

of the execution of this Agreement, the compliance by the Sellers with their

obligations hereunder, the consummation of the transactions contemplated

hereby or the identity of the Buyers, (d) changes or effects due to changes

in any Laws affecting the Business or Purchased Assets or (e) the failure of

the Business to meet any internal projections or forecasts.

"Mortgages" has the meaning set forth on Schedule 2.3(a)(ii).

"Nonexcludable Mortgage Agreements" means the mortgages identified as

items 1 through 8 listed on Schedule 2.3(a)(ii).

"Notes Receivable" has the meaning set forth in SECTION 2.2(a)(xiv).

"Other Secured Creditors" has the meaning set forth in SECTION

2.3(a)(ii).

"Owned Real Property" has the meaning set forth in SECTION 2.2(a)(i).

"Parties" means the Sellers and the Buyers together, and "Party" means

the Sellers, on the one hand, or the Buyers, on the other hand, as the case

may be.

"Permits" has the meaning set forth in SECTION 2.2(a)(iv).

"Permitted Liens" means any (a) Liens for Taxes not yet due and payable

or the validity of which is being contested in good faith by appropriate

proceedings, (b) with respect to the Owned Real Property and the Leased Real

Property, covenants, conditions, restrictions and easements and other

non-monetory liens, including any matter of the type described in this

subparagraph (b) that is disclosed in any title policy, report or commitment

delivered to or obtained by the Buyers, and (c) Liens encumbering any of the

Real Property and Entitlements which are disclosed as mortgages on Schedule

2.3(a)(ii).

"Person" means an individual, partnership, limited partnership,

corporation, limited liability company, association, joint stock company,

trust, joint venture, unincorporated organization or Governmental Entity.

"Purchase Price" has the meaning set forth in SECTION 3.2(a).

"Purchased Assets" has the meaning set forth in SECTION 2.2(a).

"Real Property and Entitlements" means the Owned Real Property and the

Leased Real Property.

"Rejected Contracts" has the meaning set forth in SECTION 6.6(b).

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"Schedule" means a disclosure schedule to this Agreement that is

contained in the Disclosure Schedules and incorporated herein pursuant to

SECTION 10.12.

"Sellers" has the meaning set forth in the Preamble.

"Sellers' Employee Benefit Plan" means an employee pension benefit plan

to which the Sellers or any of their Affiliates contributes with respect to

the current or former employees of the Business within the meaning of Section

3(2) of ERISA or an employee welfare benefit plan within the meaning of

Section 3(1) of ERISA, where no distinction is required by the context in

which the term is used.

"Sellers' Knowledge" means the actual knowledge of the individuals

listed on Schedule 1.1.

"Straddle Period" means any Tax or other applicable year or period

beginning before the Closing Date and ending after the Closing Date.

"Tax" or "Taxes" means a tax or taxes of any kind or nature, or however

denominated, including liability for federal, state, local or foreign sales,

use, transfer, registration, business and occupation, value added, excise,

severance, stamp, premium, windfall profit, customs, duties, real property,

personal property, capital stock, social security, unemployment, disability,

payroll, license, employee or other withholding, or other tax, of any kind

whatsoever, including any interest, penalties or additions to tax or

additional amounts in respect to the foregoing, including any transferee or

secondary liability for a tax and any liability assumed by agreement or

arising as a result of being or ceasing to be a member of any affiliated

group, or being included or required to be included in any Tax Return

relating thereto; provided, however, that "Tax" or "Taxes" will not include

any Income Taxes.

"Tax Returns" means, with respect to any Tax, any information return

for such Tax, and any return, report, statement, declaration, claim for

refund or document filed or required to be filed under the Law for such Tax.

"Transferred Employee" has the meaning set forth in SECTION 7.1.

"Vacant Land" has the meaning set forth in SECTION 2.2(a)(i).

Section 1.2 Construction.

