EXHIBIT 10.1

 

AMENDED AND RESTATED MANAGEMENT AGREEMENT

 

BY AND BETWEEN

 

HPT TRS IHG-2, INC.

 

AND

 

IHG MANAGEMENT (MARYLAND) LLC

 

AND

 

INTERCONTINENTAL HOTELS GROUP (CANADA), INC.

 

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AMENDED AND RESTATED MANAGEMENT AGREEMENT

 

THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT is made and entered into as of
January 6, 2006 by and between HPT TRS IHG-2, INC., a Maryland corporation
(“Owner”), and IHG MANAGEMENT (MARYLAND) LLC, a Maryland limited liability
company (“IHG Maryland”), and INTERCONTINENTAL HOTELS GROUP (CANADA), INC., a
corporation under the laws of Ontario, Canada (“IHG Canada” and, together with
IHG Maryland, collectively, “Manager”).

 

W I T N E S S E T H

 

WHEREAS, Owner and Manager are parties to that certain Management Agreement,
dated as of February 16, 2005, as amended by that certain First Amendment to
Management Agreement, dated as of May 31, 2005 (as so amended, the “Original
Management Agreement”); and

 

WHEREAS, Owner and Manager wish to amend and restate the Original Management
Agreement to include, among other things, the Baltimore Hotel (this and other
capitalized terms used and not otherwise defined herein having the meanings
ascribed to such terms in Article 1);

 

NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are herein acknowledged, Owner and Manager, intending to be legally
bound, hereby agree that the Original Management Agreement is amended and
restated in its entirety as follows:

 

ARTICLE 1

 

DEFINITIONS

 

Capitalized terms used in this Agreement and not otherwise defined herein shall
have the meanings set forth below, in the Section of this Agreement referred to
below, or in such other document or agreement referred to below:

 

1.1           “8.1(C) STATEMENT”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN
SECTION 8.1(C).

 

1.2           “ACCOUNTING PRINCIPLES”  SHALL MEAN GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, AS ADOPTED IN THE UNITED STATES OF AMERICA, CONSISTENTLY APPLIED.

 

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1.3           “AFFILIATE”  SHALL MEAN, WITH RESPECT TO ANY PERSON, (A) IN THE
CASE OF ANY SUCH PERSON WHICH IS A PARTNERSHIP, ANY PARTNER IN SUCH PARTNERSHIP;
(B) IN THE CASE OF ANY SUCH PERSON WHICH IS A LIMITED LIABILITY COMPANY, ANY
MEMBER OF SUCH COMPANY; (C) ANY OTHER PERSON WHICH IS A PARENT, OR SUBSIDIARY OR
A SUBSIDIARY OF A PARENT WITH RESPECT TO SUCH PERSON OR TO ONE OR MORE OF THE
PERSONS REFERRED TO IN THE PRECEDING CLAUSES (A) AND (B); AND (D) ANY OTHER
PERSON WHO IS AN OFFICER, DIRECTOR, TRUSTEE OR EMPLOYEE OF, OR PARTNER IN, SUCH
PERSON OR ANY PERSON REFERRED TO IN THE PRECEDING CLAUSES (A), (B) AND (C).

 

1.4           “AGREED UPON PROCEDURE LETTER”  SHALL MEAN A LETTER FROM ERNST &
YOUNG OR ANOTHER FIRM OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS (THE
“AUDITOR”) SELECTED BY MANAGER AND APPROVED BY OWNER (WHICH APPROVAL SHALL NOT
BE UNREASONABLY WITHHELD OR DELAYED) WHICH LETTER SHALL, SUBJECT TO THE
LIMITATIONS AND CONDITIONS IMPOSED BY THE AUDITOR, ADDRESS THE FOLLOWING
COMPONENTS AND SUCH OTHER REASONABLE MATTERS AS OWNER AND THE AUDITOR SHALL
REASONABLY AGREE:

 

(A)           THAT AUDITOR HAS TESTED MANAGER’S SYSTEMS OF INTERNAL CONTROLS.

 

(B)           THAT AUDITOR HAS VERIFIED THAT THE INFORMATION PROVIDED WAS
GENERATED FROM THE SAME REPORTING SYSTEMS AS MANAGER USES FOR ITS REGULAR
PERIODIC ACCOUNTING AND REPORTING.

 

(C)           THAT AUDITOR HAS VERIFIED THE MATHEMATICAL ACCURACY OF THE
8.1(C) STATEMENT.

 

(D)           THAT AUDITOR HAS RECOMPUTED THE ANNUAL CALCULATION OF MANAGEMENT
FEES, SYSTEM FEES, CONTRIBUTIONS TO THE RESERVE ACCOUNT, EXPENDITURES FROM THE
RESERVE ACCOUNT, OWNER’S PERCENTAGE PRIORITY AND THE RESIDUAL DISTRIBUTION.

 

(E)           THAT AUDITOR HAS CONFIRMED THAT THE HOTELS ARE SUBJECTED TO AUDIT
PROCEDURES BY MANAGER’S INTERNAL AUDIT DEPARTMENT, IF ANY, AND REVIEWED WORK
PAPERS PROVIDED IN CONNECTION THEREWITH.  IF AUDITOR HAS PERFORMED HOTEL LEVEL
AUDIT PROCEDURES AT ANY HOTEL, AUDITOR SHALL IDENTIFY THOSE HOTELS AND LIST THE
PROCEDURES PERFORMED AND RESULTS OBTAINED.  IN ANY EVENT AT LEAST THREE (3) OF
THE POOLED FF&E HOTELS SHALL BE SUBJECTED TO AUDIT PROCEDURES EACH FISCAL YEAR
BY EITHER INTERNAL AUDIT OR THE AUDITOR.

 

1.5           “AGREEMENT”  SHALL MEAN THIS AMENDED AND RESTATED MANAGEMENT
AGREEMENT, TOGETHER WITH ALL OF THE EXHIBITS ATTACHED

 

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HERETO, AS IT AND THEY MAY BE AMENDED FROM TIME TO TIME IN ACCORDANCE WITH THE
TERMS HEREOF.

 

1.6           “ANAHEIM CONDEMNATION”  SHALL MEAN ANY CONDEMNATION PURSUANT TO,
OR IN CONNECTION WITH, THE FUTURE STREET DEDICATION IN ACCORDANCE WITH THE CITY
OF ANAHEIM MASTER PLAN OF STREETS (AS THE SAME MAY BE AMENDED, ALTERED OR
REPLACED FROM TIME TO TIME) REFERRED TO ON THE SURVEY ENTITLED “ALTA/ACSM LAND
TITLE SURVEY PREPARED FOR INTERCONTINENTAL HOTELS GROUP,” PREPARED BY MILLMAN
SURVEYING, INC., DATED AUGUST 16, 2004, LAST REVISED JANUARY 27, 2005.

 

1.7           “ARBITRATION”  SHALL MEAN AN ARBITRATION CONDUCTED IN ACCORDANCE
WITH THE TERMS OF SECTION 24.20.

 

1.8           “AUSTIN HOTEL”  SHALL MEAN THE HOTEL HAVING A STREET ADDRESS AT
701 CONGRESS AVENUE, AUSTIN, TEXAS AND LOCATED ON THE SITE DESCRIBED ON
EXHIBIT A-12 ATTACHED HERETO.

 

1.9           “AUTHORIZED MORTGAGE”  SHALL MEAN (A) ANY FIRST MORTGAGE, CHARGE,
DEBENTURE, FIRST DEED-OF-TRUST OR FIRST DEED TO SECURE DEBT, AND OTHER RELATED
SECURITY DOCUMENTS GRANTED IN CONNECTION THEREWITH, NOW OR HEREAFTER GRANTED BY
PURCHASER TO SECURE A LOAN TO, OR OTHER DEBT OF, PURCHASER OR ITS AFFILIATES
WHICH IS MADE BY AN INSTITUTIONAL LENDER, INVESTMENT BANK, PUBLICLY TRADED
INVESTMENT FUND OR OTHER SIMILAR PERSON REGULARLY MAKING LOANS SECURED BY
HOTELS, OR INCURRED IN CONNECTION WITH THE ISSUANCE OF A MORTGAGE BACKED
SECURITY, WHICH LOAN OR DEBT PROVIDES FOR (I) LEVEL PAYMENTS OF INTEREST AND
PRINCIPAL AND (II) AMORTIZATION AND OTHER TERMS WHICH ARE COMMERCIALLY
REASONABLE AND/OR (B) THE DEED OF TRUST GRANTED BY PURCHASER TO ITS AFFILIATE IN
CONNECTION WITH PURCHASER’S ACQUISITION OF THE HOTEL IN TENNESSEE.

 

1.10         “AWARD”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN THE LEASE.

 

1.11         “BALTIMORE CENTRAL PLANT”  SHALL HAVE THE MEANING GIVEN THE TERM
“CENTRAL PLANT” IN THE BALTIMORE DECLARATION.

 

1.12         “BALTIMORE DECLARATION”  SHALL MEAN THAT CERTAIN AMENDED AND
RESTATED DECLARATION OF EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS, DATED
APRIL 9, 1986, MADE BY HARBOR COURT ASSOCIATES AND RECORDED WITH THE LAND
RECORDS OF BALTIMORE CITY, MARYLAND IN LIBER 893, PAGE 406, AS THE SAME HAS BEEN
AMENDED TO DATE AND AS THE SAME MAY HEREAFTER BE AMENDED FROM TIME TO TIME IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.

 

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1.13         “BALTIMORE EMPLOYEE PARKING LICENSE”  SHALL HAVE THE MEANING GIVEN
SUCH TERM IN SECTION 24.26(C).

 

1.14         “BALTIMORE EMPLOYEE PARKING LICENSE FEES”  SHALL HAVE THE MEANING
GIVEN SUCH TERM IN SECTION 24.26(C).

 

1.15         “BALTIMORE GENERAL PARKING LICENSE”  SHALL HAVE THE MEANING GIVEN
SUCH TERM IN SECTION 24.26(B).

 

1.16         “BALTIMORE GENERAL PARKING LICENSE FEES”  SHALL HAVE THE MEANING
GIVEN SUCH TERM IN SECTION 24.26(B).

 

1.17         “BALTIMORE HEALTH CLUB”  SHALL HAVE THE MEANING GIVEN THE TERM
“HEALTH CLUB” IN THE BALTIMORE DECLARATION.

 

1.18         “BALTIMORE HOTEL”  SHALL MEAN THE HOTEL HAVING AN ADDRESS AT 550
LIGHT STREET, BALTIMORE, MARYLAND AND LOCATED ON THE BALTIMORE SITE; FOR THE
AVOIDANCE OF DOUBT, THE TERM “BALTIMORE HOTEL” SHALL INCLUDE THE “HOTEL” (THIS
AND OTHER CAPITALIZED TERMS USED WITHIN QUOTATION MARKS IN THIS DEFINITION
HAVING THE MEANINGS ASCRIBED TO SUCH TERMS IN THE BALTIMORE DECLARATION), THE
BALTIMORE HEALTH CLUB, THE BALTIMORE CENTRAL PLANT, THE BALTIMORE VALET PARKING
AREAS AND THE NON-EXCLUSIVE RIGHT TO USE AND ENJOY ALL EASEMENTS AND
APPURTENANCES RELATED THERETO AS FURTHER DESCRIBED IN THE BALTIMORE DECLARATION
BUT SHALL OTHERWISE EXCLUDE THE “CONDO PROJECT”, THE “OFFICE BUILDING”, THE
“CONDO PARKING”, AND THE BALTIMORE PARKING GARAGE (OTHER THAN THE BALTIMORE
VALET PARKING AREAS).

 

1.19         “BALTIMORE MAINTENANCE MEMORANDUM”  SHALL MEAN THAT CERTAIN AMENDED
AND RESTATED HARBOR COURT MAINTENANCE MEMORANDUM, DATED APRIL 9, 1986, BY HARBOR
COURT ASSOCIATES, AS THE SAME HAS BEEN AMENDED TO DATE AND AS THE SAME MAY
HEREAFTER BE AMENDED FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT.

 

1.20         “BALTIMORE PARKING GARAGE”  SHALL HAVE THE MEANING GIVEN THE TERM
“PARKING GARAGE” IN THE BALTIMORE DECLARATION.

 

1.21         “BALTIMORE PURCHASE AGREEMENT”  SHALL MEAN THAT CERTAIN AGREEMENT
OF SALE AND PURCHASE, DATED AS OF NOVEMBER 18, 2005, ENTERED INTO BY BALTIMORE
SELLER AND OWNER’S AFFILIATE WITH RESPECT TO THE BALTIMORE HOTEL (AMONG OTHER
PROPERTIES), AS THE SAME HAS BEEN AMENDED TO DATE.

 

1.22         “BALTIMORE REBRANDING AMOUNTS”  SHALL MEAN, COLLECTIVELY, THE
AMOUNTS REFERRED TO IN SECTION 5.2(H).

 

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1.23         “BALTIMORE SELLER”  SHALL MEAN THE “SELLER” UNDER THE BALTIMORE
PURCHASE AGREEMENT.

 

1.24         “BALTIMORE SITE”  SHALL MEAN THE SITE DESCRIBED ON EXHIBIT A-13
ATTACHED HERETO.

 

1.25         “BALTIMORE VACANT PARCELS”  SHALL MEAN AREAS 1A AND 1B OF PARCEL 1,
AS SHOWN ON SHEET NO. 1 OF THE AMENDED SUBDIVISION PLAN OF HARBOR COURT RECORDED
AMONG THE LAND RECORDS OF BALTIMORE CITY IN PLAT POCKET FOLDER S.E.B. NO. 3067
ON JANUARY 29, 1986.

 

1.26         “BALTIMORE VALET LICENSE FEE”  SHALL HAVE THE MEANING GIVEN SUCH
TERM IN SECTION 24.26(A).

 

1.27         “BALTIMORE VALET PARKING AREAS”  SHALL MEAN THE AREA LOCATED ON THE
BOTTOM FLOOR OF THE BALTIMORE PARKING GARAGE CONTAINING APPROXIMATELY THIRTY
(30) PARKING SPACES THAT ARE BEING USED FOR VALET PARKING BY THE BALTIMORE HOTEL
AS OF THE EFFECTIVE DATE, TOGETHER WITH THOSE AREAS WITHIN THE PARKING GARAGE
THAT PROVIDE EXCLUSIVE VEHICULAR INGRESS TO AND EGRESS FROM SUCH PARKING SPACES
AND A NON-EXCLUSIVE EASEMENT FOR PURPOSES OF INGRESS TO AND EGRESS FROM SUCH
SPACES OVER SUCH OTHER AREAS OF THE BALTIMORE PARKING GARAGE AS ARE REASONABLY
NECESSARY FOR SUCH INGRESS AND EGRESS.

 

1.28         “BANK ACCOUNTS”  SHALL MEAN ONE OR MORE BANK ACCOUNTS ESTABLISHED
FOR THE OPERATION OF THE HOTELS IN OWNER’S NAME AT A BANK SELECTED BY MANAGER
AND APPROVED BY OWNER.

 

1.29         “BASE MANAGEMENT FEE”  SHALL MEAN THREE PERCENT (3%) OF THE
AGGREGATE GROSS REVENUES AT THE HOTELS IN EACH FISCAL YEAR DURING THE TERM.

 

1.30         “BASE PRIORITY AMOUNT”  SHALL INITIALLY MEAN THE FOLLOWING ANNUAL
AMOUNTS WITH RESPECT TO THE CORRESPONDING PERIODS:

 

Period

 

Annual Amount

 

 

 

 

 

February 16, 2005 – May 31, 2005

 

$

26,018,731.00

 

 

 

 

 

June 1, 2005 – December 31, 2005

 

$

28,900,000.00

 

 

 

 

 

January 1, 2006 – January 5, 2006

 

$

30,706,250.00

 

 

 

 

 

January 6, 2006 – December 31, 2006

 

$

35,506,250.00

 

 

 

 

 

Thereafter

 

$

35,806,250.00

 

 

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Provided that Purchaser performs its obligations under Section 3.2(b) of the
Purchase Agreement, the Base Priority Amount shall be increased by $850,000 per
annum on each of January 1, 2006 and January 1, 2007 and by $425,000 per annum
on January 1, 2008.  Provided that Owner performs its obligations under
Section 5.2(h) of this Agreement, the Base Priority Amount shall be increased by
$85,000 per annum on January 1, 2007 and by $110,500 per annum on January 1,
2008.

 

1.31         “BASE YEAR”  SHALL MEAN THE 2006 FISCAL YEAR WITH RESPECT TO ALL
HOTELS OTHER THAN THE BALTIMORE HOTEL, FOR WHICH THE “BASE YEAR” SHALL MEAN THE
2007 FISCAL YEAR; PROVIDED, HOWEVER, IF THERE SHALL OCCUR A CASUALTY,
CONDEMNATION OR OTHER FORCE MAJEURE EVENT WITH RESPECT TO A HOTEL WHICH CAUSES A
MATERIAL DECLINE IN GROSS REVENUES FOR SUCH HOTEL OR A FORCE MAJEURE EVENT AS
DESCRIBED IN SECTION 23.1 IN CANADA, THE UNITED STATES OR CARIBBEAN REGION OR IN
ANY RELEVANT MARKET THAT RESULTS IN A TEN PERCENT (10%) ANNUAL DECLINE IN REVPAR
FOR THE UPSCALE SEGMENT WITH RESPECT TO THE STAYBRIDGE HOTELS, THE LUXURY
SEGMENT WITH RESPECT TO THE INTERCONTINENTAL HOTELS, THE UPSCALE SEGMENT WITH
RESPECT TO CROWNE PLAZA HOTELS AND MID-SCALE WITH F AND B SEGMENT WITH RESPECT
TO THE HOLIDAY INN HOTELS, OR OTHER APPROPRIATE SEGMENT, AS DETERMINED BY SMITH
TRAVEL RESEARCH, IN CANADA, THE UNITED STATES OR CARIBBEAN REGION OR IN THE
RELEVANT MARKET, WHICH, IN EITHER CASE, CAUSES A MATERIAL DECLINE IN GROSS
REVENUES FOR SUCH HOTEL FOR THE 2006 FISCAL YEAR (EXCEPT AS TO THE BALTIMORE
HOTEL WHERE SUCH TIME PERIOD SHALL BE THE 2007 FISCAL YEAR), THE BASE YEAR FOR
SUCH HOTEL SHALL BE ADJUSTED TO BE THE FIRST FULL FISCAL YEAR OF OPERATION OF
SUCH HOTEL AFTER THE RESOLUTION OF ANY SUCH CASUALTY, CONDEMNATION OR FORCE
MAJEURE EVENT AND THE RETURN OF SUCH HOTEL TO ITS SUBSTANTIALLY NORMAL STATUS.

