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EXHIBIT 10.2(a)

AGREEMENT OF PURCHASE AND SALE

among

THE SELLERS NAMED HEREIN

and

IHC MEMBER CORPORATION

As of March 29, 1996

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TABLE OF CONTENTS

Page

1. Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2. Purchase Price; Earnest Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Formation; Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3 No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.5 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.6 Action by Assignors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.7 Limitation on Sections 4.5 and 4.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.8 Good Faith Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

5. Representations, Warranties and Covenants of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Formation; Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Power; Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Examination; No Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 Good Faith Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.7 Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.8 Operation of the Property Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

6. Conditions Precedent to Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.1 Sellers' Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.2 Buyer's Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

7. New York State Real Estate Transfer Gains Tax; Other Real Estate Transfer Taxes. . . . . . . . . . . . . . . 15

8. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

9. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

10. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.1 Indemnification by the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10.3 Termination of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

11. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

12. Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

13. Rights of the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

14. Interstone Three . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

15. Lisle Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

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16. Use of Blackstone Name and Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

17. Agreement of Interstate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

18. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

19. Confidentiality; Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

20. Successors and Assigns; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

21. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

22. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

23. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

24. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

25. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

26. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

27. Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

28. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

29. Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

30. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Exhibits

Exhibit A Form of Interstone Amendments
Exhibit B Terms of Interstone Three Amendments

Schedules

Schedule A-1 BREP Assignors and Interstone Partnerships
Schedule A-2 GP Assignors and Property Partnerships
Schedule B Trumbull Members
Schedule C Purchase Price
Schedule D Section 4.6(a) Exceptions

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AGREEMENT OF PURCHASE AND SALE

AGREEMENT OF PURCHASE AND SALE (this "Agreement"), made as of
the 29th day of March, 1996 by and between each of the entities listed in the
column entitled "BREP Assignors" of Schedule A-1 attached hereto and made a
part hereof (individually, a "BREP Assignor"; collectively, the "BREP
Assignors"), each of the entities listed in the column entitled "GP Assignors")
of Schedule A-2 attached hereto and made a part hereof (individually, a "GP
Assignor"; collectively, the "GP Assignors"; the GP Assignors and the BREP
Assignors, collectively, the "Assignors"), BRE/TRUMBULL L.L.C., a Delaware
limited liability company ("BRE/Trumbull; BRE/Trumbull and the Assignors,
collectively, the "Sellers"), and IHC MEMBER CORPORATION, a Delaware
corporation ("Buyer").

Background

A. Each BREP Assignor is a partner in the respective
partnerships (individually, an "Interstone Partnership"; collectively, the
"Interstone Partnerships") listed opposite its name on Schedule A-1 in the
column entitled "Interstone Partnerships". The Interstone Partnerships hold
limited partnership interests of certain partnerships which own one or more
hotels (individually, a "Property Partnership"; collectively, the "Property
Partnerships"). Each GP Assignor is a partner in the respective Property
Partnerships listed opposite its name on Schedule A-2 in the column entitled
"Property Partnerships"; except that BREI/CGL Inc. is a partner in
Interstone/CGL Management Associates, which is a general partner in
Interstone/CGL Partners L.P., a Property Partnership, and as used herein, the
Property Partnerships shall include Interstone/CGL Management Associates and
Interstone/CGL Partners L.P. The partnership interests of the BREP Assignors
in the Interstone Partnerships and the partnership interests of the GP
Assignors in the Property Partnerships shall be referred to herein,
collectively, as the "Interests".

B. Reference is hereby made to that certain Contribution
Agreement dated as of the date hereof (the "Fort Magruder Agreement") among
Interstone Partners I L.P., Interstone Partners II L.P., Interstone Partners
III L.P., Interstone Partners IV L.P., BREI/Williamsburg L.L.C., S.B. Westridge
Inc., IHC/Williamsburg, Inc. (collectively, in such capacity, the "Fort
Magruder Contributors") and Interstate Hotels Corporation ("Interstate"),
whereby the Fort Magruder Contributors have agreed to contribute to Interstate,
and Interstate has agreed to accept from the Fort Magruder Contributors, all of
the Fort Magruder Contributors' partnership interests in
Interstone/Williamsburg Partnership, L.P. (the "Fort Magruder Partnership").
The closing under the Fort Magruder Agreement shall occur immediately prior to
the Closing (as defined below)
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hereunder, and accordingly, the Fort Magruder Partnership shall not be deemed a
Property Partnership hereunder.

C. BRE/Trumbull L.L.C., a Delaware limited liability
company ("BRE/Trumbull"), is the holder of that certain Note Consolidation,
Amendment and Restatement Agreement dated as of April 26, 1995 between Trumbull
Hotel Associates Limited Partnership ("Trumbull Owner") and BRE/Trumbull (the
"Trumbull Note"), secured by among other things that certain Open-End Mortgage
Deed Consolidation, Amendment and Restatement Agreement and UCC-1 Financing
Statement dated as of April 26, 1995 (the "Trumbull Mortgage") between Trumbull
Owner and BRE/Trumbull. Pursuant to the Trumbull Mortgage, BRE/Trumbull has a
first mortgage lien on the land and improvements located in Trumbull,
Connecticut commonly known as the Trumbull Marriott (the "Trumbull Hotel").
Each of the parties listed on Schedule B attached hereto and made a part hereof
is a member in BRE/Trumbull (the "Trumbull Members"). The Trumbull Members'
ownership interests in BRE/Trumbull shall be referred to herein as the
"Trumbull Interests". The Trumbull Hotel and the Trumbull Interests, whichever
is to be sold hereunder pursuant to the terms hereof, shall be referred to
herein as the "Trumbull Assets".

D. Pursuant to that certain Option Agreement dated as of
October 12, 1995 among Interstate, the Existing Stockholders named therein, The
Blackstone Group L.P., the Prospective Equity Participants named therein and
Blackstone Real Estate Advisors L.P. ("BREA"), as amended by that certain
Amendment No. 1 to Option Agreement dated as of December 12, 1995 and that
certain Amendment No. 2 to the Option Agreement dated as of the date hereof (as
amended, the "Option Agreement"), BREA on behalf of the Prospective Equity
Participants named therein has the option to purchase equity interests in
Interstate (or a successor to Interstate) in accordance with the terms of the
Option Agreement (the "Option").

E. The Interests and the Trumbull Assets shall be
referred to herein, collectively, as the "Assets".

F. The Sellers desire to sell to Buyer, and Buyer
desires to purchase from the Sellers, the Assets on the terms and conditions
hereinafter set forth.

Agreement

1. Sale of Assets. (a) On the Closing Date (as
hereinafter defined) and pursuant to the terms and subject to the conditions
set forth in this Agreement, the Sellers shall sell to Buyer, and Buyer shall
purchase from each of the Sellers, all of the Assets. It is understood and
agreed that the closing of the purchases of the Assets shall occur
contemporaneously and, except
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as explicitly set forth in this Section, none of the purchases of the Assets
shall close unless the purchase of all of the Assets closes contemporaneously.
The Sellers agree that the Assets shall include any right of the Sellers in any
insurance proceeds for property damage and any condemnation awards received by
any of the Property Partnerships after the date hereof with respect to any
casualty or condemnation of the property of the Property Partnerships.