(a) For purposes of this Agreement, whenever the context requires, the

singular number will include the plural, and vice versa, the masculine gender

will include the feminine and neuter genders, the feminine gender will

include the masculine and neuter genders, and the neuter gender will include

the masculine and feminine genders.

(b) As used in this Agreement, the words "include" and "including," and

variations thereof, will not be deemed to be terms of limitation, but rather

will be deemed to be followed by the words "without limitation."

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"Sections" and "Exhibits" are intended to refer to Sections and Exhibits to

this Agreement.

(d) As used in this Agreement, the terms "hereof," "hereunder,"

"herein" and words of similar import will refer to this Agreement as a whole

and not to any particular provision of this Agreement.

(e) Each Party hereto has participated in the drafting of this

Agreement, which each Party acknowledges is the result of extensive

negotiations between the Parties. Consequently, this Agreement will be

interpreted without reference to any rule or precept of Law to the effect

that any ambiguity in a document be construed against the drafter.

ARTICLE II

PURCHASE OF ASSETS

AND ASSUMPTION OF LIABILITIES

Section 2.1 Purchase of Assets and Assumption of Liabilities. On the terms

and subject to the conditions set forth in this Agreement, at the Closing, the

Buyers will purchase from the Sellers, and the Sellers will sell, assign, convey

and deliver to the Buyers, free and clear of any Liens other than Permitted

Liens, the Purchased Assets, and the Buyers will assume and agree to pay,

discharge and perform when due all of the Assumed Liabilities.

Section 2.2 Purchased and Excluded Assets.

(a) The "Purchased Assets" are all of the right, title and interest

that the Sellers possess and have the right to transfer in and to all of the

following assets (other than the Excluded Assets), as the same may exist as

of the close of business on the Closing Date:

(i) certain real properties and all improvements thereto and thereon

as set forth on Schedule 2.2(a)(i)(A) (collectively, the "Hotels"), and

certain vacant land, as set forth on Schedule 2.2(a)(i)(B)

(collectively, the "Vacant Land", and together with the Hotels, the

"Owned Real Property");

(ii) all personal property, furniture, fixtures, vehicles, supplies,

inventory and other tangible personal property that are used or held

for use in connection with the Business;

(iii) all credits, claims for refunds and reimbursements, prepaid

expenses, deferred charges, advance payments, security deposits, and

prepaid items (excluding in respect of Taxes and Income Taxes, other

than amounts held in escrow with mortgage lenders in respect of real

estate Taxes on the Owned Real Property), in each case consisting of

utility deposits, deposits with landlords or similar items relating

primarily to the other Purchased Assets or the Assumed Liabilities;

(iv) to the extent legally assignable, all licenses, permits,

franchises, certificates of authority or orders issued by any

Governmental Entity with respect to the conduct of the Business by the

Sellers, including any such licenses, permits, franchises and

certificates of authority as set forth on Schedule 2.2(a)(iv) (the

"Permits");

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(v) the leasehold interests of the Sellers, as lessees, in the real

property identified on Schedule 2.2(a)(v) (the "Leased Real Property");

(vi) all of the Sellers' right, title and interest in certain

agreements, leases, contracts, franchise contracts (including the

Cendant Agreements), joint ventures and other commitments set forth on

Schedule 2.2(a)(vi) (collectively, the "Assumed Contracts");

(vii) any rights, warranties, guarantees and recourse (other than

any Avoidance Actions) to past providers of engineering, architectural

and other professional services and materials by third parties

contracting with the Sellers in regard to the Purchased Assets;

(viii) all books, records, ledgers, files, documents,

correspondence, lists, plats, specifications, surveys, drawings,

property reports, advertising and promotional materials, reports and

other materials (in whatever form or medium) which relate to the

Business; provided that the Sellers may retain copies of the foregoing

for administrative purposes;

(ix) all insurance proceeds due but not yet received in respect of

the Purchased Assets;

(x) all claims, offsets and legal rights and actions of the Sellers

against third parties and Governmental Entities arising out of or

relating to the Purchased Assets and the Business, whether arising pre-

or post-petition, other than any Avoidance Actions;

(xi) all ownership interests in all Persons owned by the Sellers

that are identified on Schedule 2.2(a)(xi) (the "Joint Ventures");

(xii) all goodwill of the Business;

(xiii) all amounts held in escrow with mortgage lenders in respect

of capital expenditure escrows and any other escrows for mortgages

which are assumed by the Buyers; and

(xiv) the notes receivable identified on Schedule 2.2(a)(xiv) (the

"Notes Receivables").