 

1.32         “BRAND”  SHALL MEAN: WITH RESPECT TO THE STAYBRIDGE HOTELS, THE
STAYBRIDGE SUITES HOTEL SERVICE MARKS; WITH RESPECT TO THE INTERCONTINENTAL
HOTELS, THE INTERCONTINENTAL HOTEL SERVICE MARKS; WITH RESPECT TO THE CROWNE
PLAZA HOTELS, THE CROWNE PLAZA HOTEL SERVICE MARKS; AND WITH RESPECT TO THE
HOLIDAY INN HOTELS, THE HOLIDAY INN HOTEL SERVICE MARKS, EXCLUDING ANY SEPARATE
HOLIDAY INN EXPRESS SERVICE MARKS; TOGETHER WITH, IN EACH INSTANCE, THE
APPLICABLE BRAND STANDARDS, AND ALL OF THE ATTRIBUTES AND FEATURES CUSTOMARILY
ASSOCIATED WITH, AS APPLICABLE, STAYBRIDGE SUITES HOTELS, INTERCONTINENTAL
HOTELS, CROWNE PLAZA HOTELS AND THE HOLIDAY INN HOTELS IN NORTH AMERICA FROM
TIME TO TIME.

 

1.33         “BRAND STANDARDS”  SHALL MEAN THE STANDARDS OF OPERATION, AS
AMENDED FROM TIME TO TIME, IN EFFECT AT

 

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SUBSTANTIALLY ALL HOTELS WHICH ARE OPERATED UNDER, AS APPLICABLE, THE STAYBRIDGE
SUITES, INTERCONTINENTAL, CROWNE PLAZA OR HOLIDAY INN NAME AS MAY BE SPECIFIED
IN MANUALS AND OTHER GUIDELINES PROVIDED BY THE OWNER OF THE SYSTEM MARKS OR ITS
AFFILIATES.

 

1.34         “BUILDINGS”  SHALL MEAN, EXCEPT AS HEREINAFTER DESCRIBED WITH
RESPECT TO THE BALTIMORE HOTEL, COLLECTIVELY, ALL BUILDINGS, STRUCTURES AND
IMPROVEMENTS NOW OR HEREAFTER LOCATED ON THE SITES, AND ALL FIXTURES AND
EQUIPMENT ATTACHED TO, FORMING A PART OF AND NECESSARY FOR THE OPERATION OF SUCH
BUILDINGS, STRUCTURES AND IMPROVEMENTS AS A HOTEL (INCLUDING, WITHOUT
LIMITATION, HEATING, LIGHTING, SANITARY, AIR-CONDITIONING, LAUNDRY,
REFRIGERATION, KITCHEN, ELEVATOR AND SIMILAR ITEMS) HAVING GUEST SLEEPING ROOMS,
EACH WITH BATH, AND SUCH (I) RESTAURANTS, BARS, BANQUET, MEETING AND OTHER
PUBLIC AREAS; (II) COMMERCIAL SPACE, INCLUDING CONCESSIONS AND SHOPS;
(III) PARKING FACILITIES AND AREAS; (IV) STORAGE AND SERVICE AREAS;
(V) RECREATIONAL FACILITIES AND AREAS; (VI) PERMANENTLY AFFIXED SIGNAGE;
(VII) PUBLIC GROUNDS AND GARDENS; AND (VIII) OTHER FACILITIES AND APPURTENANCES,
AS MAY HEREAFTER BE ATTACHED TO AND FORM A PART OF SUCH BUILDING, STRUCTURES AND
IMPROVEMENTS IN ACCORDANCE WITH THIS AGREEMENT.; PROVIDED, HOWEVER, FOR THE
AVOIDANCE OF DOUBT WITH RESPECT TO THE BALTIMORE HOTEL ONLY, THE TERM
“BUILDINGS” SHALL ONLY INCLUDE THE FOREGOING TO THE EXTENT THE SAME ARE LOCATED
WITHIN THE BALTIMORE SITE (INCLUDING, WITHOUT LIMITATION, THE BALTIMORE CENTRAL
PLANT) AND IT SHALL EXCLUDE ANY OF THE FOREGOING TO THE EXTENT THE SAME ARE
LOCATED WITHIN THE CONDO SPACE, THE OFFICE SPACE OR THE PARKING SPACE (AS SUCH
TERMS ARE DEFINED IN THE BALTIMORE DECLARATION) OTHER THAN THE BALTIMORE VALET
PARKING AREAS.

 

1.35         “BUSINESS DAY”  SHALL MEAN ANY DAY OTHER THAN SATURDAY, SUNDAY, OR
ANY OTHER DAY ON WHICH BANKING INSTITUTIONS IN THE COMMONWEALTH OF MASSACHUSETTS
ARE AUTHORIZED BY LAW OR EXECUTIVE ACTION TO CLOSE.

 

1.36         “CANADIAN CONSUMER PRICE INDEX”  SHALL MEAN THE CONSUMER PRICE
INDEX (ALL ITEMS FOR ONTARIO, BASE YEAR 1992-=100) PUBLISHED BY STATISTICS
CANADA OR IF SUCH INDEX IS NO LONGER PUBLISHED, SUCH OTHER INDEX AS IS PUBLISHED
IN SUBSTITUTION THEREFOR.

 

1.37         “CANADIAN HOTEL”  SHALL MEAN A HOTEL LOCATED IN CANADA.

 

1.38         “CANADIAN MANAGER”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN
SECTION 21.1(B).

 

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1.39         “CANADIAN SERVICES”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN
SECTION 21.1(B).

 

1.40         “CAPITAL REPLACEMENTS”  SHALL MEAN, COLLECTIVELY, REPLACEMENTS AND
RENEWALS TO THE FF&E AND REPAIRS WHICH ARE NORMALLY CAPITALIZED UNDER THE
ACCOUNTING PRINCIPLES.

 

1.41         “CAPITAL REPLACEMENTS BUDGET”  SHALL MEAN THE ANNUAL BUDGET FOR
CAPITAL REPLACEMENTS AT THE HOTELS, COVERING A FISCAL YEAR, AS PREPARED BY
MANAGER AND APPROVED BY OWNER AS PART OF A YEARLY BUDGET.  REFERENCES TO YEARLY
BUDGET SHALL BE DEEMED TO INCORPORATE THE CAPITAL REPLACEMENTS BUDGET UNLESS
SPECIFICALLY EXCLUDED.

 

1.42         “CLOSING”  SHALL MEAN THE CLOSING UNDER THE PURCHASE AGREEMENT.

 

1.43         “CODE”  SHALL MEAN THE UNITED STATES INTERNAL REVENUE CODE OF 1986
AND THE TREASURY REGULATIONS PROMULGATED THEREUNDER, EACH AS FROM TIME TO TIME
AMENDED, AND ANY REFERENCE TO ANY STATUTORY OR REGULATORY PROVISION SHALL BE
DEEMED TO BE A REFERENCE TO ANY SUCCESSOR STATUTORY OR REGULATORY PROVISION.

 

1.44         “COLLATERAL AGENCY AGREEMENT”  SHALL HAVE THE MEANING GIVEN SUCH
TERM IN THE GUARANTY.

 

1.45         “COLLATERAL AGENT”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN THE
GUARANTY.

 

1.46         “COMPETITOR”  SHALL MEAN ANY PERSON (OTHER THAN MANAGER AND ITS
AFFILIATES) WHICH OWNS DIRECTLY OR THROUGH AN AFFILIATE A HOTEL BRAND, TRADE
NAME, SYSTEM, OR CHAIN HAVING AT LEAST FIFTEEN (15) HOTELS (EXCLUDING A MERE
FRANCHISEE OR MERE PASSIVE INVESTOR).

 

1.47         “CONDEMNATION”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN THE
LEASE.

 

1.48         “CONDEMNOR”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN THE LEASE.

 

1.49         “CONSOLIDATED FINANCIALS”  SHALL MEAN FOR ANY FISCAL YEAR OR ANY
INTERIM PERIOD OF ANY PERSON, ANNUAL OR INTERIM FINANCIAL STATEMENTS OF SUCH
PERSON PREPARED ON A CONSOLIDATED BASIS, INCLUDING SUCH PERSON’S CONSOLIDATED
BALANCE SHEET AND THE RELATED STATEMENTS OF INCOME AND CASH FLOWS, ALL IN
REASONABLE DETAIL, AND SETTING FORTH IN COMPARATIVE FORM THE CORRESPONDING
FIGURES FOR THE CORRESPONDING PERIOD IN THE

 

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PRECEDING FISCAL YEAR OF SUCH PERSON, AND PREPARED IN ACCORDANCE WITH THE
ACCOUNTING PRINCIPLES THROUGHOUT THE PERIODS REFLECTED OR IF SUCH PERSON’S
PRINCIPAL PLACE OF BUSINESS IS THE UNITED KINGDOM, IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES, AS ADOPTED IN THE UNITED KINGDOM, CONSISTENTLY
APPLIED THROUGHOUT THE PERIODS REFLECTED PROVIDED THAT ANY SUCH FINANCIAL
STATEMENT WHICH IS AUDITED SHALL CONTAIN A RECONCILIATION OF ANY DIFFERENCES
BETWEEN SUCH ACCOUNTING PRINCIPLES AND ACCOUNTING PRINCIPLES.

 

1.50         “CONSUMER PRICE INDEX”  SHALL MEAN THE CONSUMER PRICE INDEX FOR ALL
URBAN CONSUMERS, U.S. CITY AVERAGE, PUBLISHED BY THE UNITED STATES BUREAU OF
LABOR STATISTICS OR IF SUCH INDEX IS NO LONGER PUBLISHED, SUCH OTHER INDEX AS IS
PUBLISHED IN SUBSTITUTION THEREFOR.

 

1.51         “CROWNE PLAZA HOTELS”  SHALL MEAN THE HOTELS THAT ARE OPERATED AS
OF THE DATE HEREOF AS CROWNE PLAZA HOTELS.

 

1.52         “DEBT SERVICE COVERAGE RATIO”  SHALL MEAN, WITH RESPECT TO ANY LOAN
OR OTHER DEBT SECURED BY AN AUTHORIZED MORTGAGE, THE QUOTIENT OBTAINED BY
DIVIDING (A) THE NOI OF THE PROPERTIES SECURING SUCH LOAN OR OTHER DEBT FOR THE
TWELVE (12) MONTHS ENDING ON THE DATE ON WHICH SUCH AUTHORIZED MORTGAGE IS
GRANTED BY (B) REGULARLY SCHEDULED INTEREST AND PRINCIPAL PAYMENTS PROJECTED TO
BE PAID THEREUNDER DURING THE FIRST (1ST) TWELVE (12) MONTHS AFTER THE FIRST DAY
OF THE MONTH NEXT AFTER SUCH DATE.

 

1.53         “DEPOSIT”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN THE DEPOSIT
AGREEMENT.

 

1.54         “DEPOSIT AGREEMENT”  SHALL MEAN THAT CERTAIN DEPOSIT AGREEMENT,
DATED AS OF JANUARY 6, 2006, AMONG OWNER, HPT TRS IHG-1, INC., HPT IHG PR, INC.,
INTERCONTINENTAL HOTELS GROUP RESOURCES, INC. AND MANAGER AS THE SAME MAY BE
AMENDED, SUPPLEMENTED OR REPLACED FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS
THEREOF.

 

1.55         “DISBURSEMENT RATE”  SHALL MEAN A PER ANNUM RATE EQUAL TO THE
GREATER OF (I) THE SUM OF THE PER ANNUM RATE FOR FIFTEEN (15) YEAR U.S. TREASURY
OBLIGATIONS AS PUBLISHED IN THE WALL STREET JOURNAL, PLUS FOUR HUNDRED THIRTY
(430) BASIS POINTS AND (II) NINE AND FIVE-TENTHS PERCENT (9.5%).

 

1.56         “EFFECTIVE DATE”  SHALL MEAN FEBRUARY 16, 2005 WITH RESPECT TO ALL
HOTELS OTHER THAN THE AUSTIN HOTEL, FOR WHICH THE “EFFECTIVE DATE” SHALL MEAN
MAY 31, 2005, AND THE BALTIMORE

 

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HOTEL, FOR WHICH THE “EFFECTIVE DATE” SHALL MEAN JANUARY 6, 2006.

 

1.57         “ENVIRONMENTAL NOTICE”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN
SECTION 24.2(A).

 

1.58         “EXPIRATION DATE”  SHALL MEAN THE DATE ON WHICH THE TERM SHALL
EXPIRE.

 

1.59         “FISCAL MONTH”  SHALL MEAN EACH CALENDAR MONTH IN THE TERM OR EACH
PARTIAL CALENDAR MONTH IN THE TERM.

 

1.60         “FISCAL YEAR”  SHALL MEAN EACH CALENDAR YEAR IN THE TERM AND EACH
PARTIAL CALENDAR YEAR IN THE TERM.

 

1.61         “FURNITURE, FIXTURES AND EQUIPMENT” OR “FF&E”  SHALL MEAN,
COLLECTIVELY, ALL FURNITURE, FURNISHINGS AND EQUIPMENT (EXCEPT OPERATING
EQUIPMENT AND REAL PROPERTY FIXTURES INCLUDED IN THE DEFINITION OF BUILDINGS)
NOW OR HEREAFTER LOCATED AND INSTALLED IN OR ABOUT THE HOTELS WHICH ARE USED IN
THE OPERATION THEREOF AS HOTELS IN ACCORDANCE WITH THE STANDARDS SET FORTH IN
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION (I) OFFICE FURNISHINGS AND
EQUIPMENT; (II) SPECIALIZED HOTEL EQUIPMENT NECESSARY FOR THE OPERATION OF ANY
PORTION OF THE BUILDING AS A STAYBRIDGE SUITES, INTERCONTINENTAL, CROWNE PLAZA
OR HOLIDAY INN, AS APPLICABLE, HOTEL, INCLUDING EQUIPMENT FOR KITCHENS,
LAUNDRIES, DRY CLEANING FACILITIES, BARS, RESTAURANTS, PUBLIC ROOMS, COMMERCIAL
SPACE, PARKING AREAS, AND RECREATIONAL FACILITIES; (III) ALL PORTIONS OF THE
BALTIMORE CENTRAL PLANT AS ARE NOT INCLUDED IN THE DEFINITION OF BUILDINGS WITH
RESPECT TO THE BALTIMORE HOTEL; AND (IV) ALL OTHER FURNISHINGS AND EQUIPMENT
HEREAFTER LOCATED AND INSTALLED IN OR ABOUT THE BUILDINGS WHICH ARE USED IN THE
OPERATION OF THE BUILDINGS AS HOTELS IN ACCORDANCE WITH THE STANDARDS SET FORTH
IN THIS AGREEMENT.

 

1.62         “GOVERNMENT AGENCIES”  SHALL MEAN ANY COURT, AGENCY, AUTHORITY,
BOARD (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL PROTECTION, PLANNING AND
ZONING), BUREAU, COMMISSION, DEPARTMENT, MINISTRY, REGULATORY BODY, OFFICE OR
INSTRUMENTALITY OF ANY NATURE WHATSOEVER OF ANY GOVERNMENTAL OR
QUASI-GOVERNMENTAL UNIT OF THE UNITED STATES OR CANADA OR ANY STATE, PROVINCE,
COUNTY, MUNICIPALITY OR ANY POLITICAL SUBDIVISION OF ANY OF THE FOREGOING,
WHETHER NOW OR HEREAFTER IN EXISTENCE, HAVING JURISDICTION OVER OWNER, ANY OF
THE SITES OR ANY OF THE HOTELS.