(b) Buyer shall elect prior to the Closing whether it
will purchase the Trumbull Hotel or the Trumbull Interests or both at the
Closing, subject to the reasonable approval of the Sellers based on tax
consequences. Notwithstanding the foregoing, Seller shall have the right to
preserve the existence of the Trumbull Note and Trumbull Mortgage and require
the Buyer to cause the fee interest in the Trumbull Hotel to be acquired by one
legal entity and the Trumbull Interests or the Trumbull Note and Trumbull
Mortgage to be acquired by a different legal entity. Notwithstanding
subsection (a) above, if on the Closing Date BRE/Trumbull does not have fee
title to the Trumbull Hotel and cannot otherwise cause the sale of the Trumbull
Hotel to Buyer (or an affiliate as provided in the previous sentence) on the
Closing Date, the Trumbull Assets shall be withdrawn from the Assets sold
hereunder, and the Purchase Price shall be adjusted as set forth in Section
2(b) below.

2. Purchase Price; Earnest Money. (a) The aggregate
purchase price for the Assets (the "Purchase Price") shall be the amount set
forth on Schedule C attached hereto and made a part hereof opposite the date on
which all of the following shall have occurred: (i) this Agreement shall have
been executed and delivered by the parties hereto, (ii) the Escrow Agent (as
defined below) shall have received the Earnest Money (as defined below) and the
Escrow Agreement (as defined below) shall have been executed by all of the
parties thereto and (iii) the Sellers shall have received the Interstone
Amendments (as defined below) fully executed and delivered by the affiliates of
Buyer parties thereto.

(b) Provided the Trumbull Assets shall be included in the
Assets sold hereunder, the Sellers may require Buyer to pay at the Closing up
to $4,000,000 (in addition to any other amount due hereunder) to the then owner
of the Trumbull Hotel towards the purchase of the Trumbull Hotel (the
"Additional Trumbull Payments"), and Buyer shall make the Additional Trumbull
Payments as the Sellers direct. If on the Closing Date, the Trumbull Assets
are included in the Assets being sold hereunder, and the total Additional
Trumbull Payments made by Buyer are less than $4,000,000, Buyer shall pay to
the Sellers at the Closing (as an addition to the Purchase Price) 50% of the
difference between (i) $4,000,000 and (ii) the amount of Additional Trumbull
Payments made by Buyer. In the event that the Trumbull Assets, in accordance
with Section 1(b) above, are withdrawn from the Assets
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to be sold hereunder, the Purchase Price shall be reduced by an amount equal to
$12,000,000.

(c) Simultaneously with the execution of this Agreement,
Buyer and the Sellers shall arrange for the execution and delivery by the
partners of the Interstone Partnerships of amendments to the limited
partnership agreements of the Interstone Partnerships (the "Interstone
Amendments"), in the form of Exhibit A attached hereto and made a part hereof.

(d) The Purchase Price shall be paid to the Sellers, as
follows:

(i) upon execution of this Agreement, Buyer shall deposit
with Chicago Title Insurance Company, as escrow agent ("Escrow
Agent"), the sum of Five Million Dollars ($5,000,000) (together with
any interest earned thereon, the "Earnest Money") in immediately
available funds by wire transfer to such account as Escrow Agent shall
designate to Buyer; the Earnest Money shall be held in escrow in
accordance with the Escrow Agreement among the Sellers, Buyer and
Escrow Agent dated as of the date hereof and shall be nonrefundable to
Buyer except if all of the conditions set forth in Section 6.2 have
not been met by the Outside Closing Date or otherwise as set forth in
Section 12(b) below; and

(ii) on the Closing Date, Buyer shall deliver the
remainder of the Purchase Price to the Sellers in immediately
available funds by wire transfer to such account or accounts that
BREA, as agent for the Sellers, shall designate to Buyer. By their
execution of this Agreement, each Seller acknowledges that the
Purchase Price and all other amounts payable to the Sellers hereunder
may be wired to BREA as its agent hereunder unless otherwise
explicitly stated in this Agreement.

(e) In addition to any other amounts paid by Buyer
pursuant to this Section, Buyer shall also pay to BREA at the Closing the sum
of $2,000,000, which constitutes the amount of working capital provided to the
Property Partnerships by affiliates of BREA.

(f) In addition to any other amounts paid by Buyer
pursuant to this Section, Buyer shall also pay to BREA at the Closing an amount
equal to the direct or indirect partnership interest of the Assignors in all
net cash flow of the Property Partnerships for the period beginning immediately
after the last distribution to the Assignors with respect to each Property
Partnership and ending on the Closing Date. For the purposes of this Section,
net cash flow shall be calculated in the same manner as net cash flow of the
Property Partnerships has been previously calculated, except that (i) net cash
flow shall be increased by the amount of prepaid expenses of the Property
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Partnership as of the Closing Date and (ii) net cash flow shall be increased by
any payments made after the date hereof to any lender which is applied to the
reduction of the principal amount of a loan. Amounts held by any lender or
other third party as collateral, in a lock box account or otherwise shall be
included in the calculation of net cash flow for the purposes of this Section.
To the extent any items used in the calculation of net cash flow are not
determinable at the Closing, the parties shall use reasonable estimates to
determine net cash flow at the Closing, and shall make adjustments as the
necessary information becomes available. The provisions of this Section shall
survive the Closing of this Agreement.

(g) No adjustment shall be made to the Purchase Price
except as explicitly set forth in this Agreement.

3. The Closing. (a) The closing of the sale and
purchase of the Assets (the "Closing") shall take place on the date (the
"Closing Date") of the closing of the initial public offering of the common
stock of Interstate as contemplated pursuant to Section 3.1 of the Second
Amendment to the Option Agreement (the "IPO"); provided however, that the
Closing Date shall occur on or before July 1, 1996 (the "Outside Closing Date")
whether or not the IPO has occurred, time being of the essence.

(b) The Closing shall be held on the Closing Date at
10:00 A.M. at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue,
New York, New York, or at such other location agreed upon by the parties
hereto.

4. Representations, Warranties and Covenants of the
Sellers. Each Seller hereby represents, warrants and covenants to Buyer as of
the date hereof and as of the Closing Date, as to itself and its own actions,
severally but not jointly, as follows:

4.1 Formation; Existence. It is a limited partnership or
corporation, as applicable, duly formed, validly existing and in good
standing under the laws of the state of Delaware.

4.2 Power and Authority. It has all requisite power and
authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the
consummation of the transactions provided for in this Agreement have
been duly authorized by all necessary action on its part. This
Agreement has been duly executed and delivered by it and constitutes
its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except
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as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
and by general principles of equity (whether applied in a proceeding
at law or in equity).