(b) The Purchased Assets will not include any assets, rights or

properties other than those specifically described in SECTION 2.2(a). Without

limiting the generality of the foregoing sentence and notwithstanding

anything to the contrary contained in SECTION 2.2(a), the Sellers or one of

their Affiliates will retain all of their right, title and interest in and

to, and will not sell, transfer, assign, convey or deliver to the Buyers, and

the Purchased Assets will not include, the following (collectively, the

"Excluded Assets"):

(i) any cash or cash equivalents (other than amounts held in escrow

with mortgage lenders in respect of real estate Taxes and any other

escrows on the Owned Real Property), including any marketable

securities or certificates of deposit, or any

<PAGE>

collected funds or items in the process of collection at the

Sellers' financial institutions through and including the Closing Date;

(ii) all accounts and notes receivable and other such claims for

money due to the Sellers, including amounts due arising from the

rendering of services or other performance by the Sellers prior to the

Closing under the Cendant Agreements (the "Accounts Receivable") but

excluding the Notes Receivable;

(iii) any rights of the Sellers or any of their Affiliates with

respect to any Tax or Income Tax refund, or prepaid rent on Leased Real

Property, relating to periods ending on or prior to the Closing Date,

including any ratable portion of such a rent or Tax or Income Tax

period that includes the Closing Date, any Tax Returns or Income Tax

Returns and records of the Sellers or any of their respective

Affiliates, and any rights of the Sellers or any of their respective

Affiliates under any Tax or Income Tax allocation or sharing agreement;

(iv) any prepaid Taxes and Income Taxes, other than amounts held in

escrow with mortgage lenders in respect of real estate Taxes and any

other escrows on the Owned Real Property;

(v) the corporate charter, qualification to conduct business as a

foreign corporation, arrangements with registered agents relating to

foreign qualifications, taxpayer and other identification numbers,

corporate seal, minute books, stock transfer books, blank stock

certificates, books and records relating to federal, state, local or

foreign income, gross receipts, franchise, estimated alternative

minimum or add-on taxes, and any other documents relating to the

organization, maintenance and existence of the Sellers as corporations;

(vi) any property, casualty or other insurance policy or related

insurance services contract held by a Seller or any of its Affiliates;

(vii) any Avoidance Actions of the Sellers or an Affiliate of the

Sellers;

(viii) any Sellers' Employee Benefit Plans and corresponding assets

or any rights of a Seller or any of its Affiliates in the Sellers'

Employee Benefit Plans provided by a Seller to its employees as of the

Closing Date; and

(ix) any rights of the Sellers relating to any of the Excluded

Assets or Excluded Liabilities.

Section 2.3 Assumed and Excluded Liabilities.

(a) The "Assumed Liabilities" consist of the following and only the

following liabilities of the Sellers:

(i) all liabilities and obligations arising under the Assumed

Contracts and any other contracts, leases, commitments or agreements

included in the Purchased Assets;

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(ii) all liabilities and obligations for the payment of money to the

Persons identified on Schedule 2.3(a)(ii) (the "Other Secured

Creditors") with respect to the matters identified on such schedule;

(iii) all liabilities and obligations for the payment of real estate

Taxes on the Owned Real Property with respect to which the Buyers are

acquiring amounts held in escrow by mortgage lenders under SECTION

2.2(a)(iii); and

(iv) all liabilities and obligations incurred, accrued or arising

after the Closing in connection with the conduct or operation of, or

the use or ownership of, the Purchased Assets.