 

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1.63         “GROSS REVENUES”  SHALL MEAN FOR ANY PERIOD WITH RESPECT TO EACH
HOTEL, ALL REVENUES AND INCOME OF ANY NATURE DERIVED DIRECTLY OR INDIRECTLY FROM
SUCH HOTEL OR FROM THE USE OR OPERATION THEREOF, WHETHER OR NOT SUCH REVENUES
AND INCOME ARE DERIVED FROM GOODS AND SERVICES PROVIDED AT THE HOTEL OR
OFF-SITE, INCLUDING, WITHOUT LIMITATION: ROOM SALES; FOOD AND BEVERAGE SALES
(REGARDLESS OF WHETHER OWNER, MANAGER OR ANY OF THEIR AFFILIATES OWN THE ITEMS
BEING SOLD); TELEPHONE, TELEGRAPH, FAX AND INTERNET REVENUES; RENTAL OR OTHER
PAYMENTS FROM LESSEES, SUBLEASES, CONCESSIONAIRES AND OTHERS OCCUPYING OR USING
SPACE OR RENDERING SERVICES AT SUCH HOTEL (BUT NOT THE GROSS RECEIPTS OF SUCH
LESSEES, SUBLEASES OR CONCESSIONAIRES); THE ACTUAL CASH PROCEEDS OF BUSINESS
INTERRUPTION, USE, OCCUPANCY OR SIMILAR INSURANCE; AND ALL REVENUE GENERATED
FROM OR IN CONNECTION WITH MANAGER’S OR OWNER’S OPERATION OR USE OF THE
BALTIMORE VALET PARKING AREAS, THE BALTIMORE VACANT PARCELS, THE BALTIMORE
EMPLOYEE PARKING LICENSE, THE BALTIMORE GENERAL PARKING LICENSE AND ANY
ADDITIONAL PARKING PRIVILEGES NEGOTIATED OR OBTAINED BY MANAGER AS CONTEMPLATED
BY SECTION 24.26(B) AND/OR SECTION 24.26(D); PROVIDED, HOWEVER, THAT GROSS
REVENUES SHALL NOT INCLUDE THE FOLLOWING (AND THERE SHALL BE APPROPRIATE
DEDUCTIONS MADE IN DETERMINING GROSS REVENUES FOR):  GRATUITIES OR SERVICE
CHARGES IN THE NATURE OF A GRATUITY ADDED TO A CUSTOMER’S BILL; SALES TAX OR ANY
OTHER TAXES COLLECTED DIRECTLY FROM PATRONS OR GUESTS OR INCLUDED AS PART OF THE
SALES PRICE OF ANY GOODS OR SERVICES SOLD TO PATRONS OR GUESTS; ANY REFUNDS OF
GST OR ANY SIMILAR VALUE ADDED TAX THAT IS REFUNDABLE; INTEREST RECEIVED OR
ACCRUED WITH RESPECT TO THE FUNDS IN THE RESERVE ACCOUNT OR (OTHER THAN FOR
PURPOSES OF CALCULATING THE INCENTIVE MANAGEMENT FEE AND THE RESIDUAL
DISTRIBUTION) THE OTHER OPERATING ACCOUNTS OF THE HOTELS; ANY REFUNDS, REBATES,
DISCOUNTS AND CREDITS OF A SIMILAR NATURE, GIVEN, PAID OR RETURNED IN THE COURSE
OF OBTAINING GROSS REVENUES OR COMPONENTS THEREOF; INSURANCE PROCEEDS (OTHER
THAN PROCEEDS FROM BUSINESS INTERRUPTION OR OTHER LOSS OF INCOME INSURANCE);
CONDEMNATION PROCEEDS (OTHER THAN FOR A TEMPORARY TAKING); CREDITS OR REFUNDS
MADE TO CUSTOMERS, GUESTS OR PATRONS; SUMS AND CREDITS RECEIVED BY OWNER FOR
LOST OR DAMAGED MERCHANDISE; PROCEEDS FROM THE SALE OR OTHER DISPOSITION OF A
HOTEL, ANY PART THEREOF, OF FF&E OR ANY OTHER ASSETS OF THE HOTELS; PROCEEDS OF
ANY FINANCING OR RE-FINANCING; THE INITIAL WORKING CAPITAL; ANY REIMBURSEMENTS
RELATED TO COSTS INCURRED IN CONNECTION WITH THE OPERATION OF THE BALTIMORE
CENTRAL PLANT (OTHER THAN ADMINISTRATIVE FEES COLLECTED IN ACCORDANCE WITH THE
TERMS AND CONDITIONS OF THE BALTIMORE MAINTENANCE MEMORANDUM); AND ANY OTHER
MATTERS SPECIFICALLY EXCLUDED FROM GROSS REVENUES PURSUANT TO THIS AGREEMENT.

 

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1.64         “GST”  SHALL MEAN GOODS AND SERVICES TAXES IMPOSED PURSUANT TO
PART IX OF THE EXCISE TAX ACT (CANADA) AND ANY OTHER SIMILAR VALUE ADDED TAX
THAT IS REFUNDABLE.

 

1.65         “GUARANTOR”  SHALL MEAN THE GUARANTOR UNDER THE GUARANTY.

 

1.66         “GUARANTY”  SHALL MEAN THAT CERTAIN AMENDED AND RESTATED
CONSOLIDATED GUARANTY AGREEMENT, DATED AS OF FEBRUARY 16, 2005, MADE BY IHG FOR
THE BENEFIT OF, INTER ALIA, OWNER, AS THE SAME HAS BEEN OR MAY BE AMENDED,
SUPPLEMENTED OR REPLACED FROM TIME TO TIME, BUT SPECIFICALLY EXCLUDING ANY NEW
GUARANTY (AS DEFINED IN THE GUARANTY) GIVEN PURSUANT TO THE GUARANTY AS THE SAME
MAY BE AMENDED, SUPPLEMENTED OR REPLACED FROM TIME TO TIME.

 

1.67         “HAZARDOUS SUBSTANCES”  SHALL MEAN ANY SUBSTANCE:

 

(A)           THE PRESENCE OF WHICH REQUIRES OR MAY HEREAFTER REQUIRE
NOTIFICATION, INVESTIGATION OR REMEDIATION UNDER ANY LEGAL REQUIREMENT; OR

 

(B)           WHICH IS OR BECOMES DEFINED AS A “HAZARDOUS WASTE,” “HAZARDOUS
MATERIAL” OR “HAZARDOUS SUBSTANCE” OR “POLLUTANT” OR “CONTAMINANT” UNDER ANY
PRESENT OR FUTURE LEGAL REQUIREMENT INCLUDING, WITHOUT LIMITATION, THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT (42 U.S.C.
SECTION 9601 ET SEQ.) AND THE RESOURCE CONSERVATION AND RECOVERY ACT (42 U.S.C.
SECTION 6901 ET SEQ.) AND THE REGULATIONS PROMULGATED THEREUNDER; OR

 

(C)           WHICH IS TOXIC, EXPLOSIVE, CORROSIVE, FLAMMABLE, INFECTIOUS,
RADIOACTIVE, CARCINOGENIC, MUTAGENIC OR OTHERWISE HAZARDOUS AND IS OR BECOMES
REGULATED BY ANY GOVERNMENT AGENCY; OR

 

(D)           THE PRESENCE OF WHICH AT A HOTEL CAUSES OR MATERIALLY THREATENS TO
CAUSE AN UNLAWFUL NUISANCE UPON SUCH HOTEL OR TO ADJACENT PROPERTIES OR POSES OR
MATERIALLY THREATENS TO POSE A HAZARD TO SUCH HOTEL OR TO THE HEALTH OR SAFETY
OF PERSONS; OR

 

(E)           WITHOUT LIMITATION, WHICH CONTAINS GASOLINE, DIESEL FUEL OR OTHER
PETROLEUM HYDROCARBONS OR VOLATILE ORGANIC COMPOUNDS; OR

 

(F)            WITHOUT LIMITATION, WHICH CONTAINS POLYCHLORINATED BIPHENYLS
(PCBS) OR ASBESTOS OR UREA FORMALDEHYDE FOAM INSULATION; OR

 

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(G)           WITHOUT LIMITATION, WHICH CONTAINS OR EMITS RADIOACTIVE PARTICLES,
WAVES OR MATERIAL; OR

 

(H)           WITHOUT LIMITATION, WHICH CONSTITUTES MATERIALS THAT ARE NOW OR
MAY HEREAFTER BE SUBJECT TO REGULATION PURSUANT TO THE MEDICAL WASTE TRACKING
ACT OF 1988, OR ANY REQUIREMENT PROMULGATED BY ANY GOVERNMENT AGENCIES.

 

1.68         “HOLIDAY INN HOTELS”  SHALL MEAN THE HOTELS THAT ARE OPERATED AS OF
THE DATE HEREOF AS HOLIDAY INN HOTELS.

 

1.69         “HOTEL”  SHALL MEAN EACH HOTEL LOCATED AT A SITE INCLUDING ALL OF
THE OWNER’S INTEREST IN SUCH SITE, THE BUILDING THERE, THE FURNITURE, FIXTURES
AND EQUIPMENT THERE, THE OPERATING EQUIPMENT THERE AND THE OPERATING SUPPLIES
THERE, AND, FOR THE AVOIDANCE OF DOUBT, THE TERM “HOTEL” SHALL, WITH RESPECT TO
THE SITE IN BALTIMORE, MEAN THE BALTIMORE HOTEL; PROVIDED, HOWEVER, UPON THE
TERMINATION OF THE AGREEMENT WITH RESPECT TO LESS THAN ALL OF THE HOTELS,
PURSUANT TO THE TERMS HEREOF OR OTHERWISE, THE TERM “HOTEL” SHALL, WITH RESPECT
TO THE OBLIGATION OF THE PARTIES THEREAFTER ACCRUING, ONLY REFER TO A HOTEL WITH
RESPECT TO WHICH THIS AGREEMENT IS IN FULL FORCE AND EFFECT.

 

1.70         “HPT”  SHALL MEAN HOSPITALITY PROPERTIES TRUST, A MARYLAND REAL
ESTATE INVESTMENT TRUST, TOGETHER WITH ITS SUCCESSORS AND PERMITTED ASSIGNS.

 

1.71         “IHG”  SHALL MEAN INTERCONTINENTAL HOTELS GROUP PLC, ITS SUCCESSORS
AND ASSIGNS.

 

1.72         “IHG CANADA”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN THE
PREAMBLE TO THIS AGREEMENT.

 

1.73         “IHG MARYLAND”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN THE
PREAMBLE TO THIS AGREEMENT.

 

1.74         “INCENTIVE MANAGEMENT FEE”  SHALL MEAN FOR ANY FISCAL YEAR, FIFTY
PERCENT (50%) OF THE EXCESS, IF ANY, OF (I) GROSS REVENUES FROM ALL OF THE
HOTELS OVER (II) THE APPLICATIONS THEREOF MADE PURSUANT TO SECTIONS
10.1(A) THROUGH AND INCLUDING 10.1(R).

 

1.75         “INITIAL TERM”  SHALL MEAN THE PERIOD COMMENCING ON THE EFFECTIVE
DATE AND ENDING ON DECEMBER 31, 2029.

 

1.76         “INITIAL WORKING CAPITAL”  SHALL HAVE THE MEANING GIVEN TO SUCH
TERM IN SECTION 5.1.

 

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1.77         “INSURANCE REQUIREMENTS”  SHALL MEAN ALL TERMS OF ANY INSURANCE
POLICY REQUIRED BY THIS AGREEMENT AND ALL REQUIREMENTS OF THE ISSUER OF ANY SUCH
POLICY AND ALL ORDERS, RULES AND REGULATIONS AND ANY OTHER REQUIREMENTS OF THE
NATIONAL BOARD OF FIRE UNDERWRITERS (OR ANY OTHER BODY EXERCISING SIMILAR
FUNCTIONS) BINDING UPON THE HOTELS.

 

1.78         “INTELLECTUAL PROPERTY”  SHALL HAVE THE MEANING GIVEN TO SUCH TERM
IN SECTION 12.4.

 

1.79         “INTERCONTINENTAL HOTELS”  SHALL MEAN THE HOTELS THAT ARE OPERATED
AS OF THE DATE HEREOF AS INTERCONTINENTAL HOTELS, INCLUDING, WITHOUT LIMITATION,
THE BALTIMORE HOTEL.

 

1.80         “INTEREST RATE”  SHALL MEAN A RATE, NOT TO EXCEED THE MAXIMUM LEGAL
INTEREST RATE, EQUAL TO THE GREATER OF (A) TWELVE PERCENT (12%) PER ANNUM AND
(B) TWO PERCENT (2%) PER ANNUM IN EXCESS OF THE DISBURSEMENT RATE DETERMINED AS
OF THE FIRST DAY THAT INTEREST ACCRUES ON ANY AMOUNT TO WHICH SUCH INTEREST RATE
IS TO BE APPLIED.

 

1.81         “LEASE”  SHALL MEAN, COLLECTIVELY, THE ONE OR MORE LEASE AGREEMENTS
PURSUANT TO WHICH OWNER LEASES THE HOTELS FROM PURCHASER OR CERTAIN OF ITS
AFFILIATES AS IN EFFECT ON THE DATE HEREOF, AS THE SAME MAY BE AMENDED FROM TIME
TO TIME IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.

 

1.82         “LEGAL REQUIREMENTS”  SHALL MEAN ALL FEDERAL (UNITED STATES AND
CANADA), STATE, PROVINCIAL, COUNTY, MUNICIPAL, LOCAL AND OTHER GOVERNMENTAL
STATUTES, LAWS, RULES, ORDERS, REGULATIONS, BY-LAWS, ORDINANCES, JUDGMENTS,
DECREES, INJUNCTIONS AND REQUIREMENTS AFFECTING OWNER (EXCLUDING ANY
REQUIREMENTS WHICH AFFECT OWNER’S STATUS AS A REAL ESTATE INVESTMENT TRUST),
PURCHASER, MANAGER, A HOTEL OR THE MAINTENANCE, CONSTRUCTION, ALTERATION,
MANAGEMENT OR OPERATION THEREOF, WHETHER NOW OR HEREAFTER ENACTED OR IN
EXISTENCE, INCLUDING, WITHOUT LIMITATION, (A) ALL PERMITS, LICENSES,
AUTHORIZATIONS, CERTIFICATES AND REGULATIONS NECESSARY TO OPERATE A HOTEL,
(B) ALL COVENANTS, AGREEMENTS, GROUND LEASES, RESTRICTIONS AND ENCUMBRANCES,
(C) THE OUTCOME OF ANY ARBITRATION AND (D) ANY COLLECTIVE BARGAINING AGREEMENT
OR OTHER AGREEMENT OR LEGAL REQUIREMENT PERTAINING TO ANY UNION REPRESENTING
EMPLOYEES OF A HOTEL.

 

1.83         “MANAGEMENT FEES”  SHALL MEAN, COLLECTIVELY, THE BASE MANAGEMENT
FEE AND THE INCENTIVE MANAGEMENT FEE.

 

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1.84         “MANAGER”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN THE PREAMBLE
TO THIS AGREEMENT.

 

1.85         “MANAGER DEFAULT”  SHALL MEAN A MANAGER EVENT OF DEFAULT OR ANY
OTHER CIRCUMSTANCES WHICH WITH THE GIVING OF NOTICE, THE PASSAGE OF TIME OR BOTH
WOULD CONSTITUTE A MANAGER EVENT OF DEFAULT OR OTHERWISE ENTITLE OWNER TO
TERMINATE THIS AGREEMENT IN ITS ENTIRETY PURSUANT TO THE TERMS HEREOF.

 

1.86         “MANAGER EVENT OF DEFAULT”  SHALL HAVE THE MEANING GIVEN SUCH TERM
IN SECTION 17.1.

 

1.87         “MATERIAL REPAIR”  SHALL MEAN A REPAIR THE COST OF WHICH EXCEEDS
$250,000; PROVIDED, HOWEVER, ON JANUARY 1 OF EACH YEAR STARTING IN 2006 SAID
$250,000 SHALL BE ADJUSTED TO REFLECT THE PERCENTAGE CHANGE IN THE CONSUMER
PRICE INDEX SINCE THE PRIOR JANUARY 1.

 

1.88         “NEW MANAGEMENT AGREEMENT”  SHALL HAVE THE MEANING GIVEN TO SUCH
TERM IN SECTION 24.17.

 

1.89         “NOI”  SHALL MEAN, WITH RESPECT TO ANY PROPERTY, FOR ANY PERIOD,
THE GROSS OPERATING PROFIT (AS DEFINED IN THE UNIFORM SYSTEM OF ACCOUNTS) OF
SUCH PROPERTY FOR SUCH PERIOD NET OF, FOR SUCH PERIOD AND SUCH PROPERTY, REAL
AND PERSONAL PROPERTY TAXES AND CASUALTY AND LIABILITY INSURANCE PREMIUMS, AN
IMPUTED RESERVE FOR CAPITAL REPLACEMENTS EQUAL TO FIVE PERCENT (5%) OF GROSS
REVENUES AND AN IMPUTED MANAGEMENT FEE EQUAL TO THREE PERCENT (3%) OF GROSS
REVENUES.  TO THE EXTENT THAT ANY AMOUNT (OR PORTION THEREOF) USED TO CALCULATE
NOI IS DENOMINATED IN ANY CURRENCY OTHER THAN UNITED STATES DOLLARS, THE SAME
SHALL BE CONVERTED TO UNITED STATES DOLLARS USING A REASONABLE METHOD CONSISTENT
WITH THE ACCOUNTING PRINCIPLES THEN EMPLOYED BY MANAGER AND ITS AFFILIATES WHEN
ACCOUNTING FOR FOREIGN CURRENCIES.

 

1.90         “NON-ECONOMIC HOTEL”  SHALL MEAN ANY HOTEL WHICH HAS BEEN
DESIGNATED A NON-ECONOMIC HOTEL PURSUANT TO THE TERMS HEREOF (SO LONG AS SUCH
DESIGNATION HAS NOT BEEN DEEMED WITHDRAWN PURSUANT TO THE TERMS OF
SECTION 2.7(A)).

 

1.91         “OFFER”  SHALL MEAN A BONA FIDE ARM’S-LENGTH BINDING UNCONDITIONAL
OFFER TO PURCHASE A NON-ECONOMIC HOTEL FREE AND CLEAR OF ANY RIGHTS OF MANAGER
HEREUNDER MADE BY AN UNRELATED THIRD PARTY HAVING THE FINANCIAL CAPACITY TO
IMPLEMENT THE TERMS OF SUCH OFFER WHICH PROVIDES FOR AN ALL CASH PURCHASE PRICE
ACCEPTABLE TO MANAGER AND IS OTHERWISE ON CUSTOMARY TERMS.