4.3 No Consents. No consent, license, approval, order,
permit or authorization of, or registration, filing or declaration
with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, is
required to be obtained or made in connection with the execution,
delivery and performance of this Agreement or any of the transactions
required or contemplated hereby, other than with respect to any liquor
licenses held by any of the Property Partnerships or their agents.

4.4 No Conflicts. The execution, delivery and compliance
with, and performance of the terms and provisions of, this Agreement,
and the sale of the Assets, will not (a) conflict with or result in
any violation of its organizational documents, (b) conflict with or
result in any violation of any provision of any bond, note or other
instrument of indebtedness, contract, indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
it is a party in its individual capacity, or (c) violate any existing
term or provision of any order, writ, judgment, injunction, decree,
statute, law, rule or regulation applicable to it or its assets or
properties.

4.5 Assets It is the owner and holder of the Interests
as set forth on Schedule A-1 or Schedule A- 2, as appropriate, and
such Interests are held by it free and clear of any lien, pledge,
charge, security interest, encumbrance, title retention agreement,
adverse claim or restriction (except for possible security interests
which will be terminated prior to the Closing). Other than pursuant
to agreements of which Buyer, Interstate or any affiliates of Buyer or
Interstate (provided that the Sellers shall not be deemed to be
affiliates of Buyer or Interstate for this purpose) have received
notice as partners in certain of the Interstone Partnerships and
Property Partnerships and as manager of the assets of the Property
Partnerships, there are no options, instruments or agreements to which
any such Interest is bound or pursuant to which any such Interest
might be restricted or otherwise encumbered (collectively,
"Encumbrances"). Upon transfer of such Interests by it to Buyer and
upon payment by Buyer to the Sellers of the Purchase Price, Buyer will
receive such Interests free and clear of any Encumbrances (other than
those arising from acts of Buyer or its affiliates). It has not prior
to the date hereof sold (or entered into an agreement to sell) any of
its partnership interests in the
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Interstone Partnerships or any general partnership interest in the
Property Partnerships (except for the possible granting of security
interests, all of which will be terminated prior to the Closing). The
Interests constitute all of the partnership interests in the
Interstone Partnerships which were held by the Blackstone Partners (as
defined in the limited partnership agreements of the Interstone
Partnerships) upon the formation of the Interstone Partnerships, and
all of the partnership interests in the Property Partnerships which
were held by the Blackstone General Partner and the Schreiber General
Partner (as such terms are defined in the limited partnership
agreements of the Property Partnerships) upon the formation of the
Property Partnerships. Buyer hereby acknowledges that this
representation is not being made by BRE/Trumbull.

4.6 Action by Assignors. (a) It has not, without actual
oral or written notice to Buyer or its affiliates (provided that none
of the Sellers shall be deemed affiliates of Buyer for this purpose)
as partners in certain of the Interstone Partnerships and Property
Partnerships and as manager of the assets of the Property
Partnerships, or as otherwise set forth on Schedule D, (i) caused any
Property Partnership to sell or otherwise dispose (or enter into a
contract to sell or otherwise dispose, except for this Agreement) of
any of its material assets, (ii) caused any Property Partnership to
place a voluntary lien on any of its material assets, or (iii) caused
any Property Partnership to enter into, modify or terminate any
material contracts, material leases or other material commitments.

(b) From the date hereof through the Closing Date, it
shall not, without the prior approval of Buyer, (i) cause any Property
Partnership to sell or otherwise dispose (or enter into a contract to
sell or otherwise dispose, except for this Agreement) of any of its
material assets, (ii) cause any Property Partnership to place a
voluntary lien on any of its material assets, or (iii) cause any
Property Partnership to enter into, modify or terminate any material
contracts, material leases or other material commitments, except, in
the case of clause (iii), in the ordinary course of business. From
the date hereof through the Closing Date, it shall not, without the
prior approval of Buyer, cause any Property Partnership to refinance
any loan secured by any of its assets, unless such loan shall be due
and payable.

4.7 Limitation on Sections 4.5 and 4.6. Nothing in
Section 4.5 or 4.6 shall be deemed to be a representation that a
Seller has not heretofore solicited other buyers for the Assets or has
not heretofore negotiated for the sale of the Assets with any other
parties. Notwithstanding the foregoing, each Seller covenants that it
shall not solicit other buyers for the Assets nor negotiate for the
sale of
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the Assets to other buyers prior to June 1, 1996; provided, however,
that such date shall be extended to July 1, 1996 if on June 1, 1996,
Buyer delivers to the Sellers a certificate of the lead underwriter
for the IPO stating that such lead underwriter reasonably believes
that the IPO shall be completed on or prior to July 1, 1996. Each
Seller further covenants that it shall not enter into a contract to
sell the Assets to other buyers prior to July 1, 1996.

4.8 Good Faith Efforts. It shall use its good faith
efforts to consummate the Closing and fulfill each of its obligations
hereunder.

5. Representations, Warranties and Covenants of Buyer.
Buyer hereby represents, warrants and covenants to the Sellers as of the date
hereof and as of the Closing Date as follows:

5.1 Formation; Existence. Buyer is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware.

5.2 Power; Authority. Buyer has all requisite
power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement,
the purchase of the Assets and the consummation of the transactions
provided for herein have been duly authorized by all necessary action
on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with their
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights and by general principles of equity (whether applied
in a proceeding at law or in equity).

5.3 No Consents. No consent, license, approval, order,
permit or authorization of, or registration, filing or declaration
with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, is
required to be obtained or made in connection with the execution,
delivery and performance of this Agreement or any of the transactions
required or contemplated hereby, other than with respect to any liquor
licenses held by any of the Property Partnerships or their agents.

5.4 No Conflicts. The execution, delivery and compliance
with, and performance of the terms and provisions of, this Agreement,
and the sale of the Assets, will not (a) conflict with or result in
any violation of its organizational documents, (b) conflict with or
result in any
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violation of any provision of any bond, note or other instrument of
indebtedness, contract, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party in its individual capacity, or (c) violate any existing term or
provision of any order, writ, judgment, injunction, decree, statute,
law, rule or regulation applicable to it or its assets or properties.

5.5 Examination; No Contingencies. Before entering into
this Agreement, Buyer has made such examination of the Interests, the
Property Partnerships, the assets owned by the Property Partnerships
and all other matters affecting or relating to the transactions
contemplated hereunder as Buyer has deemed necessary. In entering
into this Agreement, Buyer has not been induced by and has not relied
upon any written or oral representations, warranties or statements,
whether express or implied, made by BREA, any Seller, any partner of
BREA or any Seller, or any agent, employee, or other representative of
any of the foregoing or by any broker or any other person representing
or purporting to represent BREA or any Seller, with respect to the
Interests, the Property Partnerships, the assets owned by the Property
Partnerships or any other matter affecting or relating to the
transactions contemplated hereby, other than those expressly set forth
in this Agreement. Buyer's obligations under this Agreement shall not
be subject to any contingencies, diligence or conditions except as
expressly set forth in this Agreement.