(b) The Buyers will not assume or become responsible for, and will not

be deemed to have assumed or to have become responsible for, the following

liabilities and obligations (collectively, the "Excluded Liabilities"):

(i) all liabilities and obligations arising under any contracts,

agreements, leases and commitments not included in the Purchased

Assets;

(ii) all cure costs under the Assumed Contracts;

(iii) except as set forth in CLAUSE (i) above, all liabilities and

obligations under portions of the Business not arising in connection

with the conduct or operation of, or the use or ownership of, the

Purchased Assets by the Buyers; and

(iv) all liabilities and obligations of the Sellers not identified

as Assumed Liabilities in SECTION 2.3(a).

ARTICLE III

PURCHASE PRICE AND CLOSING

Section 3.1 Closing. The closing of the transactions contemplated by this

Agreement (the "Closing") will occur as promptly as practicable, but in no event

more than five business days, following the satisfaction and/or waiver of all

conditions to Closing set forth in ARTICLE VIII (other than any of such

conditions that by its nature is to be satisfied at the Closing, but subject to

the satisfaction or waiver of such conditions), at the offices of Jenner & Block

LLP, One IBM Plaza, Chicago, IL 60611, or at such other place on such other date

as the Parties may agree in writing. The date on which the Closing actually

occurs will be referred to as the "Closing Date," and the Closing will be deemed

effective as of 6:00 p.m., Central time on the Closing Date.

Section 3.2 Purchase Price.

(a) Subject to SECTION 3.2(b) below, on the terms and subject to the

conditions set forth in this Agreement, at the Closing, the Buyers will pay

and deliver to the Sellers the sum of Five Million Eight Hundred and Fifty

Thousand Dollars ($5,850,000.00) in cash by wire transfer of immediately

available funds to an account or accounts designated by the Sellers (the

"Cash Portion"), plus the aggregate amount of principal and interest, which

are owed on the Closing Date to the Other Secured Creditors (together with

the Cash Portion, the "Purchase Price"), plus

<PAGE>

or minus the net proration of the Apportioned Obligations determined in

accordance with SECTION 6.7 of this Agreement.

(b) Notwithstanding SECTION 3.2(a) above, if the Purchased Assets

include the Development Agreement (whether or not amended, modified or

supplemented), the Cash Portion of the Purchase Price shall be increased to

an amount equal to Six Million Two Hundred Fifty Thousand Dollars

($6,250,000.00); provided that any amendment, modification or supplement of

the Development Agreement must be acceptable to the Buyers in their sole

discretion.

Section 3.3 Purchase Price Adjustment. The Purchase Price to be paid by

the Buyers at the Closing shall be increased dollar-for-dollar by an amount

equal to the aggregate sum of all amounts in house banks, petty cash and cash

registers at the Hotels as of the effective time of the Closing.

Section 3.4 Deposit. Promptly, but in no event more than two business days

after the date hereof, the Buyers shall deliver a certified or cashier's check

made payable to the Escrow Agent and drawn on a bank which is reasonably

acceptable to the Sellers or a federal wire transfer of immediately available

funds, in an amount equal to $1,100,000, to the Escrow Agent, as an earnest

money deposit hereunder (including interest at any time accrued thereon, the

"Deposit"). The Deposit shall be held in escrow by the Escrow Agent in a

segregated, interest-bearing account of a federally insured commercial bank and

disbursed only in accordance with the terms of this Agreement. The Buyers shall

pay all costs and expenses associated with the engagement of the Escrow Agent.

If the Closing takes place, the Escrow Agent shall deliver the Deposit to the

Sellers at the Closing. If this Agreement is terminated or becomes null and void

for any reason other than the material breach by any of the Buyers of its

obligations hereunder, the Deposit shall be promptly paid within two days to the

Buyers. If this Agreement is terminated by the Sellers by reason of the material

breach by any of the Buyers of its obligations hereunder, the Deposit shall be

paid to the Sellers as liquidated damages and not a penalty with such payment,

once received, being the Sellers' sole and exclusive remedy against the Buyers.