 

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1.92         “OFFICER’S CERTIFICATE”  SHALL MEAN AS TO ANY PERSON, A CERTIFICATE
OF THE CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER OR CHIEF ACCOUNTING
OFFICER OF SUCH PERSON, DULY AUTHORIZED, ACCOMPANYING THE FINANCIAL STATEMENTS
REQUIRED TO BE DELIVERED BY SUCH PERSON PURSUANT TO SECTIONS 8.1, 8.4 OR 17.4 OR
OTHERWISE PURSUANT TO THE PR GUARANTY, IN WHICH SUCH OFFICER SHALL CERTIFY TO
SUCH OFFICER’S BEST KNOWLEDGE (A) THAT SUCH STATEMENTS HAVE BEEN PROPERLY
PREPARED IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLES, (B) IN THE EVENT THAT THE
CERTIFYING PARTY IS AN OFFICER OF IHG OR ANOTHER GUARANTOR, THAT SUCH STATEMENTS
ARE TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS AND FAIRLY PRESENT THE
CONSOLIDATED FINANCIAL CONDITION OF SUCH PERSON AT AND AS OF THE DATES THEREOF
AND THE RESULTS OF ITS AND THEIR OPERATIONS FOR THE PERIODS COVERED THEREBY AND
THAT THERE IS NO DEFAULT ON THE PART OF THE GUARANTOR UNDER THE GUARANTY, AND
(C) IN THE EVENT THAT THE CERTIFYING PARTY IS AN OFFICER OF MANAGER AND THE
CERTIFICATE IS BEING GIVEN IN SUCH CAPACITY, THAT SUCH STATEMENTS FAIRLY PRESENT
THE FINANCIAL OPERATION OF THE HOTELS.

 

1.93         “OPERATING COSTS”  SHALL MEAN, COLLECTIVELY, ALL COSTS AND EXPENSES
OF THE HOTELS (REGARDLESS OF WHETHER THE SAME ARE INCURRED BY OWNER, PURCHASER
OR MANAGER) THAT ARE NORMALLY CHARGED AS AN OPERATING EXPENSE UNDER ACCOUNTING
PRINCIPLES, INCLUDING, WITHOUT LIMITATION:

 

(I)         THE COST OF OPERATING SUPPLIES, WAGES, SALARIES AND EMPLOYEE FRINGE
BENEFITS, ADVERTISING AND PROMOTIONAL EXPENSES, THE COST OF PERSONNEL TRAINING
PROGRAMS, UTILITY AND ENERGY COSTS, OPERATING LICENSES AND PERMITS, MAINTENANCE
COSTS, AND EQUIPMENT RENTALS;

 

(II)        ALL EXPENDITURES MADE FOR MAINTENANCE AND REPAIRS TO KEEP THE HOTEL
IN GOOD CONDITION AND REPAIR (OTHER THAN CAPITAL REPLACEMENTS);

 

(III)       PREMIUMS FOR INSURANCE REQUIRED HEREUNDER;

 

(IV)       THE SYSTEM FEES, THE BALTIMORE VALET LICENSE FEE, AND THE BALTIMORE
GENERAL PARKING LICENSE FEES AND ANY ADDITIONAL COSTS INCURRED BY MANAGER FOR
ANY ADDITIONAL PARKING PRIVILEGES NEGOTIATED OR OBTAINED BY MANAGER AS
CONTEMPLATED BY SECTION 24.26(B);

 

(V)        REAL ESTATE AND PERSONAL PROPERTY TAXES AND EXPENSES EXCEPT TO THE
EXTENT EXPRESSLY SPECIFIED OTHERWISE HEREIN;

 

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(VI)       AUDIT, LEGAL AND ACCOUNTING FEES AND EXPENSES EXCEPT TO THE EXTENT
EXPRESSLY SPECIFIED OTHERWISE HEREIN;

 

(VII)      RENT OR LEASE PAYMENTS UNDER GROUND LEASES OR FOR EQUIPMENT USED AT
THE HOTELS IN THE OPERATION THEREOF; AND

 

(VIII)     SALES TAXES (EXCEPT AS PROVIDED BELOW) PAYABLE ON OR IN RESPECT OF
OPERATING COSTS (INCLUDING THOSE OPERATING COSTS WHICH ARE REIMBURSED
HEREUNDER).

 

Notwithstanding anything contained herein to the contrary, Operating Costs shall
exclude:  (a) the Base Management Fee and the Incentive Management Fee;
(b) items expressly excluded from Operating Costs pursuant to the terms hereof;
(c) items for which Manager or its Affiliates are to indemnify Purchaser or
Owner; (d) items for which Owner or its Affiliates are to indemnify Manager;
(e) items for which Manager or its Affiliates has agreed under the Transaction
Documents to be liable at its own cost and expense; (f) amounts payable to Owner
or its Affiliates under the Purchase Agreement or the Transaction Documents or
for periods not included in the Term; (g) any reimbursement of advances made by
Manager or Owner; (h) the cost of Capital Replacements; (i) the Minimum Rent and
the Additional Rent under the Lease; (j) debt service on any loan or other debt
secured by an Authorized Mortgage or other financing obtained by Purchaser,
Owner or Manager other than equipment financing permitted hereunder; (k) except
as provided in Sections 2.2, 6.1 or 11.1, the cost of providing any services by
the Manager or its Affiliates using their own personnel to the Hotels which are
not performed at the Hotels; (l) any cost incurred in connection with the sale
of the Hotels from Manager or its Affiliates to Owner or its Affiliates
including, without limitation, any expense incurred in connection with
performing obligations under the Purchase Agreement or any agreement,
instrument, indemnity or undertaking executed and delivered by IHG or any of its
Affiliates in connection with the Closing; (m) gratuities or service charges in
the nature of a gratuity added to a customer’s bill, Sales Tax or any other
taxes collected directly from patrons or guests or included as part of the sales
price of any goods or services sold to patrons or guests, provided Manager shall
apply any amounts collected on account of such excluded items to the obligations
to which they pertain; (n) costs and expenses relating to transfers of any Hotel
by Purchaser pursuant to Sections 4.4 or 4.5; (o) costs and expenses incurred by
Owner in connection with providing asset management services and related
undertakings pursuant to
Section 2.8(b); (p) GST payable on or in respect of Operating Costs

 

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(including those Operating Costs which are reimbursed hereunder) and/or on or in
respect of any amounts payable to Manager or the Canadian Manager hereunder,
including but not limited to, the Base Management Fee and the Incentive
Management Fee; and (q) costs incurred in connection with the operation,
maintenance or repair of the Baltimore Central Plant, except to the extent that
such charges are properly allocated to the Baltimore Hotel (including, without
limitation, the Baltimore Health Club) in accordance with the terms and
conditions of the Baltimore Maintenance Memorandum.

 

1.94         “OPERATING EQUIPMENT”  SHALL HAVE THE MEANING GIVEN TO THE TERM
“PROPERTY AND EQUIPMENT” UNDER THE UNIFORM SYSTEM OF ACCOUNTS.

 

1.95         “OPERATING PROFIT”  SHALL MEAN: WITH RESPECT TO ANY HOTEL, FOR ANY
PERIOD, THE EXCESS, IF ANY, OF GROSS REVENUES FOR SUCH HOTEL FOR SUCH PERIOD
OVER OPERATING COSTS FOR SUCH HOTEL FOR SUCH PERIOD; AND WITH RESPECT TO ALL OF
THE HOTELS (OR A GROUP OF HOTELS), FOR ANY PERIOD, THE EXCESS, IF ANY, OF GROSS
REVENUES FOR ALL OF THE HOTELS (OR SUCH GROUP OF HOTELS) FOR SUCH PERIOD OVER
OPERATING COSTS FOR ALL OF THE HOTELS (OR SUCH GROUP OF HOTELS) FOR SUCH PERIOD.

 

1.96         “OPERATING STANDARDS”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN
SECTION 2.1.

 

1.97         “OPERATING SUPPLIES”  SHALL HAVE THE MEANING GIVEN TO THE TERM
“INVENTORIES” UNDER THE UNIFORM SYSTEM OF ACCOUNTS.

 

1.98         “ORIGINAL MANAGEMENT AGREEMENT”  SHALL HAVE THE MEANING GIVEN SUCH
TERM IN THE FIRST RECITAL TO THIS AGREEMENT.

 

1.99         “OTHER DOCUMENTS”  SHALL MEAN, COLLECTIVELY, THE PURCHASE
AGREEMENT, THE PR STOCK AGREEMENT, THE BALTIMORE PURCHASE AGREEMENT AND ANY
OTHER AGREEMENT, INSTRUMENT, INDEMNITY OR UNDERTAKING EXECUTED AND DELIVERED BY
IHG OR ANY OF ITS AFFILIATES IN CONNECTION WITH THE CLOSING OR THE CLOSING UNDER
THE PR STOCK AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

 

1.100               “OWNER”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN THE
PREAMBLE TO THIS AGREEMENT AND SHALL INCLUDE ITS SUCCESSORS AND ASSIGNS.

 

1.101               “OWNER’S FIRST PRIORITY”  SHALL MEAN AN ANNUAL AMOUNT EQUAL
TO THE SUM OF (A) THE BASE PRIORITY AMOUNT PLUS, (B) EFFECTIVE ON THE DATE OF
EACH DISBURSEMENT BY PURCHASER OR OWNER PURSUANT TO SECTIONS 5.2(C)(IV) OR 15.2
(IN EXCESS OF NET

 

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INSURANCE PROCEEDS OR THE AWARD), AN AMOUNT EQUAL TO THE AMOUNT SO DISBURSED
MULTIPLIED BY THE OWNER’S FIRST PRIORITY ADJUSTMENT RATE (DETERMINED AS OF THE
DATES ON WHICH SUCH SUMS ARE ADVANCED).  OWNER’S FIRST PRIORITY SHALL BE SUBJECT
TO FURTHER ADJUSTMENT AS PROVIDED IN SECTIONS 2.7, 15.1(C) AND 24.17(B).

 

1.102               “OWNER’S FIRST PRIORITY ADJUSTMENT RATE”  SHALL MEAN A PER
ANNUM RATE EQUAL TO THE GREATER OF (X) EIGHT AND FIVE-TENTHS (8.5%) PERCENT AND
(Y) THE SUM OF THE RATE FOR FIFTEEN (15) YEAR U.S. TREASURY OBLIGATIONS, AS
PUBLISHED IN THE WALL STREET JOURNAL, PLUS THREE HUNDRED THIRTY (330) BASIS
POINTS.

 

1.103               “OWNER’S FIXED PRIORITY”  SHALL MEAN OWNER’S FIRST PRIORITY
AND OWNER’S SECOND PRIORITY, COLLECTIVELY.

 

1.104               “OWNER’S PERCENTAGE PRIORITY”  SHALL MEAN, FOR EACH FISCAL
YEAR AFTER THE 2006 FISCAL YEAR FOR EACH HOTEL OTHER THAN THE BALTIMORE HOTEL,
AND FOR EACH FISCAL YEAR AFTER THE 2007 FISCAL YEAR FOR THE BALTIMORE HOTEL, AN
AMOUNT EQUAL TO SEVEN AND ONE-HALF PERCENT (7.5%) OF THE EXCESS, IF ANY, OF
GROSS REVENUES OF SUCH HOTEL FOR SUCH FISCAL YEAR OVER THE GROSS REVENUES FOR
SUCH HOTEL FOR ITS BASE YEAR.

 

1.105               “OWNER’S SECOND PRIORITY”  SHALL MEAN AN ANNUAL AMOUNT EQUAL
TO THE SUM OF (A) THREE MILLION THIRTY SEVEN THOUSAND FIVE HUNDRED DOLLARS
($3,037,500) FOR THE PERIOD THROUGH JANUARY 5, 2006 AND THREE MILLION FOUR
HUNDRED FIFTY-EIGHT THOUSAND TWENTY-FIVE DOLLARS ($3,458,025) THEREAFTER
(PRORATED, IF NECESSARY, BASED ON THE APPLICABLE EFFECTIVE DATES AS CONTEMPLATED
BY SECTION 10.5) PLUS (B) EFFECTIVE ON THE DATE OF EACH DISBURSEMENT BY
PURCHASER OR OWNER PURSUANT TO SECTIONS 5.2(C)(II) HEREOF, AN AMOUNT EQUAL TO
THE AMOUNT SO DISBURSED MULTIPLIED BY THE APPLICABLE DISBURSEMENT RATE
(DETERMINED AS OF THE DATES ON WHICH SUCH SUMS ARE ADVANCED).  OWNER’S SECOND
PRIORITY SHALL BE SUBJECT TO FURTHER ADJUSTMENT AS PROVIDED IN SECTIONS 2.7,
15.1(C) AND 24.17(B).

 

1.106               “PARENT”  SHALL MEAN WITH RESPECT TO ANY PERSON, ANY PERSON
WHO OWNS DIRECTLY, OR INDIRECTLY THROUGH ONE OR MORE SUBSIDIARIES OR AFFILIATES,
GREATER THAN FIFTY PERCENT (50%) OF THE VOTING OR BENEFICIAL INTEREST IN, OR
OTHERWISE HAS THE RIGHT OR POWER (WHETHER BY CONTRACT, THROUGH OWNERSHIP OF
SECURITIES OR OTHERWISE) TO CONTROL, SUCH PERSON.

 

1.107               “PERSON”  SHALL MEAN ANY INDIVIDUAL OR ENTITY, AND THE
HEIRS, EXECUTORS, ADMINISTRATORS, LEGAL REPRESENTATIVES,

 

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SUCCESSORS AND ASSIGNS OF SUCH INDIVIDUAL OR ENTITY WHERE THE CONTEXT SO ADMITS.

 

1.108               “PLEDGED HOTELS”  SHALL MEAN, WITH RESPECT TO ANY LOAN OR
OTHER DEBT SECURED BY AN AUTHORIZED MORTGAGE, COLLECTIVELY, THE HOTELS WHICH
SECURE SUCH LOAN OR OTHER DEBT.

 

1.109               “POOLED FF&E HOTELS”  SHALL MEAN THE HOTELS AND, AFTER THE
CLOSING UNDER THE PR STOCK AGREEMENT AND SUBJECT TO THE LIMITATIONS ON TRANSFER
SET FORTH IN THE PR LEASE, SO LONG AS THE PR PROPERTY IS OWNED BY AN AFFILIATE
OF PURCHASER, THE PR PROPERTY.

 

1.110               “PR GUARANTY”  SHALL HAVE THE MEANING GIVEN TO SUCH TERM IN
THE GUARANTY.

 

1.111               “PR INDEMNITY”  SHALL MEAN THAT CERTAIN INDEMNITY AGREEMENT
TO BE EXECUTED AND DELIVERED BY THE GUARANTOR PURSUANT TO THE PR STOCK AGREEMENT
AT THE CLOSING THEREUNDER.

 

1.112               “PR LEASE”  SHALL MEAN THAT CERTAIN LEASE TO BE ENTERED INTO
PURSUANT TO THE PR STOCK AGREEMENT BETWEEN THE OWNER OF THE PR PROPERTY, ON THE
ONE HAND, AND MANAGER’S AFFILIATE, ON THE OTHER HAND, WITH RESPECT TO THE
INTERCONTINENTAL HOTEL IN SAN JUAN, PUERTO RICO, AS THE SAME MAY BE AMENDED FROM
TIME TO TIME.

 

1.113               “PR PROPERTY”  SHALL HAVE THE MEANING ASCRIBED TO THE TERM
“PROPERTY” IN THE PR LEASE.

 

1.114               “PR STOCK AGREEMENT”  SHALL MEAN THAT CERTAIN AMENDED AND
RESTATED STOCK PURCHASE AGREEMENT PURSUANT TO WHICH AN AFFILIATE OF MANAGER SOLD
OR WILL SELL THE STOCK OF THE OWNER OF THE PR PROPERTY TO AN AFFILIATE OF OWNER,
AS THE SAME MAY BE AMENDED FROM TIME TO TIME.

 

1.115               “PR TENANT”  SHALL MEAN THE TENANT UNDER THE PR LEASE.

 

1.116               “PRINCIPAL DOCUMENTS”  SHALL MEAN, COLLECTIVELY, THIS
AGREEMENT, THE PR LEASE, THE GUARANTY, THE PR GUARANTY, THE PR INDEMNITY, THE
COLLATERAL AGENCY AGREEMENT AND THE DEPOSIT AGREEMENT.

 

1.117               “PRIORITY COVERAGE RATIO”  SHALL MEAN FOR ANY PERIOD, FOR
ANY HOTEL OR GROUP OF HOTELS, THE QUOTIENT OF (A) THE EXCESS OF OPERATING PROFIT
FOR SUCH HOTEL OR GROUP OF HOTELS OVER AN IMPLIED RESERVE FOR CAPITAL
REPLACEMENTS EQUAL TO FIVE

 

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PERCENT (5%) OF GROSS REVENUES FOR SUCH HOTEL OR GROUP OF HOTELS (AS APPLICABLE)
DIVIDED BY (B) THE SUM OF THE OWNER’S FIRST PRIORITY ALLOCATED PURSUANT TO
SECTION 10.9 TO SUCH HOTEL OR GROUP OF HOTELS (AS APPLICABLE) FOR SUCH PERIOD. 
TO THE EXTENT THAT ANY AMOUNT (OR PORTION THEREOF) USED TO CALCULATE THE
PRIORITY COVERAGE RATIO IS DENOMINATED IN ANY CURRENCY OTHER THAN UNITED STATES
DOLLARS, THE SAME SHALL BE CONVERTED TO UNITED STATES DOLLARS USING A REASONABLE
METHOD CONSISTENT WITH THE ACCOUNTING PRINCIPLES USED BY MANAGER AND ITS
AFFILIATES TO ACCOUNT FOR FOREIGN CURRENCIES.

 

1.118               “PURCHASE AGREEMENT”  SHALL MEAN, COLLECTIVELY, ONE OR MORE
PURCHASE AGREEMENTS BETWEEN OWNER OR ITS AFFILIATE(S) AND MANAGER OR ITS
AFFILIATE(S) PURSUANT TO WHICH PURCHASER HAS ON THE EFFECTIVE DATE ACQUIRED THE
HOTELS (OTHER THAN THE BALTIMORE HOTEL) FROM MANAGER OR ITS AFFILIATE(S), AS THE
SAME MAY BE AMENDED FROM TIME TO TIME.