5.6 Good Faith Efforts. Buyer shall use its good faith
efforts to consummate the Closing and fulfill each of its obligations
hereunder.

5.7 Sellers. Although the Sellers have jointly executed
this Agreement for administrative efficiency, Buyer hereby
acknowledges and agrees that each Seller shall be liable hereunder
only for the representations, warranties and covenants made by such
Seller with respect to such Seller and the Assets owned by such
Seller, and no Seller shall be liable for any representations,
warranties or covenants made by any of the other Sellers hereunder.

5.8 Operation of the Property Partnerships. Buyer
covenants and agrees that, prior to the Closing, it shall cause
Interstate's affiliates, as partners in the Interstone Partnerships or
the Property Partnerships, and as manager of the assets owned by the
Property Partnerships, to continue to operate the assets of the
Property Partnerships in accordance (in all material respects) with
the standards and procedures in which they have been and continue to
be operated as of the date hereof. Without limiting the foregoing,
Buyer covenants and agrees that such affiliates will not permit the
prepayment of expenses, the deferral of
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receivables or the incurrence of capital expenditures except in
accordance with such historical standards and procedures. If Buyer
breaches this covenant, the calculation of the amount owed to the
Sellers pursuant to Section 2(f) above shall be calculated as if the
prepayments, deferrals, incurrence of capital expenditures or other
items which fail to comply with such historical standards and
procedures were not made.

6. Conditions Precedent to Closing.

6.1 Sellers' Obligation. The obligation of the
Sellers to consummate the transfer of the Assets to Buyer on the
Closing Date is subject to the satisfaction (or waiver by the Sellers)
as of the Closing of the following conditions:

(a) Each of the representations and warranties made by
Buyer in this Agreement shall be true and correct in all material
respects when made and on and as of the Closing Date as though such
representations and warranties were made on and as of the Closing
Date, and Buyer shall have performed or complied in all material
respects with each obligation and covenant required by this Agreement
to be performed or complied with by Buyer on or before the Closing;
and Buyer shall have delivered to the Sellers a certificate dated the
Closing Date and signed by an authorized officer of Buyer confirming
the foregoing.

(b) The Sellers shall have received duly executed
counterparts of each of the following documents, dated as of the
Closing Date:

(i) Assignment and Assumption of Interests for
each of the Interests;

(ii) amendments to the limited partnership
agreements and certificates of limited partnership for the
Interstone Partnerships and the Property Partnerships
reflecting the assignment of partnership interests;

(iii) all documents reasonably necessary to be
executed by Buyer (or its affiliates) with respect to the sale
of the Trumbull Hotel, the Trumbull Interests and/or the
Trumbull Notes and Trumbull Mortgage in accordance with
Section 1(b) above, unless the Trumbull Assets have been
removed from the Assets pursuant to Section 1(b) above;

(iv) written confirmation from each of Buyer's
affiliates who are partners in the Interstone Partnerships
that they are not entitled to any
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distributions under Section 5.5 of any of the limited
partnership agreements of the Interstone Partnerships with
respect to amounts received by the Sellers under this
Agreement;

(v) the Interstone Three Amendments (as defined
below) or such other documents as discussed in Section 14
below);

(vi) any forms or affidavits required to be filed
with respect to any applicable transfer, stamp, transfer gains
or other similar taxes applicable to the transfers;

(vii) such other documents reasonably required by
the Sellers to transfer the Assets hereunder.

(c) No order or injunction of any court or administrative
agency of competent jurisdiction nor any statute, rule, regulation or
executive order promulgated by any governmental authority of competent
jurisdiction shall be in effect as of the Closing which restrains or
prohibits the transfer of the applicable Assets or the consummation of
any other transaction contemplated hereby.

(d) No action, suit or other proceeding shall be pending
which shall have been brought by any person or entity (other than the
parties hereto and their affiliates) (i) to restrain, prohibit or
change in any material respect the purchase and sale of the Assets or
the consummation of any other transaction contemplated hereby or (ii)
seeking material damages with respect to such purchase and sale or any
other transaction contemplated hereby.

(e) The Sellers shall have received a duly executed and
sworn Secretary's Certificate of Buyer, certifying that Buyer has duly
adopted resolutions authorizing the transactions contemplated hereby
and that the resolutions have not been revoked, modified or amended.

(f) The Sellers shall have received an executed and
acknowledged Incumbency Certificate of Buyer, certifying the authority
of the officers of Buyer to execute this Agreement and the other
documents delivered by Buyer to the Sellers at the Closing.

(g) The Sellers shall have received (i) the Earnest Money
from Escrow Agent, (ii) payment of the remainder of the Purchase Price
in accordance with Section 2(d)(ii) above, and (iii) payment of all
other amounts due to the Sellers hereunder.

(h) Buyer shall have obtained all necessary consents to
the transfer of the Assets from any ground lessors, lenders,
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franchisors, partners in the Property Partnerships and all other third
parties with approval rights. The Sellers shall cooperate with Buyer
in obtaining any necessary consents (including reasonably timely
execution of any applications or similar documents), but Buyer
acknowledges and agrees that the obtaining of all necessary consents
shall be Buyer's obligation hereunder. Notwithstanding the foregoing,
if, at the Closing, Buyer has not obtained all of the necessary
consents discussed in this subsection (i) but (1) Buyer agrees to
indemnify the Sellers and the affiliates of the Sellers against any
losses, liabilities, claims, damages and reasonable expenses the
Sellers or the affiliates of the Sellers may incur as a result of the
failure to obtain such consents, (2) the liability to the Sellers or
their affiliates from Buyer's failure to obtain all necessary consents
may not exceed $50,000,000 (except that with respect to the failure to
obtain a consent regarding a liquor license held by or on behalf of
any Property Partnership, such $50,000,000 limitation shall not apply
as long as Buyer, on the Closing Date, has named such parties as the
Sellers shall direct as additional insureds on all liability and dram
shop insurance policies and Buyer shall maintain such parties as
additional insureds on such policies until such consent is obtained)
and (3) the failure to obtain such consent will not subject the
Sellers' to the risk of criminal liability, then the Sellers shall not
be entitled to fail to close hereunder if the sole reason for such
failure to close is the fact that Buyer has not met the requirements
of this subsection (i).

(i) Buyer shall have paid (or reimbursed the Sellers, as
the case may be) all of the reasonable costs and expenses incurred by
the Sellers and Buyer in connection with the negotiation and execution
of this Agreement and the consummation of the transactions
contemplated hereby, including without limitation the reasonable legal
fees and disbursements of the Sellers' counsel, and any sales, real
estate transfer, stamp, recordation, or other similar taxes applicable
to or arising out of the sale of the Assets, but not including any tax
pursuant to the New York Gains Tax Law (as defined below).