Notwithstanding the foregoing in this SECTION 3.4, the Escrow Agent shall not

disburse the Deposit until the earlier to occur of (i) receipt by the Escrow

Agent of joint written instructions, signed by the Sellers and the Buyers, or

(ii) entry of a final and nonappealable adjudication of the Bankruptcy Court

determining which Party is entitled to receive the Deposit. In the event of a

dispute between the Parties with respect to the Deposit, the Escrow Agent may

deposit the Deposit with the Bankruptcy Court and commence an action to

determine the proper disposition of such Deposit.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

The Sellers represent and warrant to the Buyers as follows:

Section 4.1 Organization. Each Seller is a corporation duly organized,

validly existing and in good standing under the laws of its state of

incorporation. The Sellers are duly qualified or licensed to do business as a

foreign entity and are in good standing in each jurisdiction in which the

ownership or lease of the Purchased Assets or the conduct of the Business

requires such qualification or license, except where the failure to be so

qualified or be so licensed would not reasonably be expected to result in a

Material Adverse Effect. The Sellers have all requisite power and authority to

<PAGE>

carry on the Business as currently conducted and to own, lease or use, as the

case may be, the Purchased Assets.

Section 4.2 Authorization of Transaction. Subject to the entry of the

Approval Order, each Seller has all requisite power and authority to execute,

deliver and perform this Agreement and each of the Ancillary Documents to which

it is a party. Subject to the entry of the Approval Order, this Agreement

constitutes, and each of such Ancillary Documents when executed and delivered by

such Seller will constitute, a valid and legally binding obligation of such

Seller (assuming that this Agreement and such Ancillary Documents constitute

valid and legally binding obligations of the other parties thereto), enforceable

in accordance with its terms and conditions, except as enforceability may be

limited by applicable bankruptcy, insolvency, reorganization, moratorium,

fraudulent transfer and similar Laws of general applicability relating to or

affecting creditors' rights, or by general equity principles, including

principles of commercial reasonableness, good faith and fair dealing.

Section 4.3 Noncontravention; Consents. Except for the Bankruptcy Court's

entry of the Approval Order (as herein defined), no material consent, release,

authorization, order or approval of, or filing or registration with, any

governmental authority or other person is required for the execution and

delivery of this Agreement and the Ancillary Documents to be executed and

delivered by the Sellers hereunder and the consummation by the Sellers of the

transactions contemplated. Except for the Bankruptcy Court's entry of the

Approval Order, neither the execution and delivery by the Sellers of this

Agreement and the Ancillary Documents, nor the consummation by the Sellers of

the transactions contemplated hereby and thereby, will conflict with or result

in a breach of any of the terms, conditions or provisions of the Sellers'

respective certificates of incorporation or by-laws, any statute or

administrative regulation, or of any order, writ, injunction, judgment or decree

of any court or any governmental authority or of any arbitration award or any

agreement, instrument, permit or authorization held by any of the Sellers or

included within the Purchased Assets, in each case to which any of the Sellers

is subject or by which any of the Sellers is bound, which conflict or breach

would reasonably be expected to have a Material Adverse Effect on the Sellers,

the Business, the Purchased Assets or the transaction contemplated by this

Agreement.

Section 4.4 Title To the Sellers' Knowledge, the Sellers have good title

to and, subject only to the Bankruptcy Court's entry of the Approval Order, the

power to sell the material tangible personal property and the Real Property and

Entitlements contained in the Purchased Assets, free and clear of any Liens

other than Permitted Liens. To the Sellers' Knowledge, the Sellers have good

title to its ownership interests in the Joint Ventures, free and clear of any

Liens.