 

1.119               “PURCHASER”  SHALL MEAN, COLLECTIVELY, THE LANDLORDS UNDER
THE LEASE.

 

1.120               “RENEWAL TERMS”  SHALL MEAN ANY EXTENSION OF THE TERM OF
THIS AGREEMENT, COMMENCING UPON THE EXPIRATION OF THE INITIAL TERM OR ANY
EXTENSIONS THERETO, AS PROVIDED IN ARTICLE 3.

 

1.121               “REPAIRS”  SHALL HAVE THE MEANING GIVEN SUCH TERM IN
SECTION 7.6.

 

1.122               “REPLACEMENT PROPERTY”  SHALL MEAN A HOTEL MUTUALLY
ACCEPTABLE TO THE PARTIES ACQUIRED BY PURCHASER IN SUBSTITUTION FOR A HOTEL WITH
RESPECT TO WHICH THIS AGREEMENT WAS TERMINATED PURSUANT TO SECTION 16.1.

 

1.123               “RESERVATION SYSTEM”  SHALL MEAN A COMPUTERIZED NETWORK OF
HIGH SPEED TERRESTRIAL AND SATELLITE-LINKED HARDWARE AND DATA LINES CONNECTING
HOTELS, CENTRAL RESERVATION CENTERS, DATA PROCESSING CENTERS AND TRAVEL AGENCIES
WHICH PROVIDES RESERVATION SERVICES TO THE STAYBRIDGE SUITES, INTERCONTINENTAL,
CROWNE PLAZA OR HOLIDAY INN, AS APPLICABLE, HOTELS IN NORTH AMERICA.

 

1.124               “RESERVE ACCOUNT”  SHALL MEAN AN INTEREST-BEARING UNITED
STATES DOLLAR ACCOUNT ESTABLISHED FOR FUNDS TO BE HELD IN RESERVE FOR CAPITAL
REPLACEMENTS IN PURCHASER’S NAME AT A BANK SELECTED BY PURCHASER.

 

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1.125               “RESERVE EFFECTIVE DATE”  SHALL MEAN FEBRUARY 25, 2007 FOR
ALL HOTELS EXCEPT THE BALTIMORE HOTEL, FOR WHICH THE “RESERVE EFFECTIVE DATE”
SHALL MEAN FEBRUARY 25, 2006.

 

1.126               “RESERVE PERCENTAGE”  SHALL MEAN, WITH RESPECT TO ALL OF THE
HOTELS OTHER THAN THE BALTIMORE HOTEL, THE FOLLOWING PERCENTAGES FOR THE
CORRESPONDING PERIODS:

 

Year

 

Rate

 

 

 

 

 

2005

 

0

%

2006

 

0

%

2007

 

3.0

%

2008

 

3.5

%

2009

 

4.0

%

2010

 

4.5

%

Thereafter

 

5.0

%

 

With respect to the Baltimore Hotel only, the “Reserve Percentage” shall mean
the following percentages for the corresponding periods:

 

Year

 

Rate

 

 

 

 

 

2006

 

3.0

%

2007

 

4.0

%

Thereafter

 

5.0

%

 

1.127               “RESIDUAL DISTRIBUTION”  SHALL MEAN AMOUNTS TO BE
DISTRIBUTED TO OWNER PURSUANT TO SECTION 10.2.

 

1.128               “RESTRICTED AREA”  SHALL MEAN, FOR ANY HOTEL, THE AREA
AROUND SUCH HOTEL DEPICTED ON EXHIBIT D.

 

1.129               “RESTRICTED PERIOD”  SHALL MEAN: FOR EACH STAYBRIDGE HOTEL
AND HOLIDAY INN HOTEL, THE PERIOD ENDING ON THE THIRD (3RD) ANNIVERSARY OF THE
EFFECTIVE DATE; AND FOR EACH INTERCONTINENTAL HOTEL AND CROWNE PLAZA HOTEL, THE
PERIOD ENDING ON THE FIFTH (5TH) ANNIVERSARY OF THE EFFECTIVE DATE.

 

1.130               “ROOMS REVENUE”  SHALL MEAN ALL REVENUE DERIVED FROM THE
RENTAL OF GUEST ROOMS IN A HOTEL IN WHATEVER CURRENCY COLLECTED DETERMINED IN
ACCORDANCE WITH THE ACCOUNTING PRINCIPLES.

 

1.131               “RST”  SHALL MEAN RETAIL SALES TAXES IMPOSED PURSUANT TO THE
RETAIL SALES TAX ACT (ONTARIO).

 

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1.132               “SALES TAX”  SHALL MEAN ALL FEDERAL (U.S. AND CANADA),
STATE, PROVINCIAL, MUNICIPAL OR LOCAL SALES, USE, EXCISE, GST, VALUE ADDED,
RETAIL SALES, GROSS RECEIPTS AND OCCUPANCY TAXES, DUTIES, LEVIES, CHARGES OR
SIMILAR GOVERNMENTAL CHARGES, WHETHER IMPOSED NOW OR IN THE FUTURE.

 

1.133               “SECURED OBLIGATIONS”  SHALL HAVE THE MEANING GIVEN SUCH
TERM IN THE DEPOSIT GUARANTY.

 

1.134               “SEVERANCE DATE”  SHALL HAVE THE MEANING GIVEN TO SUCH TERM
IN THE GUARANTY.

 

1.135               “SITES”  SHALL MEAN THE PARCELS OF REAL ESTATE MORE
PARTICULARLY DESCRIBED ON EXHIBITS A-1 THROUGH A-13 ATTACHED HERETO.

 

1.136               “SPECIALLY DESIGNATED OR BLOCKED PERSON”  SHALL MEAN (I) A
PERSON DESIGNATED BY THE U.S. DEPARTMENT OF TREASURY’S OFFICE OF FOREIGN ASSETS
CONTROL FROM TIME TO TIME AS A “SPECIALLY DESIGNATED NATIONAL OR BLOCKED PERSON”
OR SIMILAR STATUS, (II) A PERSON DESCRIBED IN SECTION 1 OF THE U.S. EXECUTIVE
ORDER 13224, ISSUED SEPTEMBER 23, 2001, OR (III) A PERSON OR ENTITY OTHERWISE
IDENTIFIED BY GOVERNMENT AGENCIES AS A PERSON OR ENTITY WITH WHICH EITHER PARTY
IS PROHIBITED FROM TRANSACTING BUSINESS.  AS OF THE DATE OF THIS AGREEMENT, A
LIST OF SUCH DESIGNATIONS AND THE TEXT OF THE EXECUTIVE ORDER ARE PUBLISHED AT: 
WWW.USTREAS.GOV/OFFICES/ENFORCEMENT/OFAC.

 

1.137               “STAYBRIDGE HOTELS”  SHALL MEAN THE HOTELS THAT ARE OPERATED
AS OF THE DATE HEREOF AS STAYBRIDGE SUITES HOTELS.

 

1.138               “SUBSIDIARY”  SHALL MEAN WITH RESPECT TO ANY PERSON, ANY
ENTITY (A) IN WHICH SUCH PERSON OWNS DIRECTLY, OR INDIRECTLY, GREATER THAN
TWENTY PERCENT (20%) OF THE VOTING OR BENEFICIAL INTEREST OR (B) WHICH SUCH
PERSON OTHERWISE HAS THE RIGHT OR POWER TO CONTROL (WHETHER BY CONTRACT, THROUGH
OWNERSHIP OF SECURITIES OR OTHERWISE).

 

1.139               “SUBSTITUTE TENANT”  SHALL HAVE THE MEANING GIVEN THE TERM
IN SECTION 4.2.

 

1.140               “SUCCESSOR PURCHASER”  SHALL HAVE THE MEANING GIVEN TO SUCH
TERM IN SECTION 4.3(A)(IV)  (C).

 

1.141               “SYSTEM FEES”  SHALL MEAN THE FEES SPECIFIED IN SECTION 9.2,
EXCLUDING THE E-MAIL SERVICE FEE AND THE ACCOUNTING FEE DESCRIBED THEREIN.

 

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1.142               “SYSTEM MARKS”  SHALL MEAN ALL SERVICE MARKS, TRADEMARKS,
COPYRIGHTS, TRADE NAMES, LOGO TYPES, COMMERCIAL SYMBOLS, PATENTS OR OTHER
SIMILAR RIGHTS OR REGISTRATIONS NOW OR HEREAFTER HELD, APPLIED FOR OR LICENSED
BY MANAGER OR ANY AFFILIATE OF MANAGER IN CONNECTION WITH THE STAYBRIDGE SUITES,
INTERCONTINENTAL, CROWNE PLAZA OR HOLIDAY INN, AS APPLICABLE, BRAND OF HOTELS.

 

1.143               “TERM”  SHALL MEAN THE TERM OF THIS AGREEMENT AS IT MAY BE
EXTENDED OR TERMINATED PURSUANT TO THE TERMS OF THIS AGREEMENT.

 

1.144               “TRANSACTION DOCUMENTS”  SHALL MEAN, COLLECTIVELY, THE
PRINCIPAL DOCUMENTS AND THE OTHER DOCUMENTS.

 

1.145               “TRANSFERRED HOTEL”  SHALL MEAN A CANADIAN HOTEL WHICH IS
SOLD OR OTHERWISE TRANSFERRED BY PURCHASER AND OWNER (OTHER THAN TO AN
AFFILIATE) PURSUANT TO SECTION 24.17.

 

1.146               “UNIFORM SYSTEM OF ACCOUNTS”  SHALL MEAN THE UNIFORM SYSTEM
OF ACCOUNTS FOR THE LODGING INDUSTRY, NINTH REVISED EDITION, 1996, AS PUBLISHED
BY THE EDUCATIONAL INSTITUTE OF THE AMERICAN HOTEL AND MOTEL ASSOCIATION, AS IT
MAY BE AMENDED FROM TIME TO TIME.

 

1.147               “ULTIMATE PARENT”  SHALL MEAN, WITH RESPECT TO ANY PERSON,
EACH PARENT OF SUCH PERSON WHO IN TURN HAS NO PARENT.

 

1.148               “UNSUITABLE FOR ITS PERMITTED USE”  SHALL MEAN WITH RESPECT
TO A HOTEL, A STATE OR CONDITION OF SUCH HOTEL SUCH THAT (A) FOLLOWING ANY
DAMAGE OR DESTRUCTION INVOLVING SUCH HOTEL, SUCH HOTEL CANNOT BE OPERATED IN THE
GOOD FAITH JUDGMENT OF MANAGER OR OWNER ON A COMMERCIALLY PRACTICABLE BASIS AND
IT CANNOT REASONABLY BE EXPECTED TO BE RESTORED TO SUBSTANTIALLY THE SAME
CONDITION AS EXISTED IMMEDIATELY BEFORE SUCH DAMAGE OR DESTRUCTION AND OTHERWISE
AS REQUIRED UNDER ARTICLE 15 HEREOF, USING ONLY THE NET PROCEEDS OF INSURANCE
OBTAINED IN CONNECTION THEREWITH AND OTHER FUNDS THAT OWNER OR MANAGER ELECT TO
PROVIDE PURSUANT TO THE TERMS OF ARTICLE 15 HEREOF WITHIN TWELVE (12) MONTHS
FOLLOWING SUCH DAMAGE OR DESTRUCTION OR SUCH SHORTER PERIOD OF TIME AS TO WHICH
BUSINESS INTERRUPTION INSURANCE IS AVAILABLE TO COVER AMOUNTS PAYABLE TO OWNER
HEREUNDER AND OTHER COSTS RELATED TO THE HOTEL FOLLOWING SUCH DAMAGE OR
DESTRUCTION, (B) AS THE RESULT OF A PARTIAL TAKING BY CONDEMNATION, SUCH HOTEL
CANNOT BE OPERATED IN THE GOOD FAITH JUDGMENT OF OWNER ON A COMMERCIALLY
PRACTICABLE BASIS IN LIGHT OF THEN EXISTING CIRCUMSTANCES, OR (C) AS THE RESULT
OF A PARTIAL TAKING BY

 

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CONDEMNATION (OTHER THAN AN ANAHEIM CONDEMNATION) SUCH HOTEL CANNOT BE OPERATED
IN THE GOOD FAITH JUDGMENT OF MANAGER ON A COMMERCIALLY PRACTICABLE BASIS IN
LIGHT OF THEN EXISTING CIRCUMSTANCES.  NOTWITHSTANDING THE FOREGOING, THE TERM
“UNSUITABLE FOR ITS PERMITTED USE” SHALL APPLY TO THE BALTIMORE HOTEL TO THE
EXTENT THAT ANY SUCH DAMAGE, DESTRUCTION OR CONDEMNATION IS TO THE
INFRASTRUCTURE AND/OR EQUIPMENT WHICH IS/ARE LOCATED WITHIN THE BALTIMORE
PARKING GARAGE.  HOWEVER, THE TERM “UNSUITABLE FOR ITS PERMITTED USE” SHALL NOT
APPLY TO THE BALTIMORE HOTEL TO THE EXTENT THAT ANY SUCH DAMAGE, DESTRUCTION OR
CONDEMNATION IS TO INFRASTRUCTURE AND/OR EQUIPMENT WHICH IS/ARE NOT LOCATED
WITHIN OR OTHERWISE A PART OF THE BALTIMORE HOTEL OR THE BALTIMORE PARKING
GARAGE (INCLUDING, WITHOUT LIMITATION, THE “CONDO PARKING”, THE “CONDO PROJECT”,
OR THE “OFFICE BUILDING” AS SUCH TERMS ARE DEFINED IN THE BALTIMORE
DECLARATION).

 

1.149       “WORKING CAPITAL”  SHALL MEAN FUNDS, IN WHATEVER CURRENCY, THAT ARE
USED (OR HELD FOR USE) IN THE DAY-TO-DAY OPERATION OF THE BUSINESS OF THE
HOTELS, INCLUDING, WITHOUT LIMITATION, CHANGE AND PETTY CASH FUNDS, AMOUNTS
DEPOSITED IN OPERATING BANK ACCOUNTS, RECEIVABLES, DEPOSITS WITH UTILITY
PROVIDERS, AMOUNTS DEPOSITED IN PAYROLL ACCOUNTS, PREPAID EXPENSES, AMOUNTS TO
PAY GST ON THE OWNER’S “TAXABLE SUPPLIES” (INCLUDING, WITHOUT LIMITATION,
OPERATING SUPPLIES, OPERATING EQUIPMENT, RENT UNDER THE LEASE, AND MANAGEMENT
FEES), AND FUNDS REQUIRED TO MAINTAIN OPERATING SUPPLIES, LESS ACCOUNTS PAYABLE
AND ACCRUED CURRENT LIABILITIES, EXCLUSIVE OF ANY FUNDS IN THE RESERVE ACCOUNT.

 

1.150       “YEARLY BUDGET”  SHALL MEAN, WITH RESPECT TO EACH HOTEL, THE ANNUAL
OPERATING BUDGET OF SUCH HOTEL, COVERING A FISCAL YEAR, AS PREPARED BY MANAGER
IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLES AND APPROVED BY OWNER.  SUCH BUDGET
SHALL INCLUDE AN OPERATING BUDGET, A BUSINESS PLAN AND A CAPITAL REPLACEMENTS
BUDGET.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE YEARLY BUDGET
SHALL INCLUDE A PROJECTION OF THE ESTIMATED FINANCIAL RESULTS OF THE OPERATION
OF EACH HOTEL FOR THE FISCAL YEAR.  SUCH PROJECTION SHALL PROJECT THE ESTIMATED
GROSS REVENUES, DEPARTMENTAL PROFITS, OPERATING COSTS AND OPERATING PROFIT FOR
THE FISCAL YEAR FOR EACH HOTEL.

 

ARTICLE 2

 

SCOPE OF AGREEMENT

 

2.1           ENGAGEMENT OF MANAGER.  SUBJECT TO THE TERMS OF THIS AGREEMENT,
OWNER HEREBY GRANTS TO MANAGER THE SOLE AND EXCLUSIVE

 

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RIGHT TO SUPERVISE AND DIRECT THE MANAGEMENT AND OPERATION OF THE HOTELS FOR THE
TERM AS OWNER’S AGENT COUPLED WITH AN INTEREST.  MANAGER HEREBY ACCEPTS SAID
GRANT AND AGREES THAT IT WILL CONTROL, SUPERVISE AND DIRECT THE MANAGEMENT AND
OPERATION OF THE HOTELS, ALL SUBJECT TO THE TERMS, REQUIREMENTS AND CONDITIONS
OF THIS AGREEMENT, WITH COMMERCIALLY REASONABLE EFFORTS IN DOING SO, AND IN AN
EFFICIENT AND ECONOMICAL MANNER CONSISTENT WITH STANDARDS PREVAILING IN WELL
MANAGED HOTELS SIMILAR TO THE HOTELS, INCLUDING ALL ACTIVITIES IN CONNECTION
THEREWITH WHICH ARE CUSTOMARY AND USUAL TO SUCH AN OPERATION (THE FOREGOING
STANDARDS CONSTITUTING THE “OPERATING STANDARDS”).  WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, AND IN ADDITION TO THE OTHER FUNCTIONS TO BE
PERFORMED BY MANAGER PURSUANT TO THIS AGREEMENT, MANAGER SHALL PERFORM (OR SHALL
CAUSE ITS AFFILIATES TO PERFORM), IN CONNECTION WITH THE HOTELS IN ITS CAPACITY
AS “MANAGER” HEREUNDER AND IN ACCORDANCE WITH THE APPLICABLE BRAND STANDARDS,
THE OPERATING STANDARDS AND THE TERMS OF THIS AGREEMENT, EACH OF THE FOLLOWING
FUNCTIONS, PROVIDED, HOWEVER, EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT,
THE COSTS AND EXPENSES OF PERFORMING THE FOLLOWING FUNCTIONS SHALL BE OPERATING
COSTS:

 

(A)           ESTABLISH AND REVISE, AS NECESSARY, ADMINISTRATIVE POLICIES AND
PROCEDURES, INCLUDING POLICIES AND PROCEDURES FOR THE CONTROL OF REVENUE AND
EXPENDITURES, FOR THE PURCHASING OF SUPPLIES AND SERVICES, FOR THE CONTROL OF
CREDIT, AND FOR THE SCHEDULING OF MAINTENANCE, AND VERIFY THAT THE FOREGOING
PROCEDURES ARE OPERATING IN A SOUND MANNER.