(j) Buyer shall have paid or caused its affiliates to
have paid to BREA in satisfaction of amounts due to certain of the
Sellers a disposition fee of $987,000 in the aggregate payable under
the partnership agreements of the Interstone Partnerships. These
amounts shall be in addition to any other amounts payable by the
Buyers hereunder.

(k) If the IPO has been completed by the Closing Date,
BREA and its affiliates shall have received shares of common stock of
Interstate in accordance with the terms of the Option Agreement,
unless the failure to receive such shares is due to a default by BREA
thereunder.
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(l) The closing of the transactions contemplated by the
Fort Magruder Agreement shall have occurred in accordance with the
terms of the Fort Magruder Agreement unless the failure to close is
due to a default by the sellers thereunder (other than
IHC/Williamsburg, Inc.).

(m) Buyer shall have replaced the $5,000,000 letter of
credit provided to Wells Fargo by affiliates of the Sellers as
security.

(n) Buyer shall be a wholly owned subsidiary of
Interstate.

6.2 Buyer's Obligation. The obligation of Buyer to
purchase and pay for the Assets is subject to the satisfaction (or
waiver by Buyer) as of the Closing of the following conditions:

(a) Each of the representations and warranties made by
the Sellers in this Agreement shall be true and correct in all
material respects when made and on and as of the Closing Date as
though such representations and warranties were made on and as of
Closing Date, and the Sellers shall have performed or complied in all
material respects with each obligation and covenant required by this
Agreement to be performed or complied with by the Sellers on or before
the Closing; and the Sellers shall have delivered to Buyer
certificates dated the Closing Date and signed by authorized officers
of the Sellers confirming the foregoing.

(b) Buyer shall have received duly executed counterparts
of each of the following documents, dated the Closing Date:

(i) Assignment and Assumption of Interests for
each of the Interests;

(iv) the Interstone Three Amendments (as defined
below) or such other documents as discussed in Section 14
below);

(v) any forms or affidavits required to be filed
with respect to any applicable transfer, stamp, transfer gains
or other similar taxes applicable to the transfers;

(vi) such other documents reasonably required by
Buyer to transfer the Assets hereunder.

(d) No action, suit or other proceeding shall be pending
which shall have been brought by any person or entity (other than the
parties hereto and their affiliates) (i) to restrain, prohibit or
change in any material respect the purchase and sale of the applicable
Assets or the consummation of any other transaction contemplated
hereby or (ii) seeking material damages with respect to such purchase
and sale or any other transaction contemplated hereby.

(e) Buyer shall have received a duly executed and sworn
Secretary's Certificate from the Sellers (or the general partners of
the Sellers, where appropriate) certifying that the Sellers have taken
all necessary action to authorize the execution of all documents being
delivered hereunder and the consummation of all of the transactions
contemplated hereby and that such authorization has not been revoked,
modified or amended.

(f) Buyer shall have received an executed and
acknowledged Incumbency Certificate from the Sellers (or the general
partners of the Sellers, where appropriate) certifying the authority
of the officers of the Sellers (or the general partner of the Sellers,
where appropriate) to execute this Agreement and the other documents
delivered by the Sellers to Buyer at the Closing.

(f) If the IPO has been completed by the Closing Date,
Interstate shall have received all payments required to be made by
BREA and its affiliates in accordance with the terms of the Option
Agreement, unless the failure to receive such payments is due to a
default by Interstate.

(g) The closing of the transactions contemplated by the
Fort Magruder Agreement shall have occurred in
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accordance with the terms of the Fort Magruder Agreement unless the
failure to close is due to a default by Interstate or IHC/Williamsburg
Inc.

7. New York State Real Estate Transfer Gains Tax; Other
Real Estate Transfer Taxes. (a) In the case of any Interest in an Interstone
Partnership or Property Partnership which directly or indirectly owns real
property located in the State of New York, Buyer and the Sellers agree to
comply in a timely manner with the requirements of Article 31-B of the Tax Law
of the State of New York and the regulations applicable thereto, as the same
from time to time may be amended (the "NY Gains Tax Law"). Buyer agrees to
execute and acknowledge a Transferee Questionnaire (Form TP-581), prepared by
the Sellers, with respect to each such Interest within five business days after
the date of this Agreement. Each Seller of each such Interest agrees to
execute and acknowledge a Transferor Questionnaire (Form TP-580), prepared by
such Seller, with respect to each such Interest within five business days after
the date of this Agreement. The Sellers shall pay any amounts due under the NY
Gains Tax Law.

(b) Buyer and the Sellers agree to comply with all other
real estate transfer tax laws applicable to the sale of the Assets.

8. Further Assurances. From time to time, as and when
requested by any party hereto, the other party shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments and
shall take, or cause to be taken, all such further or other actions as such
other party may reasonably deem necessary or desirable to consummate the
transactions contemplated by this Agreement.

9. Survival of Representations. The representations and
warranties contained in Section 4.6 of this Agreement shall survive the Closing
and shall terminate on the first anniversary of the Closing Date. The
remainder of the representations and warranties contained in this Agreement
shall survive the Closing and shall terminate on the third anniversary of the
Closing Date.

10. Indemnification.

10.1 Indemnification by the Sellers. Each Seller shall
indemnify and hold Buyer, its affiliates, members and partners, and
the partners, shareholders, officers, directors, employees,
representatives and agents of each of the foregoing harmless from and
against any and all costs, fees, expenses, damages, deficiencies,
interest and penalties (including, without limitation, reasonable
attorneys' fees and disbursements) suffered or incurred by any such
indemnified party in connection with any and all
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losses, liabilities, claims, damages and expenses ("Losses"), arising
out of, or in any way relating to, (i) any breach of any
representation or warranty of such Seller contained in this Agreement
or in any Schedule, certificate, instrument or other document
delivered pursuant hereto and (ii) any breach of any covenant of such
Seller contained in this Agreement, such obligation to survive the
Closing subject to Section 10.3.

10.2 Indemnification by Buyer. Buyer shall indemnify and
hold the Sellers, their affiliates, members and partners, and the
partners, shareholders, officers, directors, employees,
representatives and agents of each of the foregoing harmless from any
and all Losses arising out of, or in any way relating to, (i) any
breach of any representation or warranty by Buyer contained in this
Agreement or in any Schedule, certificate, instrument or other
document delivered pursuant hereto or in connection herewith, (ii) any
breach of any covenant of Buyer contained in this Agreement, and (iii)
whether or not the Closing occurs, any breach of any provision of any
partnership agreement of the Property Partnerships or of any agreement
to which any Property Partnership is a party, such obligation to
survive the Closing or termination of this Agreement subject to
Section 10.3.

10.3 Termination of Indemnification. (a) The obligations
of the Sellers under Section 10.1 shall terminate on the first
anniversary of the Closing Date (or the first anniversary of the
termination of this Agreement) except with respect to any claims
expressly asserted prior to such termination; provided however that
with respect to any representations of the Sellers herein which
survive for a period of 3 years after the Closing Date pursuant to
Section 9 above, the obligations of the Sellers with respect to such
representations shall survive until the termination of the survival of
such representations.