Section 4.5 Brokers. Except as set forth on Schedule 4.5, the Sellers have

not dealt with any person or entity who is or may be entitled to a broker's

commission, finder's fee, investment banker's fee or similar payment from the

Sellers for arranging the transactions contemplated hereby or introducing the

parties to each other. The Sellers will pay any compensation due to any person

and/or entities identified on such Schedule 4.5.

Section 4.6 LIMITATION ON WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN

THIS ARTICLE IV OR IN ANY ANCILLARY DOCUMENT, NONE OF THE SELLERS OR ANY

AFFILIATE OF THE SELLERS MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND,

EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF

<PAGE>

THE PURCHASED ASSETS, THE ASSUMED LIABILITIES, THE BUSINESS OR OTHERWISE,

OR WITH RESPECT TO ANY INFORMATION PROVIDED TO THE BUYERS, INCLUDING WITH

RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE. ALL

OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY DISCLAIMED. EXCEPT TO THE EXTENT

SPECIFICALLY SET FORTH IN THIS ARTICLE IV OR IN ANY ANCILLARY DOCUMENT, THE

SELLERS ARE SELLING, ASSIGNING AND TRANSFERRING THE PURCHASED ASSETS TO THE

BUYERS ON AN "AS-IS, WHERE-IS" BASIS.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE BUYERS

The Buyers represent and warrant to the Sellers as follows:

Section 5.1 Organization. Each Buyer is duly organized, formed or

incorporated and validly existing and in good standing under the laws of the

state of such organization, formation or incorporation. Each Buyer is duly

qualified or licensed to do business as a foreign entity and is in good standing

in each jurisdiction where such qualification or license is required, except

where the failure to so qualify or be so licensed would not reasonably be

expected to adversely affect its ability to consummate the transactions

contemplated by, and discharge its obligations under, this Agreement and the

Ancillary Documents to which it is a party (a "Buyer Material Adverse Effect").

Each Buyer has all requisite power and authority to carry on its business as

currently conducted.

Section 5.2 Authorization of Transaction. Each Buyer has all requisite

power and authority to execute and deliver this Agreement and each of the

Ancillary Documents to which it is a party, and to perform its obligations

hereunder and thereunder. This Agreement constitutes, and each of the Ancillary

Documents executed and delivered by such Buyer constitutes, a valid and legally

binding obligation of such Buyer (assuming that this Agreement and such

Ancillary Documents will constitute valid and legally binding obligations of the

other parties thereto), enforceable in accordance with its terms and conditions,

except as enforceability may be limited by applicable bankruptcy, insolvency,

reorganization, moratorium, fraudulent transfer and similar Laws of general

applicability relating to or affecting creditors' rights or by general equity

principles, including principles of commercial reasonableness, good faith and

fair dealing.

Section 5.3 Noncontravention; Consents.

(a) The execution and delivery by each of the Buyers of this Agreement

and the Ancillary Documents to which it is a party, and the consummation by

the each of the Buyers of the transactions contemplated hereby and thereby,

do not: (i) violate any Law to which such Buyer or their respective assets

are subject, (ii) conflict with or result in a breach of any provision of

such Buyer's organizational or governance documents, or (iii) create a

breach, default, termination, cancellation or acceleration of any obligation

under any contract, agreement or binding commitment to which such Buyer is a

party or by which such Buyer or any of its assets or properties is bound or

subject, except for any of the foregoing in the case of CLAUSES (i) and

(iii), that would not reasonably be expected to result in a Buyer Material

Adverse Effect.

<PAGE>

(b) No notices, permits, consents, approvals, authorizations,

qualifications or orders of Governmental Entities or third parties are

required for the consummation by the Buyers of the transactions contemplated

hereby or by the Ancillary Documents, other than such of the foregoing that,

if not obtained or made, would not reasonably be expected to result in a

Buyer Material Adverse Effect.

Section 5.4 Litigation. There are no legal, administrative, arbitration or

other formal proceedings or governmental investigations pending or, to the

knowledge of the Buyers threatened, that question the validity of this Agreement

or any of the Ancillary Documents, or any action taken or to be taken by the

Buyers in connection with this Agreement or any of the Ancillary Documents,

other than such of the foregoing that would not individually or reasonably be

expected to result in a Buyer Material Adverse Effect.