 

(B)           MANAGE EXPENDITURES TO REPLENISH OPERATING SUPPLIES AND OPERATING
EQUIPMENT, MAKE PAYMENTS ON ACCOUNTS PAYABLE AND COLLECT ACCOUNTS RECEIVABLE.

 

(C)           ARRANGE FOR AND SUPERVISE PUBLIC RELATIONS AND ADVERTISING AND
PREPARE MARKETING PLANS.

 

(D)           PROCURE ALL OPERATING SUPPLIES AND REPLACEMENT OPERATING
EQUIPMENT.

 

(E)           PROVIDE, OR CAUSE TO BE PROVIDED, RISK MANAGEMENT SERVICES
RELATING TO THE TYPES OF INSURANCE REQUIRED TO BE OBTAINED OR PROVIDED BY
MANAGER UNDER THIS AGREEMENT.

 

(F)            REASONABLY COOPERATE (PROVIDED THAT EXCEPT AS HEREIN EXPRESSLY
PROVIDED MANAGER SHALL NOT BE OBLIGATED TO ENTER INTO ANY AMENDMENTS OF THIS
AGREEMENT OR, UNLESS OWNER AGREES TO REIMBURSE MANAGER THEREFOR, TO INCUR ANY
MATERIAL EXPENSE INCLUDING ANY INTERNAL EXPENSES) IN ANY ATTEMPT(S) TO: (I)

 

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EFFECTUATE A SALE OR OTHER TRANSFER OF A HOTEL SUBJECT TO THE TERMS OF
SECTIONS 4.4 AND 4.5 OF THIS AGREEMENT; OR (II) OBTAIN ANY AUTHORIZED MORTGAGE.

 

(G)           NEGOTIATE, ENTER INTO AND ADMINISTER SERVICE CONTRACTS AND
LICENSES FOR THE OPERATION OF THE HOTELS, INCLUDING, WITHOUT LIMITATION, AND TO
THE EXTENT APPROPRIATE, CONTRACTS AND LICENSES FOR HEALTH AND SAFETY SYSTEMS
MAINTENANCE, ELECTRICITY, GAS, TELEPHONE, CLEANING, ELEVATOR AND BOILER
MAINTENANCE, AIR CONDITIONING MAINTENANCE, LAUNDRY AND DRY CLEANING, MASTER
TELEVISION SERVICE, USE OF COPYRIGHTED MATERIALS (SUCH AS MUSIC AND VIDEOS),
ENTERTAINMENT AND OTHER SERVICES AS MANAGER DEEMS ADVISABLE.

 

(H)           NEGOTIATE, ENTER INTO AND ADMINISTER CONTRACTS FOR THE USE OF
BANQUET AND MEETING FACILITIES AND GUEST ROOMS BY GROUPS AND INDIVIDUALS.

 

(I)            TAKE REASONABLE ACTION TO COLLECT AND INSTITUTE IN ITS OWN NAME
OR IN THE NAME OF OWNER OR A HOTEL, IN EACH INSTANCE AS MANAGER IN ITS
REASONABLE DISCRETION DEEMS APPROPRIATE, LEGAL ACTIONS OR PROCEEDINGS TO COLLECT
CHARGES, RENT OR OTHER INCOME DERIVED FROM THE OPERATION OF THE HOTELS OR TO
OUST OR DISPOSSESS GUESTS, TENANTS, MEMBERS OR OTHER PERSONS IN POSSESSION
THEREFROM, OR TO CANCEL OR TERMINATE ANY LEASE, LICENSE OR CONCESSION AGREEMENT
FOR THE BREACH THEREOF OR DEFAULT THEREUNDER BY THE TENANT, LICENSEE OR
CONCESSIONAIRE.

 

(J)            MAKE REPRESENTATIVES AVAILABLE TO CONSULT WITH AND ADVISE OWNER
OR OWNER’S DESIGNEE AT OWNER’S REASONABLE REQUEST CONCERNING POLICIES AND
PROCEDURES AFFECTING THE CONDUCT OF THE BUSINESS OF THE HOTELS.

 

(K)           COLLECT AND ACCOUNT FOR AND REMIT TO GOVERNMENT AGENCIES ALL
APPLICABLE EXCISE, SALES, VALUE ADDED, OCCUPANCY AND USE TAXES OR SIMILAR
GOVERNMENTAL CHARGES COLLECTED BY OR AT THE HOTELS DIRECTLY FROM GUESTS,
MEMBERS, OTHER PATRONS, TENANTS, LICENSEES, CONCESSIONAIRES OR OTHER OCCUPANTS,
OR AS PART OF THE SALES PRICE OF ANY GOODS, SERVICES, RENTALS OR DISPLAYS, SUCH
AS GROSS RECEIPTS, ADMISSION OR SIMILAR OR EQUIVALENT TAXES, DUTIES, LEVIES OR
CHARGES, AND PREPARE, SIGN AND SUBMIT TO THE APPLICABLE GOVERNMENT AGENCIES THE
APPLICABLE RETURNS AND REPORTS THEREFOR ON BEHALF OF OWNER, IN OWNER’S NAME AND
USING OWNER’S REGISTRATION.

 

(L)            KEEP OWNER ADVISED OF EVENTS WHICH MIGHT REASONABLY BE EXPECTED
TO HAVE A MATERIAL EFFECT ON THE FINANCIAL PERFORMANCE OR VALUE OF ANY HOTEL.

 

27

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(M)          TO THE EXTENT IN MANAGER’S CONTROL, OBTAIN AND MAINTAIN ALL
APPROVALS NECESSARY TO USE AND OPERATE THE HOTELS IN ACCORDANCE WITH THE
APPLICABLE BRAND STANDARDS, OPERATING STANDARDS AND LEGAL REQUIREMENTS.

 

(N)           USE ITS REASONABLE EFFORTS TO KEEP ALL GROUND, UNDERLYING AND
PARKING LEASES IN FULL FORCE AND EFFECT AND ARRANGE APPROPRIATE SUBSTITUTES FOR
ANY SUCH LEASE WHICH CEASES TO BE OR IS REASONABLY ANTICIPATED TO CEASE TO BE IN
FULL FORCE AND IN EFFECT.

 

(O)           EXCEPT FOR THE OBLIGATIONS OF OWNER OR OWNER’S AFFILIATE ARISING
PURSUANT TO THAT CERTAIN SIXTH SUPPLEMENT TO THE BALTIMORE DECLARATION, COMPLY
WITH ALL OF THE OBLIGATIONS OF OWNER AND OWNER’S AFFILIATE UNDER THE BALTIMORE
DECLARATION IN THEIR CAPACITIES AS OWNERS AND/OR OPERATORS OF THE BALTIMORE
HOTEL (INCLUDING, WITHOUT LIMITATION, THE BALTIMORE HEALTH CLUB AND THE
BALTIMORE CENTRAL PLANT).  NOTWITHSTANDING THE FOREGOING, MANAGER ADDITIONALLY
AGREES TO COMPLY WITH ALL OF THE OBLIGATIONS OF OWNER AND OWNER’S AFFILIATE
UNDER SECTION 4.4 OF THE BALTIMORE DECLARATION.

 

(P)           PERFORM SUCH OTHER TASKS WITH RESPECT TO THE HOTELS AS ARE
GENERALLY PERFORMED BY MANAGERS OF SIMILAR HOTELS CONSISTENT WITH THE OPERATING
STANDARDS AND THE BRAND STANDARDS.

 

2.2           ADDITIONAL SERVICES.  ANY FEES FOR SERVICES NOT INCLUDED IN THE
MANAGEMENT FEES FOR THE HOTELS SHALL BE CONSISTENT WITH FEES ESTABLISHED FOR
SIMILAR TYPES OF HOTELS MANAGED BY MANAGER OR ITS AFFILIATES.  ANY DISPUTES
UNDER THIS SECTION 2.2 SHALL BE RESOLVED BY ARBITRATION.

 

2.3           USE OF HOTELS.  MANAGER SHALL NOT USE, AND SHALL EXERCISE
COMMERCIALLY REASONABLE EFFORTS TO PREVENT THE USE OF, THE HOTELS AND OWNER’S
AND MANAGER’S PERSONAL PROPERTY (WHETHER OWNED OR LEASED) USED IN CONNECTION
WITH THE HOTELS, IF ANY, FOR ANY UNLAWFUL PURPOSE.  MANAGER SHALL NOT COMMIT,
AND SHALL USE COMMERCIALLY REASONABLE EFFORTS TO PREVENT THE COMMISSION OF, ANY
WASTE AT THE HOTELS.  MANAGER SHALL NOT USE, AND SHALL USE COMMERCIALLY
REASONABLE EFFORTS TO PREVENT THE USE OF, THE HOTELS IN SUCH A MANNER AS WILL
CONSTITUTE AN UNLAWFUL NUISANCE THEREON OR THEREIN.  MANAGER SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO PREVENT THE USE OF THE HOTELS IN SUCH A
MANNER AS MIGHT REASONABLY BE EXPECTED TO IMPAIR OWNER’S OR PURCHASER’S TITLE
THERETO OR ANY PORTION THEREOF OR MIGHT REASONABLY BE EXPECTED TO GIVE RISE TO A
CLAIM OR CLAIMS FOR ADVERSE USE OR ADVERSE POSSESSION BY THE PUBLIC, AS SUCH, OR
OF IMPLIED DEDICATION OF THE HOTELS OR ANY PORTION THEREOF.

 

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2.4           RIGHT TO INSPECT.  MANAGER SHALL PERMIT OWNER AND ITS AUTHORIZED
REPRESENTATIVES TO INSPECT OR SHOW THE HOTELS DURING USUAL BUSINESS HOURS UPON
NOT LESS THAN TWENTY FOUR (24) HOURS’ NOTICE, PROVIDED THAT ANY INSPECTION BY
OWNER OR ITS REPRESENTATIVES SHALL NOT UNREASONABLY INTERFERE WITH THE USE AND
OPERATION OF THE HOTELS AND FURTHER PROVIDED THAT IN THE EVENT OF AN EMERGENCY
AS DETERMINED BY OWNER IN ITS REASONABLE DISCRETION, PRIOR NOTICE SHALL NOT BE
REQUIRED.

 

2.5           NO RIGHT OF OFFSET.  MANAGER SHALL NOT OFFSET AGAINST ANY AMOUNTS
OWED TO OWNER; PROVIDED, HOWEVER, MANAGER MAY OFFSET AMOUNTS WHICH OWNER HAS
FAILED TO FUND IN VIOLATION OF SECTION 5.2(C) (OR, SO LONG AS PR PROPERTY IS A
POOLED FF&E HOTEL, THE LANDLORD UNDER THE PR LEASE HAS FAILED TO FUND IN
VIOLATION OF SECTION 5.1.3(B) OF THE PR LEASE) AGAINST THE AMOUNTS OWED TO OWNER
HEREUNDER PROVIDED THAT AFTER GIVING EFFECT TO ALL SUCH OFFSETS THERE SHALL
STILL BE PAID TO OWNER AN AMOUNT SUFFICIENT TO PAY REGULARLY SCHEDULED PAYMENTS
OF INTEREST AND PRINCIPAL UNDER ANY LOAN OR OTHER DEBT SECURED BY AN AUTHORIZED
MORTGAGE AND ATTRIBUTABLE TO THE PLEDGED HOTELS.

 

2.6           CONDITION OF THE HOTELS.

 

(A)           MANAGER ACKNOWLEDGES RECEIPT AND DELIVERY OF POSSESSION OF EACH
HOTEL, AND MANAGER ACCEPTS EACH HOTEL IN ITS “AS IS” CONDITION AS OF THE
EFFECTIVE DATE, SUBJECT TO THE RIGHTS OF PARTIES IN POSSESSION, THE EXISTING
TITLE, INCLUDING ALL COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, MINERAL
LEASES, EASEMENTS AND OTHER MATTERS OF RECORD OR THAT ARE VISIBLE OR APPARENT ON
THE HOTELS, ALL APPLICABLE LEGAL REQUIREMENTS, AND SUCH OTHER MATTERS WHICH
WOULD BE DISCLOSED BY AN INSPECTION OF THE HOTELS AND THE RECORD TITLE THERETO
OR BY AN ACCURATE SURVEY THEREOF.  MANAGER REPRESENTS THAT:  IT HAS INSPECTED
THE HOTELS INCLUDING THE FF&E AND ALL OF THE FOREGOING AND HAS FOUND THE
CONDITION THEREOF SATISFACTORY; EXCEPT FOR THE BALTIMORE HOTEL, AS OF THE
EFFECTIVE DATE, THE HOTELS ARE IN COMPLIANCE WITH THE APPLICABLE BRAND STANDARDS
IN ALL MATERIAL RESPECTS; EXCEPT FOR CAPITAL REPLACEMENTS TO BE MADE FROM TIME
TO TIME USING THE BALTIMORE REBRANDING AMOUNTS, FUNDS TO BE DEPOSITED IN THE
RESERVE ACCOUNT PURSUANT TO SECTION 5.2(A) AND AMOUNTS TO BE EXPENDED BY THE
MANAGER’S AFFILIATES AS REQUIRED BY THE PURCHASE AGREEMENT, MANAGER CURRENTLY
DOES NOT ANTICIPATE THE NEED TO MAKE CAPITAL REPLACEMENTS DURING THE FIRST FIVE
YEARS OF THE TERM (PROVIDED, HOWEVER, SUCH REPRESENTATION IS NOT A GUARANTY OR
WARRANTY THAT NO SUCH CAPITAL REPLACEMENTS WILL BE REQUIRED); AND IT IS NOT
RELYING ON ANY REPRESENTATION OR WARRANTY OF OWNER, PURCHASER OR ANY OF THEIR
AGENTS OR EMPLOYEES WITH RESPECT TO ANY OF THE MATTERS SET FORTH IN THIS
SECTION.

 

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EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, MANAGER WAIVES ANY CLAIM OR
ACTION AGAINST OWNER AND PURCHASER WITH RESPECT TO THE CONDITION OF THE HOTELS. 
PURCHASER AND OWNER MAKE NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY HOTEL OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO THE
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT.

 

(B)           MANAGER’S REPRESENTATIONS SET FORTH IN SECTION 2.6(A) ARE
QUALIFIED AS TO THE BALTIMORE HOTEL IN CERTAIN RESPECTS BECAUSE, PRIOR TO ITS
EFFECTIVE DATE, THE BALTIMORE HOTEL WAS OPERATED AS AN UNBRANDED HOTEL THAT WAS
OWNED BY AN UNRELATED THIRD PARTY AND, IN ORDER TO BRING THE BALTIMORE HOTEL
INTO COMPLIANCE WITH APPLICABLE BRAND STANDARDS, MANAGER WILL NEED TO SPEND THE
BALTIMORE REBRANDING AMOUNTS ON VARIOUS ITEMS AS CONTEMPLATED BY
SECTION 5.2(H).  MANAGER REASONABLY BELIEVES THAT THE BALTIMORE REBRANDING
AMOUNTS SHALL BE SUFFICIENT FOR PURPOSES OF BRINGING THE BALTIMORE HOTEL INTO
COMPLIANCE WITH APPLICABLE BRAND STANDARD.  EXCEPT FOR THOSE CAPITAL
REPLACEMENTS THAT ARE TO BE MADE AT THE BALTIMORE HOTEL USING THE BALTIMORE
REBRANDING AMOUNTS, MANAGER CURRENTLY DOES NOT ANTICIPATE THE NEED TO MAKE ANY
OTHER CAPITAL REPLACEMENTS DURING THE FIRST FIVE (5) YEARS OF THE TERM WITH
RESPECT TO THE BALTIMORE HOTEL (PROVIDED, HOWEVER, SUCH REPRESENTATION IS NOT A
GUARANTY OR A WARRANTY THAT NO SUCH CAPITAL REPLACEMENTS WILL BE REQUIRED). 
MANAGER COVENANTS TO COMPLETE THE REBRANDING OF THE BALTIMORE HOTEL ON OR PRIOR
TO JANUARY 1, 2007.