(b) The obligations of Buyer under Section 10.2 shall
terminate on the first anniversary of the Closing Date (or the first
anniversary of the termination of this Agreement) except with respect
to any claims expressly asserted prior to such termination; provided
however that with respect to any representations of Buyer herein which
survive for a period of 3 years after the Closing Date pursuant to
Section 9 above, the obligations of Buyer with respect to such
representations shall survive until the termination of the survival of
such representations.

11. Allocation of Purchase Price. The parties hereto
shall use good faith efforts to agree, prior to Closing, upon an allocation of
the Purchase Price among the Assets and among certain classes of assets owned
by the Property Partnerships;
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provided, however that a failure of the parties to reach agreement on such
allocation shall not permit any party to fail to close hereunder, and the
agreement contained in this Section shall survive the Closing.

12. Default. (a) If Buyer shall default in the
performance of its obligations under this Agreement to purchase the Assets by
the Outside Closing Date, or Interstate shall default in the performance of its
obligations under the Fort Magruder Agreement to purchase the assets thereunder
by the Outside Closing Date, or, if the IPO has occurred, Interstate shall
default in its obligations under the Option Agreement to deliver shares of
common stock of Interstate to BREA and its affiliates, the Sellers, as their
sole and exclusive remedy hereunder (except as set forth in the last sentence
of this subsection (a)), shall be entitled to terminate this Agreement, to
direct Escrow Agent to deliver the Earnest Money to the Sellers, and to retain
the Earnest Money as liquidated damages, at which time this Agreement shall be
terminated and of no further force and effect except for the provisions which
explicitly survive such termination. Buyer agrees that the Sellers shall have
the right to retain the Earnest Money as liquidated damages without the
necessity of proving actual damages due to the difficulty of proving actual
damages resulting from Buyer's default hereunder. In addition to the above
remedies, if Buyer shall default in its performance of its obligations under
this Agreement to purchase the Assets by the Outside Closing Date, the
provisions of the Interstone Amendments shall apply. Nothing in this Section
shall be deemed to waive any of BREA's rights under the Option Agreement, all
of which shall remain in full force and effect. Nothing in this Section shall
be deemed to limit the Sellers' remedies with respect to a breach by Buyer of
any of its obligations which survive the Closing.

(b) If any Seller shall default in the performance of its
obligations under this Agreement to cause the sale of the Assets by the Outside
Closing Date, Buyer, as its sole and exclusive remedy, shall be entitled to (i)
terminate this Agreement, direct Escrow Agent to deliver the Earnest Money to
Buyer and retain the Earnest Money, at which time this Agreement shall be
terminated and of no further force and effect except for the provisions which
explicitly survive such termination, or (ii) in the alternative, bring an
action for specific performance of the Sellers' obligations under this
Agreement. Nothing in this Section shall be deemed to limit the Buyer's
remedies with respect to a breach by any Seller of any of such Seller's
obligations which survive the Closing.

13. Rights of the Sellers. (a) If, at any time after the
date hereof through a date which is nine months after the Closing Date, an
Interstate Disposition (as defined below) occurs
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and the net proceeds (whether in cash or property) of such Interstate
Disposition reflect a total enterprise value (including debt) of Interstate (or
Qualifying Entity (as defined below)) in excess of (i) $650,000,000 if the
Trumbull Assets were sold to Buyer pursuant to this Agreement or (ii)
$621,000,000 if the Trumbull Assets were not sold to Buyer pursuant to the
terms of this Agreement, Buyer shall (contemporaneous with the closing of such
Interstate Disposition and as a condition thereto) pay to BREA, in cash
(without duplication of any additional net proceeds received by BREA and its
affiliates pursuant to the Option Agreement with respect to such Interstate
Disposition), 50% of the amount of such excess. As used in this Section, an
"Interstate Disposition" shall mean any of the following transactions, whether
in one transaction or through a series of transactions: (A) a merger,
consolidation, recapitalization, reorganization, reclassification or other
similar transaction involving Interstate or any other entity ("Qualifying
Entity") which, directly or indirectly, owns all or substantially all of the
assets of Interstate and its affiliates as of the date of this Agreement and
all or substantially all of the Assets being transferred hereunder and the
assets being transferred under the Fort Magruder Agreement; (B) a direct or
indirect sale, transfer, contribution or other disposition of all or
substantially all of the assets of Interstate or Qualifying Entity; and (C) a
direct or indirect sale, transfer, contribution or other distribution of the
capital stock or other equity interests of Interstate or Qualifying Entity (on
a primary or secondary basis), including without limitation an initial public
offering of shares of common stock of Interstate or Qualifying Entity.

(b) If, at any time after the date hereof through a date
which is nine months after the Closing Date, a Hotel Disposition (as defined
below) shall occur, and the net proceeds (whether in cash or property) of such
Hotel Disposition reflect a total enterprise value (including debt) for the
Hotel Assets (as defined below) in excess of (i) $480,000,000 if the Trumbull
Assets were sold to Buyer pursuant to this Agreement or (ii) $451,000,000, if
the Trumbull Assets were not sold to Buyer pursuant to the terms of this
Agreement, Buyer shall (contemporaneous with the closing of such Interstate
Disposition and as a condition thereto) pay to BREA, in cash, 50% of the amount
of such excess. As used in this Section, a "Hotel Disposition" shall mean any
of the following transactions, whether in one transaction or through a series
of transactions: (A) a direct or indirect sale, transfer, contribution or other
disposition of all or substantially all of the Hotel Assets; (B) a direct or
indirect sale, transfer, contribution or other disposition of all or
substantially all of the direct or indirect partnership interests in the
Property Partnerships by Buyer, Interstate, Qualifying Entity or any affiliate
of the foregoing and the Fort Magruder Partnership; with respect to clauses (A)
and (B), where the transferring party or parties are Interstate, Qualifying
Entity, Buyer, the Property Partnerships and/or any affiliates of Interstate;
(C) a merger, consolidation,
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recapitalization, reorganization, reclassification or other similar transaction
involving Interstate, Qualifying Entity or an affiliate or affiliates of
Interstate or Qualifying Entity which own, directly or indirectly, the Hotel
Assets; and (D) a direct or indirect sale, transfer, contribution or other
distribution of the capital stock or other equity interests, including without
limitation an initial public offering, of Interstate, Qualifying Entity or an
affiliate or affiliates of Interstate or Qualifying Entity which own, directly
or indirectly, the Hotel Assets. Net proceeds from a Hotel Disposition
described in clauses (C) and (D) above shall equal the net proceeds allocable
to the Hotel Assets only. As used in this Section, "Hotel Assets" means all of
the assets owned by the Property Partnerships and the Fort Magruder Partnership
as of the date hereof.