Section 5.5 Availability of Funds. The Buyers have funds available to them

sufficient to pay to the Sellers the Purchase Price and to perform all of the

obligations of the Buyers pursuant to, and to consummate the transactions

contemplated by, this Agreement and each of the Ancillary Documents to which it

is a party.

Section 5.6 LIMITATION ON THE WARRANTIES OF THE SELLERS. THE BUYERS HEREBY

ACKNOWLEDGE AND AGREE THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN

ARTICLE IV, NONE OF THE SELLERS OR THEIR RESPECTIVE AFFILIATES MAKE, and the

Buyers are not relying upon, ANY REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS

OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF THE PURCHASED ASSETS, THE

ASSUMED LIABILITIES, THE BUSINESS OR OTHERWISE, OR WITH RESPECT TO ANY

INFORMATION PROVIDED TO THE BUYERS, INCLUDING WITH RESPECT TO MERCHANTABILITY OR

FITNESS FOR ANY PARTICULAR PURPOSE OR USE, AND THE BUYERS ARE ACQUIRING THE

PURCHASED ASSETS ON AN "AS-IS, WHERE-IS" BASIS.

ARTICLE VI

COVENANTS

Section 6.1 General. Each of the Parties will use commercially reasonable

efforts to take or cause to be taken all actions and to do or cause to be done,

as soon as possible, all things necessary, proper or advisable (subject to any

Laws) to consummate the Closing and the other transactions contemplated by this

Agreement, including the negotiation, execution and delivery of any additional

instruments necessary to consummate the transactions contemplated by this

Agreement or the Ancillary Documents. Neither of the Parties will, without prior

written consent of the other Party, take or fail to take, or permit their

respective Affiliates to take or fail to take, any action, which would

reasonably be expected to prevent or materially impede, interfere with or delay

the consummation, as soon as possible, of the transactions contemplated by this

Agreement or the Ancillary Documents; provided that nothing in this SECTION 6.1

will require a Party to cure any breach or inaccuracy with respect to any

representation or warranty contained in this Agreement or any Ancillary

Documents.

Section 6.2 Notices and Consents. Prior to the Closing Date, the Sellers

will use commercially reasonable efforts to give all notices required to be

given by the Sellers and to obtain

<PAGE>

all material consents, approvals or authorizations of any third parties

(including any Governmental Entity) that are required to be obtained by the

Sellers in connection with the transactions contemplated by this Agreement. In

connection with the foregoing, each Party will (a) promptly notify the other

Party of any written communication to that Party or its Affiliates from any

Governmental Entity and, subject to Law, provide the other Party with a copy of

any written communication to any of the foregoing and (b) not participate in any

substantive meeting or discussion with any Governmental Entity in respect of any

filings, investigation or inquiry concerning the transactions contemplated by

this Agreement unless it consults with the other Party in advance and, to the

extent permitted by such Governmental Entity, give the other Party the

opportunity to attend and participate thereat, with respect to this Agreement or

the Ancillary Documents and the transactions contemplated hereby or thereby.

Nothing contained herein will require any Party to pay any consideration (except

filing and application fees) to any other Person from whom any such consents,

approvals or authorizations are requested.

Section 6.3 Conduct of the Business.

(a) Prior to the Closing Date, except with the written consent of the

Buyers (which consent will not be unreasonably withheld or delayed), the

Sellers will use commercially reasonable efforts under the circumstances to:

(i) maintain and operate the tangible Purchased Assets in good operating

condition and repair, ordinary wear and tear excepted; (ii) operate the

Business in the usual and ordinary course, substantially in the same manner

as heretofore conducted; and (iii) preserve and maintain the goodwill

associated with the Business and relationships with the employees, customers,

suppliers, distributors and others with whom the Business has a business

relationship.