 

2.7           NON-ECONOMIC HOTELS.

 

(A)           MANAGER SHALL BE ENTITLED TO DESIGNATE AS A NON-ECONOMIC HOTEL ANY
HOTEL FOR WHICH, IN EACH OF ANY THREE (3) CONSECUTIVE FULL FISCAL YEARS DURING
THE TERM, THE OPERATING PROFIT IS LESS THAN THE SUM OF (I) AMOUNTS TO BE FUNDED
TO THE RESERVE ACCOUNT PURSUANT TO SECTION 5.2(A) ON ACCOUNT OF SUCH HOTEL, PLUS
(II) OWNER’S FIXED PRIORITY ATTRIBUTABLE TO SUCH HOTEL PURSUANT TO EXHIBIT C
HERETO; PROVIDED, HOWEVER, THAT THE NUMBER OF HOTELS DESIGNATED AS NON-ECONOMIC
HOTELS UNDER THIS AGREEMENT (OTHER THAN THOSE WITH RESPECT TO WHICH SUCH
DESIGNATION HAS BEEN WITHDRAWN OR DEEMED WITHDRAWN, BUT INCLUDING THOSE WHICH
HAVE BEEN SOLD PURSUANT TO THIS SECTION 2.7) SHALL NOT EXCEED THREE (3).  IF
SUBSEQUENT TO A HOTEL BEING DESIGNATED AS A NON-ECONOMIC HOTEL BUT PRIOR TO ITS
SALE PURSUANT TO THIS SECTION 2.7, THE OPERATING PROFIT OF SUCH HOTEL FOR ANY
FISCAL YEAR SHALL EXCEED THE SUM OF AMOUNTS TO BE FUNDED TO THE RESERVE ACCOUNT
PURSUANT TO SECTION 5.2(A) ON ACCOUNT OF SUCH HOTEL, PLUS THE PORTION OF THE
OWNER’S FIXED PRIORITY FOR

 

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SUCH FISCAL YEAR SO ATTRIBUTABLE TO SUCH HOTEL, SUCH DESIGNATION SHALL BE DEEMED
WITHDRAWN; PROVIDED, HOWEVER, IF MANAGER IS THEN NEGOTIATING A SALE OF SUCH
HOTEL TO A THIRD PARTY, SUCH DESIGNATION SHALL NOT BE DEEMED WITHDRAWN FOR A
PERIOD OF THREE (3) MONTHS.

 

(B)           SO LONG AS THERE IS NO MANAGER DEFAULT OR MANAGER EVENT OF
DEFAULT, MANAGER MAY MARKET EACH HOTEL THAT IS A NON-ECONOMIC HOTEL FOR SALE. 
IN ADDITION, IF MANAGER REASONABLY ANTICIPATES BASED ON PROJECTIONS PREPARED IN
THE ORDINARY COURSE THAT A HOTEL WILL BECOME A NON-ECONOMIC HOTEL WITHIN THE
NEXT TWELVE (12) MONTHS, MANAGER MAY MARKET SUCH HOTEL FOR SALE; PROVIDED,
HOWEVER, NO HOTEL SHALL BE SOLD PURSUANT TO THIS SECTION 2.7 OTHER THAN
NON-ECONOMIC HOTELS.  IF MANAGER RECEIVES AN OFFER, MANAGER SHALL GIVE OWNER AND
PURCHASER NOTICE THEREOF, WHICH NOTICE SHALL INCLUDE A COPY OF THE EXECUTED
OFFER.  IN THE EVENT THAT OWNER AND PURCHASER SHALL FAIL TO ACCEPT OR REJECT
SUCH OFFER WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT OF SUCH NOTICE, SUCH
OFFER SHALL BE DEEMED TO BE REJECTED BY THEM.  PROVIDED THERE IS NO MANAGER
DEFAULT OR MANAGER EVENT OF DEFAULT, IF OWNER AND PURCHASER SHALL EITHER SELL
SUCH NON-ECONOMIC HOTEL PURSUANT TO SUCH OFFER OR REJECT OR BE DEEMED TO HAVE
REJECTED SUCH OFFER, THEN EFFECTIVE AS OF THE DATE OF SUCH SALE OR, IF THE OFFER
WAS REJECTED OR DEEMED REJECTED, THE PROPOSED DATE OF SALE CONTAINED IN SUCH
OFFER, AS THE CASE MAY BE, THE FOLLOWING SHALL APPLY: (I) THE TERM SHALL
TERMINATE WITH RESPECT TO SUCH NON-ECONOMIC HOTEL; (II) NO FURTHER OWNER’S
PERCENTAGE PRIORITY SHALL ACCRUE WITH RESPECT TO SUCH NON-ECONOMIC HOTEL’S GROSS
REVENUES WHICH ACCRUE AFTER SUCH TERMINATION; (III) THE OWNER’S FIRST PRIORITY
SHALL BE REDUCED BY AN AMOUNT EQUAL TO EIGHT PERCENT (8%) OF THE NET (AFTER
TAKING INTO ACCOUNT ANY COSTS PAID BY MANAGER) PROCEEDS OF SALE RECEIVED BY
OWNER OR PURCHASER (OR, IN THE CASE OF SUCH A REJECTION, EIGHT PERCENT (8%) OF
THE PROJECTED NET (AFTER TAKING INTO ACCOUNT ANY COSTS TO BE PAID BY MANAGER)
PROCEEDS OF SALE WHICH WOULD HAVE BEEN RECEIVED BY OWNER OR PURCHASER DETERMINED
BY REFERENCE TO SUCH OFFER); AND (IV) THE OWNER’S SECOND PRIORITY SHALL BE
REDUCED BY ONE HALF OF ONE PERCENT (0.5%) OF SUCH NET PROCEEDS (OR, IN THE CASE
OF A REJECTION, ONE HALF OF ONE PERCENT (0.5%) OF SUCH PROJECTED NET PROCEEDS).

 

2.8           NO EARLY TERMINATION OF MANAGER; NATURE OF RELATIONSHIP ETC.

 

(A)           SO LONG AS THIS AGREEMENT IS IN FULL FORCE AND EFFECT AND OWNER IS
NOT ENTITLED PURSUANT TO THE TERMS HEREOF TO TERMINATE THIS AGREEMENT IN ITS
ENTIRETY, OWNER COVENANTS AND AGREES NOT TO HIRE, ENGAGE, APPOINT OR EMPLOY ANY
OTHER MANAGER TO

 

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MANAGE ANY HOTEL PRIOR TO THE EXPIRATION OR EARLIER TERMINATION OF THE TERM WITH
RESPECT TO SUCH HOTEL.  ANY OTHERWISE APPLICABLE PRINCIPLES OF LAW
NOTWITHSTANDING, IT IS OWNER’S INTENT AND AGREEMENT THAT MANAGER SHALL MANAGE
EACH HOTEL PURSUANT TO THIS AGREEMENT THROUGH THE TERM SO LONG AS THIS AGREEMENT
IS IN FULL FORCE AND EFFECT WITH RESPECT TO SUCH HOTEL.

 

(B)           OWNER SHALL PROVIDE APPROPRIATE ASSET MANAGEMENT SERVICES WITH
RESPECT TO THE HOTELS AT NO COST OR EXPENSE TO MANAGER (AND SHALL USE REASONABLE
EFFORTS TO COOPERATE WITH MANAGER IN ORDER TO KEEP ALL GROUND, UNDERLYING AND
PARKING LEASES IN FULL FORCE AND EFFECT).  THE COSTS AND EXPENSES INCURRED BY
OWNER IN CONNECTION WITH PROVIDING SUCH ASSET MANAGEMENT SERVICES SHALL NOT BE
OPERATING COSTS.  OWNER SHALL, FROM TIME TO TIME, UPON THE REQUEST OF MANAGER
PROVIDE MANAGER WITH THE NAME, TELEPHONE NUMBER, FAX NUMBER AND EMAIL ADDRESS OF
THE INDIVIDUAL RESPONSIBLE FOR PROVIDING SUCH ASSET MANAGEMENT SERVICES. 
MANAGER WILL COOPERATE WITH AND ASSIST THE OWNER IN EVERY REASONABLE AND PROPER
WAY TO PERMIT OWNER TO CARRY OUT ITS DUTIES AND EXERCISE ITS RIGHTS HEREUNDER
WITH RESPECT TO THE HOTELS.

 

(C)           WITHOUT LIMITING THE SCOPE OR INTENT OF THE PROVISIONS OF
SECTION 19.1 OF THIS AGREEMENT, EACH OF THE PARTIES ACKNOWLEDGES AND AGREES THAT
(I) THE EXECUTION AND DELIVERY BY THE OTHER OF THIS AGREEMENT IS SUBSTANTIAL AND
ESSENTIAL CONSIDERATION FOR THEIR RESPECTIVE AFFILIATES’ PURCHASE AND SALE OF
THE HOTELS (OTHER THAN THE BALTIMORE HOTEL) PURSUANT TO THE PURCHASE AGREEMENT,
(II) BUT FOR THE EXECUTION AND DELIVERY OF THIS AGREEMENT, MANAGER’S AFFILIATES
WOULD NOT HAVE SOLD THE HOTELS (OTHER THAN THE BALTIMORE HOTEL) TO PURCHASER
PURSUANT TO THE PURCHASE AGREEMENT, (III) BUT FOR THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, OWNER’S AFFILIATES WOULD NOT HAVE PURCHASED THE HOTELS (OTHER
THAN THE BALTIMORE HOTEL) FROM MANAGER’S AFFILIATES OR THE BALTIMORE HOTEL FROM
THE BALTIMORE SELLER, (IV) THE TERMS AND PROVISIONS OF THE PURCHASE AGREEMENT
AND THE BALTIMORE PURCHASE AGREEMENT, INCLUDING THE PURCHASE PRICES SET FORTH
THEREIN, THE PR STOCK AGREEMENT AND THE PR LEASE WERE NEGOTIATED AND AGREED UPON
ON THE BASIS AND UPON THE CONDITION THAT THIS AGREEMENT BE EXECUTED AND
DELIVERED AT THE TIME OF THE CLOSING OF THE SALE OF THE HOTELS TO PURCHASER,
(V) THIS AGREEMENT FAIRLY, ACCURATELY AND FULLY SETS FORTH THE AGREEMENT BETWEEN
OWNER AND MANAGER REGARDING MANAGER’S MANAGEMENT OF THE HOTELS THROUGH THE TERM,
(VI) THERE ARE NO DUTIES OR OBLIGATIONS BETWEEN THE PARTIES NOT EXPRESSLY SET
FORTH HEREIN AND (VII) EACH OF THE PARTIES HERETO HAS A DUTY OF COMMERCIAL GOOD
FAITH AND FAIR DEALING.

 

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(D)           ANY COMMON LAW OR OTHER RULE OR RESTRICTION THAT WOULD OTHERWISE
APPLY NOTWITHSTANDING, BUT SUBJECT TO THE TERMS OF SECTION 24.1, MANAGER, OWNER
AND THEIR RESPECTIVE AFFILIATES ARE FREE TO MANAGE, ENGAGE IN OR LICENSE OTHER
BUSINESS ACTIVITIES, INCLUDING ACTIVITIES INVOLVING TRANSIENT LODGING AND
RELATED ACTIVITIES.  EXCEPT AS PROVIDED IN SECTION 24.1, NOTHING HEREIN OR
OTHERWISE SHALL PREVENT MANAGER, OWNER OR THEIR RESPECTIVE AFFILIATES FROM
OWNING, MANAGING OR LICENSING OTHER FACILITIES, AND MANAGER, OWNER AND THEIR
RESPECTIVE AFFILIATES MAY MANAGE, ENGAGE IN OR LICENSE ANY BUSINESS ACTIVITY AT
ANY OTHER LOCATION WHETHER OR NOT COMPETING WITH THE HOTELS, WITHOUT THE CONSENT
OR APPROVAL OF, OR LIABILITY TO, THE OTHER AND WITHOUT OFFERING THE OTHER ANY
OPPORTUNITY TO PARTICIPATE THEREIN.  SUBJECT TO THE TERMS OF SECTION 24.1, EACH
PARTY HEREBY WAIVES ANY CLAIM OR CAUSE OF ACTION, OF WHATEVER NATURE AND HOWEVER
DERIVED, RELATING TO OR ARISING IN ANY WAY OUT OF THE OTHER’S OWNERSHIP,
LICENSING OR MANAGEMENT OF ANY OTHER HOTEL OR COMMERCIAL PROPERTY WHEREVER
LOCATED.

 

ARTICLE 3

 

TERM AND RENEWALS

 

3.1           TERM.  THE TERM OF THIS AGREEMENT SHALL BE FOR A PERIOD BEGINNING
ON THE EFFECTIVE DATE AND CONTINUING FOR THE INITIAL TERM AND ANY EXTENSION OF
THE TERM HEREOF IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, UNLESS
SOONER TERMINATED AS HEREIN PROVIDED.  MANAGER ACKNOWLEDGES THAT IF THE GROUND
LEASE FOR THE INTERCONTINENTAL HOTEL IN TORONTO, ONTARIO IS TERMINATED, THE
LESSOR THEREUNDER MAY TERMINATE THIS AGREEMENT UPON GIVING NOT LESS THAN ONE
HUNDRED EIGHTY (180) DAYS’ NOTICE, WHICH NOTICE SHALL BE GIVEN WITHIN NINETY
(90) DAYS AFTER SUCH GROUND LEASE IS TERMINATED.

 

3.2           RENEWAL TERM.  PROVIDED THE TERM OF THE PR LEASE IS SIMULTANEOUSLY
EXTENDED IN ACCORDANCE WITH THE TERMS OF THE PR LEASE, THE TERM MAY BE EXTENDED,
AT MANAGER’S OPTION, FOR UP TO TWO (2) CONSECUTIVE PERIODS (EACH, A “RENEWAL
TERM”) OF FIFTEEN (15) YEARS EACH ON NOT LESS THAN TWO (2) YEARS’ PRIOR NOTICE
TO OWNER.  IF MANAGER FAILS TO GIVE NOTICE OF ITS ELECTION NOT TO EXERCISE
EITHER OF ITS OPTIONS TO EXTEND THE TERM ON OR BEFORE THE DATE WHICH IS THE DAY
PRIOR TO THE DATE THAT IS TWO (2) YEARS PRIOR TO THE THEN EXPIRATION DATE OR IF
PR TENANT FAILS TO GIVE NOTICE OF ITS ELECTION NOT TO EXERCISE EITHER OF ITS
OPTIONS TO EXTEND THE TERM OF THE PR LEASE ON OR BEFORE THE DATE WHICH IS THE
DAY PRIOR TO THE DATE THAT IS TWO (2) YEARS PRIOR TO THE THEN EXPIRATION DATE OF
THE PR LEASE, MANAGER SHALL BE DEEMED TO HAVE EXERCISED THE APPLICABLE EXTENSION
OPTION.  THE

 

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TERMS AND PROVISIONS OF THIS AGREEMENT WILL REMAIN IN EFFECT AS STATED HEREIN
DURING ANY RENEWAL TERM EXCEPT THAT MANAGER SHALL HAVE NO RIGHT TO EXTEND THE
TERM BEYOND THE RENEWAL TERMS HEREIN PROVIDED.

 

3.3           OWNER’S TERMINATION RIGHT AT END OF TERM.  IF MANAGER GIVES NOTICE
OF ITS ELECTION NOT TO EXTEND THE TERM, OR THE PR TENANT GIVES NOTICE OF ITS
ELECTION NOT TO EXTEND THE TERM OF THE PR LEASE, OR MANAGER SHALL HAVE NO
FURTHER RIGHT TO EXTEND THE TERM, THEN AT ANY TIME DURING THE LAST TWO YEARS OF
THE TERM, OWNER MAY TERMINATE THIS AGREEMENT ON NOT LESS THAN THIRTY (30) DAYS’
PRIOR WRITTEN NOTICE.

 

ARTICLE 4

 

TITLE TO HOTEL

 

4.1           COVENANTS OF TITLE.  DURING THE TERM, PROVIDED NO MANAGER DEFAULT
EXISTS, MANAGER SHALL HAVE THE RIGHT PEACEABLY AND QUIETLY TO OPERATE THE HOTELS
IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, FREE FROM INTERFERENCE,
DISTURBANCE AND EVICTION BY OWNER OR PURCHASER OR BY ANY OTHER PERSON OR PERSONS
CLAIMING BY, THROUGH OR UNDER OWNER OR PURCHASER, SUBJECT ONLY TO TERMINATION OF
THIS AGREEMENT AS HEREIN PROVIDED.  EXCEPT AS MAY OTHERWISE BE PROVIDED HEREIN,
OWNER, AT OWNER’S OWN EXPENSE (AND NOT AS AN OPERATING COST), SHALL PROSECUTE
ALL APPROPRIATE ACTIONS, JUDICIAL OR OTHERWISE, REQUIRED TO ASSURE SUCH QUIET
AND PEACEABLE OPERATION BY MANAGER AND SHALL PAY AND DISCHARGE ANY RENTAL
OBLIGATIONS UNDER THE LEASE.  WITHOUT MANAGER’S WRITTEN CONSENT, WHICH CONSENT
SHALL NOT BE UNREASONABLY WITHHELD, OWNER SHALL NOT DURING THE TERM ENTER INTO
AN AGREEMENT, COVENANT OR ENCUMBRANCE AFFECTING TITLE TO THE HOTELS EXCEPT IN
CONNECTION WITH AUTHORIZED MORTGAGES AND SALES OR TRANSFERS OF THE HOTELS NOT
PROHIBITED HEREBY.  FURTHER, DURING THE TERM, OWNER SHALL NOT CONVERT ANY HOTEL
TO A CONDOMINIUM FORM OF OWNERSHIP.