(c) If, at any time after the date hereof through a date
which is nine months after the Closing Date, an Interest Disposition (as
defined below) shall occur and the net proceeds (whether in cash or property)
of such Interest Disposition exceeds (i) the sum of (A) $141,700,000 plus (B)
any amount the Sellers require Buyer to pay to the owner of the Trumbull Hotel
pursuant to Section 2(b) above if the Trumbull Assets were sold to Buyer
pursuant to this Agreement or (ii) $129,700,000 if the Trumbull Assets were not
sold to Buyer pursuant to the terms of this Agreement, Buyer shall
(contemporaneous with the closing of such Interstate Disposition and as a
condition thereto) pay to BREA, in cash, 100% of the amount of such excess. As
used in this Section, an "Interest Disposition" shall mean the direct or
indirect sale, transfer, contribution or other disposition of all or
substantially all of the Interests and the Fort Magruder Interests, where the
transferring party or parties are Interstate, Qualifying Entity, Buyer, the
Property Partnerships and/or any affiliates of Interstate or Qualifying Entity,
whether in one transaction or through a series of transactions. Interstate
Dispositions, Hotel Dispositions and Interest Dispositions shall be
collectively referred to herein as the "Dispositions".

(d) Notwithstanding the foregoing, the provisions of this
Section 13 shall not be applicable with respect to a Disposition which occurs
after the completion of the IPO unless the Disposition was disclosed in the
registration statement, prospectus or any other public document in connection
with the IPO.

(e) Buyer hereby covenants and agrees that neither it nor
its affiliates shall structure any disposition transaction or transactions in a
manner designed principally to avoid the payment of any amounts that would
otherwise be payable to BREA under this Section 13, and upon a breach of the
covenant contained in this subsection (e), such amounts that would otherwise be
payable to the Sellers under this Section 13 if no breach had occurred shall
become due and payable by Buyer to the Sellers.
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(f) If any single transaction results in a payment
obligation to the Sellers pursuant to more than one of subsections (a), (b) or
(c) of this Section 13, the Sellers shall receive the highest amount payable
pursuant to this Section 13 in connection therewith.

(g) The provisions of this Section 13 shall survive the
Closing.

14. Interstone Three. (a) Simultaneously with the
Closing hereunder, Buyer and the Sellers shall cause their respective
affiliates which constitute all the partners in Interstone Three Partners I
L.P., Interstone Three Partners II L.P., Interstone Three Partners III L.P. and
Interstone Three Partners IV L.P. (collectively, the "Interstone Three
Partnerships") to execute and deliver amendments to the limited partnership
agreements of the Interstone Three Partnerships, reflecting the terms set forth
in Exhibit B attached hereto and made a part hereof (the "Interstone Three
Amendments").

(b) Notwithstanding the foregoing, if the Interstone
Three Partnerships purchase any assets prior to the Closing, prior to the
termination of this Agreement, the affiliates of the Sellers which are partners
in the Interstone Three Partnerships shall not sell any such assets without the
consent of the affiliates of Buyer which are partners in the Interstone Three
Partnerships. In addition, upon the Closing Buyer and the Sellers shall cause
their respective affiliates which constitute all the partners in Interstone
Three Partnerships to terminate the right of first opportunity under the
Interstone Three Partnerships and to form Interstone Four Partners I L.P.,
Interstone Four Partners II L.P., Interstone Four Partners III L.P. and
Interstone Four Partners IV L.P. (collectively, the "Interstone Four
Partnerships"), upon the same terms as the Interstone Three Partnerships as
they would have been amended by the Interstone Three Amendments (except that
the aggregate committed capital of the Interstone Four Partnerships shall equal
$60,000,000 less the aggregate capital contributions made under the Interstone
Three Partnerships, and such aggregate remaining committed capital for the
Interstone Four Partnerships shall be apportioned among the partners in
accordance with the partnership percentages in the Interstone Four
Partnerships). In addition, Buyer and the Sellers shall cause their respective
affiliates which constitute all the partners in Interstone Three Partnerships
to execute and deliver the Interstone Three Amendments at the Closing. In such
case, the Interstone Three Amendments will contain a provision that the
Interstone Three Amendments will not be effective until such time as the
partners of the Interstone Three Partnerships affiliated with Buyer shall have
distributed to the partners of the Interstone Three Partnerships affiliated
with the Sellers (in proportion to their sharing percentages in the Interstone
Three Partnerships) in the aggregate, 26% of the total capital contributions
made to the
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Interstone Three Partnerships through the Closing Date, with the effect that
after such distribution, the partners affiliated with the Sellers shall have
contributed 49% of the total contributions of the Interstone Three Partnerships
and the partners affiliated with Buyer shall have contributed 51% of the total
contributions of the Interstone Three Partnerships.

15. Lisle Management Agreement. The Sellers hereby agree
that at the Closing, they shall cause the delivery to Buyer of an amendment to
the Management and Leasing Agreement dated as of July 9, 1994 between BRPM
Associates L.P. and Interstone/Lisle Partnership L.P. (the "Lisle Management
Agreement") which shall grant Interstone/Lisle Partnership L.P. the option to
terminate the Lisle Management Agreement upon 15 days written notice at any
time after the Closing without the payment of any termination fee.

16. Use of Blackstone Name and Address. Buyer hereby
acknowledges and agrees that, notwithstanding any provision of the limited
partnership agreements of the Interstone Partnerships or the Property
Partnerships, neither Buyer nor any affiliate, successor, assignee or designee
of Buyer shall be entitled to use the name "Blackstone" in any way whatsoever.
Buyer further acknowledges and agrees that, upon the Closing, the principal
place of business of the Interstone Partnerships and the Property Partnerships
shall cease to be 118 North Bedford Road, Suite 300, Mount Kisco, New York
10549 or 345 Park Avenue, New York, New York 10154. The provisions of this
Section shall survive the Closing.

17. Agreement of Interstate. By its execution below,
Interstate hereby covenants and agrees that it shall provide funds to Buyer
from time to time to the extent necessary for Buyer to satisfy any claims any
of the Sellers may have against Buyer pursuant to this Agreement, taking into
account other liabilities that Buyer may have. Interstate acknowledges that
the covenants provided in this Section are material inducements to the Sellers'
execution of this Agreement, and that the Sellers are relying on the covenants
provided in this Section in executing and delivering this Agreement. The
provisions of this Section shall survive the Closing. Nothing contained in
this Agreement, in Section 12 or elsewhere, shall be deemed to limit the
Sellers' remedies against Interstate in the event Interstate breaches the
covenants provided in this Section.

18. Brokers. (a) Each Seller represents and warrants to
Buyer that it has dealt with no broker, salesman, finder or consultant with
respect to this Agreement or the transactions contemplated hereby. Each Seller
agrees to indemnify, protect, defend and hold Buyer harmless from and against
all claims,
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losses, damages, liabilities, costs, expenses (including reasonable attorneys'
fees and disbursements) and charges resulting from such Seller's breach of the
foregoing representation in this subsection (a). The provisions of this
subsection (a) shall survive the Closing and any termination of this Agreement.