(b) The Sellers shall not, without the prior written consent of the

Buyers (i) sell, transfer, or otherwise dispose of any Purchased Assets or

parts thereof, except in the ordinary course of business, (ii) waive any

material rights included in the Purchased Assets, or (iii) terminate, amend,

waive or modify any Assumed Contract except in the ordinary course of

business.

Section 6.4 Transfer Taxes. Subject to the Approval Order, the Buyers will

pay all Taxes that are required to be paid in respect of any transfer, recording

or similar Taxes that may be imposed by reason of the sale, assignment, transfer

and delivery of the Purchased Assets; provided that the Sellers will use their

reasonable best efforts to have the Bankruptcy Court apply SECTION 1146(c) of

the Bankruptcy Code to the transactions contemplated hereby. The Buyers will

timely file all Tax Returns required to be filed in connection with the payment

of such Taxes.

Section 6.5 Access to Business, Records and Documents.

(a) Except as may be prohibited by Law, by the terms of any contract or

under any confidentiality or non-disclosure agreement, prior to the Closing,

the Sellers will (a) upon reasonable notice, permit representatives of the

Buyers to have reasonable access during normal business hours and under

reasonable circumstances to all personnel, premises, properties, assets,

books, records, the Assumed Contracts and documents of the Business, and (b)

furnish the Buyers with financial and other information in the Sellers'

possession relating to the Business and the Purchased Assets as the Buyers

may from time to time reasonably request; provided,

<PAGE>

however that the Buyers may not under any circumstances conduct or cause

to be conducted any intrusive or invasive environmental testing at any of

the properties of the Sellers, including any of the Leased Real Property.

(b) The Buyers will preserve and maintain all books and records

included in the Purchased Assets (including all items under SECTION

2.2(a)(viii)) for a period of two (2) years following the Closing Date. After

such two-year period, the Buyers will provide at least 60 days prior written

notice to the Sellers, c/o Jenner & Block LLP, of its intent to dispose of

any such books and records, and the Sellers and their respective Affiliates

will be given the opportunity, at their cost and expense, to remove and

retain all or any part of such books and records as they may select. During

such two-year period, duly authorized representatives of the Sellers and

their respective Affiliates will, upon reasonable notice, have reasonable

access during normal business hours to examine, inspect and copy such books

and records; provided that to the extent that disclosing any such information

would reasonably be expected to constitute a waiver of attorney-client, work

product or other privilege with respect thereto, the Parties will take all

commercially reasonable action to prevent a waiver of any such privilege,

including entering into an appropriate joint defense agreement in connection

with affording access to such information.

Section 6.6 Bankruptcy Case.

(a) The Sellers shall use commercially reasonable efforts to have the

Bankruptcy Court enter the Approval Order.

(b) (i) The Buyers shall have until the date that is one (1) business

day prior to the hearing by the Bankruptcy Court for the Approval Order to

designate, by written notice to the Sellers, the Assumed Contracts that it

wishes the Sellers to assume and assign to the Buyers, and the Assumed

Contracts so identified in such notice shall be set forth on Schedule

2.2(a)(vi); and, (ii) up until the day the Approval Order is entered by the

Bankruptcy Court, the Buyers may elect, by written notice to the Sellers, to

have any of the executory contracts or unexpired leases set forth on Schedule

2.2(a)(vi) not be assigned to and assumed by the Buyers, and any such

contracts or leases so identified in such notice shall be removed from

Schedule 2.2(a)(vi) and shall no longer constitute Assumed Contracts;

provided that the Buyers may not remove the Development Agreement from

Schedule 2.2(a)(vi) without the prior written consent of the Sellers, which

consent may be withheld in their sole discretion. The Buyers shall not elect

to assume the contracts set forth on Schedule 6.6 (the "Rejected Contracts")

and the Sellers shall have no obligation to assume and assign the Rejected

Contracts. Subject to the entry of the Approval Order and the Closing having

occurred, the Sellers

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