(b) Buyer represents and warrants to the Sellers that it
has dealt with no broker, salesman, finder or consultant with respect to this
Agreement or the transactions contemplated hereby. Buyer agrees to indemnify,
protect, defend and hold the Sellers harmless from and against all claims,
losses, damages, liabilities, costs, expenses (including reasonable attorneys'
fees and disbursements) and charges resulting from Buyer's breach of the
foregoing representations in this subsection (b). The provisions of this
subsection (b) shall survive the Closing and any termination of this Agreement.

19. Confidentiality; Registration Statement. (a) Buyer
and the Sellers shall hold as confidential all information concerning each
other, the Partnerships, this Agreement and the transaction contemplated hereby
disclosed in connection with the transaction contemplated hereby, and shall not
release any such information to third parties without the prior written consent
of the other parties hereto, except (i) any information which was previously or
is hereafter publicly disclosed (other than in violation of this Agreement or
other confidentiality agreements to which affiliates of Buyer are parties),
(ii) to their counsel, accountants and other advisors who need to know such
information in connection with the transactions contemplated herein, (iii) to
prospective underwriters and their counsel, (iv) as required to obtain any
consent in connection with consummation of the transactions contemplated
herein, (v) to their lenders, (vi) to comply with any law, rule or regulation,
and (vii) any other disclosures which a party reasonably believes is necessary
in order to consummate the transactions contemplated herein and which do not
materially adversely affect the other parties hereto, the Interstone
Partnerships or the Property Partnerships. The provisions of this Section
shall survive the Closing or the termination of this Agreement for a period of
4 years.

(b) Buyer agrees that Interstate (or a successor) shall,
except as prohibited by law, consult with the Sellers concerning the drafting
and filing of the registration statement, prospectus and all other documents in
connection with the initial public offering of Interstate (or a successor) and
will reasonably consider any comments and objections the Sellers may have.
Notwithstanding the foregoing, no such registration statement, prospectus or
other document may refer to the Sellers or any affiliate of the Sellers without
the prior written consent of the Sellers, not to be unreasonably withheld or
delayed. Buyer agrees that the failure of Interstate to comply with this
provision shall constitute a default of Buyer hereunder.
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20. Successors and Assigns; No Third-Party Beneficiaries.
The stipulations, terms, covenants and agreements contained in this Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto
and their respective permitted successors and assigns (including any successor
entity after a public offering of stock, merger, consolidation, purchase or
other similar transaction involving a party hereto) and nothing herein
expressed or implied shall give or be construed to give to any person or
entity, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.

21. Assignment. This Agreement may not be assigned by
either party hereto without the consent of the other party hereto, except to an
entity under the control of, controlling or under common control with the
assigning party, provided that in each case, the assigning party will continue
to remain primarily liable under this Agreement notwithstanding any such
assignment. Buyer may designate parties to which the Assets will be assigned
at the Closing, provided that Buyer will continue to remain primarily liable
under this Agreement notwithstanding any such designation.

22. Notices. All notices, demands or requests made
pursuant to, under or by virtue of this Agreement must be in writing and shall
be (i) personally delivered, (ii) delivered by express mail, Federal Express or
other comparable overnight courier service, (iii) telecopied or (iv) mailed to
the party to which the notice, demand or request is being made by certified or
registered mail, postage prepaid, return receipt requested, as follows:

(a) To any Seller:

c/o Blackstone Real Estate Advisors L.P.
345 Park Avenue
New York, New York 10154
Attention: Mr. Thomas J. Saylak
Facsimile: 212-754-8726

with copies thereof to:

Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Glenn D. Kesselhaut, Esq.
Facsimile: 212-455-2502
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(b) To Buyer:

c/o Interstate Hotels Corporation
Foster Plaza X
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
Attention: Mr. Milton Fine
Facsimile: 412-937-8053

with copies thereof to:

Interstate Hotels Corporation
Foster Plaza X
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
Attention: Marvin I. Droz, Esq.
Facsimile: 412-937-3265

and

Jones, Day, Reavis & Pogue
2300 Trammel Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: David Lowery, Esq.
Facsimile: 214-969-5100

All notices (i) shall be deemed to have been given on the date that the same
shall have been delivered in accordance with the provisions of this Section and
(ii) may be given either by a party or by such party's attorneys. Any party
may, from time to time, specify as its address for purposes of this Agreement
any other address upon the giving of 10 days' notice thereof to the other
parties.

23. Entire Agreement. This Agreement, along with the
Exhibits hereto, and the "Ground Rules" letter agreement dated March 18, 1996
between BREA (by Thomas J. Saylak) and Interstate (by Marvin I. Droz), which
letter, as amended, shall survive the execution of this Agreement, (but
specifically excluding any other correspondence between any of the parties
hereto or any of their affiliates), contains all of the terms agreed upon
between the parties hereto with respect to the subject matter hereof, and all
understandings and agreements heretofore had or made among the parties hereto
are merged in this Agreement which alone fully and completely expresses the
agreement of the parties hereto.

24. Amendments. This Agreement may not be amended,
modified, supplemented or terminated, nor may any of the obligations of the
Sellers or Buyer hereunder be waived, except
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by written agreement executed by the party or parties to be charged.

25. No Waiver. No waiver by either party of any failure
or refusal by the other party to comply with its obligations hereunder shall be
deemed a waiver of any other or subsequent failure or refusal to so comply.

26. Governing Law. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with, the laws of
the State of New York.

27. Submission to Jurisdiction. Each of Buyer and each
Seller irrevocably submits to the jurisdiction of (a) the Supreme Court of the
State of New York, New York County, (b) the United States District Court for
the Southern District of New York, and (c) the United States District Court for
the Western District of Pennsylvania for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of Buyer and each Seller further agrees that service of any
process, summons, notice or document by U.S. registered mail to such party's
respective address set forth above shall be effective service of process for
any action, suit or proceeding in New York or Pennsylvania with respect to any
matters to which it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. Each of Buyer and each Seller irrevocably and
unconditionally waives trial by jury and irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby in (a) the
Supreme Court of the State of New York, New York County, (b) the United States
District Court for the Southern District of New York, and (c) the United States
District Court for the Western District of Pennsylvania, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.

28. Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstances shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.

29. Section Headings. The headings of the various
Sections of this Agreement have been inserted only for purposes of convenience,
are not part of this Agreement and shall not be
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deemed in any manner to modify, explain, expand or restrict any of the
provisions of this Agreement.

30. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
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IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above written.

BJS INTERSTONE MANAGEMENT ASSOCIATES

By: Blackstone Real Estate Inc.,
general partner

By: /s/ Thomas J. Saylak
--------------------------------------
Name:
Title:

BLACKSTONE REAL ESTATE PARTNERS I L.P.

By: Blackstone Real Estate
Associates L.P., general partner