 

4.2           NON-DISTURBANCE.  PURCHASER AND MANAGER AGREE THAT IN THE EVENT
THE LEASE TERMINATES PRIOR TO EXPIRATION OR EARLIER TERMINATION OF THE TERM, SO
LONG AS (I) THERE EXISTS NO UNCURED MANAGER EVENT OF DEFAULT AND (II) OWNER IS
NOT OTHERWISE ENTITLED TO TERMINATE THIS AGREEMENT: (A) MANAGER SHALL NOT BE
DISTURBED IN ITS RIGHTS UNDER THIS AGREEMENT BY PURCHASER; (B) PURCHASER SHALL
ASSUME THE OBLIGATIONS OF OWNER UNDER THIS AGREEMENT; AND (C) MANAGER SHALL
ATTORN TO PURCHASER AND RECOGNIZE PURCHASER AS THE “OWNER” UNDER THIS
AGREEMENT.  PURCHASER SHALL HAVE THE RIGHT TO ASSIGN ALL OF ITS RIGHT, TITLE AND
INTEREST IN, TO AND UNDER THIS AGREEMENT TO A NEW TENANT (A

 

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“SUBSTITUTE TENANT”) TO WHICH PURCHASER SHALL LEASE THE HOTELS (PURSUANT TO A
LEASE WHICH IMPOSES NO GREATER RISKS, OBLIGATIONS, DUTIES OR LIABILITY ON
MANAGER THAN THE LEASE (ASSUMING THE SAME HAD NOT BEEN TERMINATED) AND FOR A
TERM EQUAL TO THE UNEXPIRED TERM OF THIS AGREEMENT) WHICH SUBSTITUTE TENANT
SHALL EXPRESSLY ASSUME ALL OF THE OWNER’S OBLIGATIONS UNDER THIS AGREEMENT. 
UPON SUCH ASSIGNMENT TO, AND ASSUMPTION BY, A SUBSTITUTE TENANT, PURCHASER SHALL
BE RELIEVED OF ALL FUTURE OBLIGATIONS ARISING UNDER THIS AGREEMENT (OTHER THAN
ANY EXPRESSLY IMPOSED ON PURCHASER PURSUANT TO SECTIONS 4.2 THROUGH AND
INCLUDING 4.7), MANAGER SHALL ATTORN TO THE SUBSTITUTE TENANT AND RECOGNIZE THE
SUBSTITUTE TENANT AS THE “OWNER” UNDER THIS AGREEMENT, AND THE TERM “LEASE” AS
USED IN THIS AGREEMENT SHALL BE DEEMED TO REFER TO SUCH LEASE BETWEEN PURCHASER
AND THE SUBSTITUTE TENANT.

 

4.3           FINANCING.

 

(A)           PURCHASER SHALL BE ENTITLED TO ENCUMBER THE HOTELS OR ANY OF THEM
WITH ONE OR MORE AUTHORIZED MORTGAGES WHICH ARE EXPRESSLY SUBORDINATE TO THIS
AGREEMENT OR IN CONNECTION WITH WHICH THE FOLLOWING TERMS AND CONDITIONS ARE
SATISFIED:

 

(I)      THE LOAN OR OTHER DEBT SECURED BY SUCH AUTHORIZED MORTGAGE SHALL NOT BE
CROSS-COLLATERALIZED WITH OTHER PROPERTY OR HOTELS WHICH ARE NOT MANAGED OR
FRANCHISED BY MANAGER, IHG OR THEIR RESPECTIVE AFFILIATES;

 

(II)     THE PRINCIPAL AMOUNT SECURED BY SUCH AUTHORIZED MORTGAGE SHALL NOT
EXCEED THE SUM OF SEVENTY-FIVE PERCENT (75%) (OR, IF LESS THAN FOUR (4) POOLED
FF&E HOTELS SECURE SUCH PRINCIPAL AMOUNT, SIXTY-FIVE PERCENT (65%)) OF THE SUM
OF THE FAIR MARKET VALUE AS OF THE DATE OF THE GRANTING OF SUCH AUTHORIZED
MORTGAGE OF THE PLEDGED HOTELS AND THE OTHER PROPERTIES SECURING SUCH PRINCIPAL
AMOUNT;

 

(III)       AS OF THE DATE OF THE GRANTING OF SUCH AUTHORIZED MORTGAGE, THE DEBT
SERVICE COVERAGE RATIO ASSOCIATED WITH SUCH LOAN OR DEBT SECURED THEREBY SHALL
NOT BE LESS THAN (I) 1.4 IF FEWER THAN FOUR (4) POOLED FF&E HOTELS SECURE SUCH
LOAN OR OTHER DEBT OR (II) 1.3 IF FOUR (4) OR MORE POOLED FF&E HOTELS SECURE
SUCH LOAN OR OTHER DEBT; AND

 

(IV)    THE HOLDER OF SUCH AUTHORIZED MORTGAGE SHALL EXECUTE AND DELIVER TO
MANAGER (MANAGER AGREEING TO LIKEWISE EXECUTE AND DELIVER TO SUCH HOLDER) A
SO-CALLED

 

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SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT WHICH SHALL PROVIDE
THAT:

 

(A)          THIS AGREEMENT AND MANAGER’S RIGHTS HEREUNDER ARE SUBJECT AND
SUBORDINATE TO THE AUTHORIZED MORTGAGE, THE LIEN THEREOF, THE RIGHTS OF THE
HOLDER THEREOF AND TO ANY AND ALL ADVANCES MADE THEREUNDER, INTEREST THEREON OR
COSTS INCURRED IN CONNECTION THEREWITH;

 

(B)           SO LONG AS THIS AGREEMENT IS IN FULL FORCE AND EFFECT AND THERE
EXISTS NO MANAGER DEFAULT WHICH HAS NOT BEEN CURED WITHIN ANY APPLICABLE NOTICE
OR GRACE PERIOD, MANAGER’S RIGHTS UNDER THIS AGREEMENT SHALL NOT BE DISTURBED BY
REASON OF SUCH SUBORDINATION OR BY REASON OF FORECLOSURE OF SUCH AUTHORIZED
MORTGAGE OR RECEIPT OF DEED IN LIEU OF FORECLOSURE;

 

(C)           MANAGER SHALL ATTORN TO THE HOLDER OR THE PURCHASER AT ANY SUCH
FORECLOSURE OR THE GRANTEE OF ANY SUCH DEED (EACH, A “SUCCESSOR PURCHASER”);

 

(D)          IN THE EVENT OF SUCH ATTORNMENT, THE TERMS OF THIS AGREEMENT
BINDING ON PURCHASER AND MANAGER SHALL CONTINUE IN FULL FORCE AND EFFECT AS A
DIRECT AGREEMENT BETWEEN SUCH SUCCESSOR PURCHASER AND MANAGER, UPON ALL THE
TERMS, CONDITIONS AND COVENANTS SET FORTH HEREIN, EXCEPT THAT THE SUCCESSOR
PURCHASER SHALL NOT BE (1) BOUND BY ANY PAYMENT OF OWNER’S FIXED PRIORITY,
OWNER’S PERCENTAGE PRIORITY OR THE RESIDUAL DISTRIBUTION IN ADVANCE OF WHEN DUE;
(2) BOUND BY ANY AMENDMENT OR MODIFICATION OF THIS AGREEMENT MADE AFTER THE DATE
THAT MANAGER FIRST HAD WRITTEN NOTICE OF SUCH AUTHORIZED MORTGAGE WITHOUT THE
CONSENT OF THE HOLDER THEREOF; (3) LIABLE IN ANY WAY TO MANAGER FOR ANY ACT OR
OMISSION, NEGLECT OR DEFAULT ON THE PART OF PURCHASER OR OWNER UNDER THIS
AGREEMENT; (4) OBLIGATED TO PERFORM ANY WORK OR IMPROVEMENTS TO BE DONE BY
PURCHASER OR OWNER OR TO MAKE ANY ADVANCES EXCEPT FOR THOSE ADVANCES TO BE MADE
PURSUANT TO SECTION 5.2(C) FROM AND AFTER THE DATE ON WHICH SUCH SUCCESSOR
PURCHASER ACQUIRED THE HOTEL(S); OR (5) SUBJECT TO ANY COUNTERCLAIM OR SETOFF
WHICH THERETOFORE ACCRUED TO MANAGER AGAINST PURCHASER OR OWNER;

 

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(E)           IN THE EVENT OF A CASUALTY OR CONDEMNATION AFFECTING ANY PLEDGED
HOTEL WHICH DOES NOT RESULT IN THE TERMINATION OF THIS AGREEMENT WITH RESPECT TO
SUCH PLEDGED HOTEL, THE NET INSURANCE PROCEEDS OR AWARD SHALL BE APPLIED TO THE
RESTORATION OF SUCH HOTEL AS HEREIN PROVIDED; AND

 

(F)           SUCH OTHER TERMS AS ARE CUSTOMARY FOR SIMILAR AGREEMENTS.

 

(B)           IN THE EVENT LESS THAN ALL OF THE HOTELS ARE TO SECURE THE LOAN OR
OTHER DEBT SECURED BY AN AUTHORIZED MORTGAGE, OWNER SHALL HAVE THE RIGHT TO
CAUSE THE PLEDGED HOTELS TO BE MANAGED PURSUANT TO A SEPARATE MANAGEMENT
AGREEMENT WHICH AGREEMENT SHALL BE FOR A TERM EQUAL TO THE UNEXPIRED PORTION OF
THE TERM AND OTHERWISE ON SUBSTANTIALLY THE SAME TERMS OF THIS AGREEMENT EXCEPT
AS OTHERWISE PROVIDED HEREIN, PROVIDED THAT THE PLEDGED HOTELS IN THE AGGREGATE
AND THE REMAINING HOTELS IN THE AGGREGATE SHALL HAVE PRIORITY COVERAGE RATIOS
FOR THE 12-MONTH PERIOD ENDING ON THE LAST DAY OF THE MONTH NEXT PRIOR TO THE
DATE ON WHICH SUCH AUTHORIZED MORTGAGE IS GRANTED EQUAL TO EACH OTHER OR EQUAL
TO, OR GREATER THAN, 1.3.  IN CONNECTION WITH ENTERING INTO SUCH SEPARATE
MANAGEMENT AGREEMENT, THE PARTIES SHALL MAKE APPROPRIATE ALLOCATIONS OF OWNER’S
FIXED PRIORITY, AMOUNTS IN THE RESERVE ACCOUNT, THE WORKING CAPITAL, AND ANY
OUTSTANDING ADVANCES MADE BY OWNER, MANAGER OR THEIR RESPECTIVE AFFILIATES SO
THAT THE OBLIGATIONS ALLOCABLE TO THE HOTELS SUBJECT TO SUCH AUTHORIZED MORTGAGE
SHALL NOT BE DUE FROM THE OTHER HOTELS AND VICE VERSA.  THE ALLOCATION OF
OWNER’S FIXED PRIORITY FOR EACH HOTEL SHALL BE PROPORTIONAL TO THE NOI OF SUCH
HOTEL FOR THE THEN MOST RECENTLY ENDED TWELVE (12) MONTHS RELATIVE TO THE NOI OF
ALL THE OTHER HOTELS FOR SUCH PERIOD.  WITHOUT THE CONSENT OF MANAGER, THE
HOLDER OF ANY AUTHORIZED MORTGAGE SHALL HAVE THE RIGHT TO ELECT TO BE SUBJECT
AND SUBORDINATE TO THIS AGREEMENT, SUCH SUBORDINATION TO BE EFFECTIVE UPON SUCH
TERMS AND CONDITIONS AS SUCH HOLDER MAY DIRECT WHICH ARE NOT INCONSISTENT WITH
THE PROVISIONS HEREOF.

 

(C)           MANAGER SHALL BE ENTITLED TO PAY ANY OVERDUE REGULARLY SCHEDULED
PAYMENTS OF INTEREST AND PRINCIPAL ON ANY AUTHORIZED MORTGAGE FROM THE OPERATING
PROFITS OF ALL OF THE HOTELS SUBJECT TO SUCH AUTHORIZED MORTGAGE AND TO CREDIT
ANY SUCH PAYMENTS AGAINST DISBURSEMENT OBLIGATIONS FOR OWNER’S FIXED PRIORITY.

 

4.4           SALE OF A HOTEL TO AN AFFILIATE.  IN THE EVENT OF A SALE OR
TRANSFER OF PURCHASER’S INTEREST IN ANY HOTEL TO AN AFFILIATE OF THE PURCHASER
WITH SUCH AFFILIATE ASSUMING PURCHASER’S OBLIGATIONS UNDER THE LEASE, THIS
AGREEMENT SHALL

 

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REMAIN IN FULL FORCE AND EFFECT WITHOUT REGARD TO SUCH SALE OR TRANSFER.

 

4.5           SALE OF ALL THE HOTELS.  IF PURCHASER SELLS OR OTHERWISE TRANSFERS
ALL OF THE HOTELS TO A SINGLE TRANSFEREE IN A SINGLE TRANSACTION, (A) THE
TRANSFEREE SHALL ASSUME PURCHASER’S OBLIGATIONS HEREUNDER AND (B) PURCHASER
SHALL BE RELEASED AND RELIEVED FROM ANY AND ALL OBLIGATIONS HEREUNDER.  IN
CONNECTION WITH SUCH TRANSFER, OWNER MAY ASSIGN THIS AGREEMENT TO THE TRANSFEREE
OR ITS AFFILIATE, AND PROVIDED THE ASSIGNEE ASSUMES ALL OF OWNER’S OBLIGATIONS
HEREUNDER THEREAFTER ACCRUING, OWNER SHALL BE RELEASED AND RELIEVED FROM ALL
SUCH OBLIGATIONS.  EXCEPT AS PROVIDED IN SECTIONS 2.7 OR 24.17 OR IN CONNECTION
WITH THE FORECLOSURE OF AN AUTHORIZED MORTGAGE OR DEED-IN-LIEU OF SUCH
FORECLOSURE, PURCHASER AND ITS AFFILIATES AND THEIR SUCCESSORS AND ASSIGNS SHALL
NOT SELL LESS THAN ALL THE POOLED FF&E HOTELS TO ANY PERSON EXCEPT TO AN
AFFILIATE AS PROVIDED IN SECTION 4.4 OR IN SECTION 15.6 OF THE PR LEASE.

 

4.6           THE LEASE.  THE LEASE SHALL NOT BE AMENDED OR MODIFIED IN ANY WAY
WHICH WOULD MATERIALLY INCREASE MANAGER’S OBLIGATIONS HEREUNDER OR MATERIALLY
REDUCE ITS RIGHTS HEREUNDER.  IN THE EVENT OF A CONFLICT BETWEEN THE TERMS
HEREOF AND THE TERMS OF THE LEASE, THE TERMS HEREOF SHALL GOVERN.

 

4.7           RESTRICTED SALE.  EXCEPT AS PROVIDED IN SECTION 2.7 OR IN
CONNECTION WITH A FORECLOSURE OF AN AUTHORIZED MORTGAGE, NEITHER PURCHASER NOR
OWNER SHALL TRANSFER ITS INTEREST IN ANY HOTEL, DIRECTLY OR INDIRECTLY, (A) TO
ANY PERSON WHICH: (I) IS IN CONTROL OF OR CONTROLLED BY PERSONS WHO HAVE BEEN
CONVICTED OF FELONIES; (II) IS A COMPETITOR OR AN AFFILIATE OF A COMPETITOR;
(III) LACKS THE FINANCIAL CAPABILITIES TO PERFORM OWNER’S OBLIGATIONS HEREUNDER;
OR (IV) IS A SPECIALLY DESIGNATED OR BLOCKED PERSON OR (B) IF SUCH TRANSFER
WOULD MATERIALLY ADVERSELY AFFECT THE ABILITY OF MANAGER OR ITS AFFILIATES TO
OBTAIN OR RETAIN ANY LICENSE OR PERMIT FOR THE HOTELS OR COMPLY WITH ANY
APPLICABLE GROUND OR PARKING LEASES FOR THE HOTELS.

 

ARTICLE 5

 

REQUIRED FUNDS

 

5.1           WORKING CAPITAL.

 

(A)           WITH RESPECT TO ALL OF THE HOTELS OTHER THAN THE BALTIMORE HOTEL,
MANAGER SHALL CONTRIBUTE TO THE WORKING CAPITAL FOR THE HOTELS AN AMOUNT (THE
“INITIAL WORKING CAPITAL”) REASONABLY SUFFICIENT TO PAY OPERATING COSTS FOR THE
HOTELS AND

 

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GST REQUIRED TO BE PAID BY OWNER (INCLUDING, WITHOUT LIMITATION, ANY GST ON OR
IN RESPECT OF OPERATING SUPPLIES, OPERATING EQUIPMENT AND ANY OTHER ITEMS
ACQUIRED BY OWNER IN CONNECTION WITH THE CLOSING UNDER THE PURCHASE AGREEMENT)
FOR THE FIRST THIRTY (30) DAYS OF OPERATING THE HOTELS FOLLOWING THE EFFECTIVE
DATE AFTER TAKING INTO ACCOUNT GROSS REVENUES AND GST COLLECTED FROM PATRONS,
GUESTS AND OTHERS OF, OR AT, THE HOTELS.  PROMPTLY AFTER THE MONTH IN WHICH THE
APPLICABLE EFFECTIVE DATE OCCURS, THE PARTIES SHALL AGREE ON THE AMOUNT OF THE
INITIAL WORKING CAPITAL WHICH MANAGER SO CONTRIBUTED.  WITH RESPECT TO THE
BALTIMORE HOTEL ONLY, THE INITIAL WORKING CAPITAL IS $0.00.

 

(B)           AFTER THE FIRST THIRTY (30) DAYS FOLLOWING THE APPLICABLE
EFFECTIVE DATE FOR EACH OF THE HOTELS, UPON WRITTEN NOTICE FROM MANAGER, OWNER
MAY, BUT SHALL NOT BE OBLIGATED TO, ADVANCE ANY ADDITIONAL FUNDS, OVER AND ABOVE
THE INITIAL WORKING CAPITAL, NECESSARY TO PAY OPERATING COSTS AND/OR GST
REQUIRED TO BE PAID BY OWNER (BUT NOT OWNER’S FIRST PRIORITY OR OWNER’S SECOND
PRIORITY) AS THEY COME DUE.  ANY SUCH REQUEST BY MANAGER SHALL BE ACCOMPANIED BY
A REASONABLY DETAILED EXPLANATION OF THE REASONS FOR THE REQUEST.  ALL FUNDS SO
ADVANCED FOR WORKING CAPITAL SHALL BE UTILIZED BY MANAGER TO PAY OPERATING COSTS
AND/OR SUCH GST AS THEY COME DUE.  IF OWNER DOES NOT ADVANCE SUCH ADDITIONAL
WORKING CAPITAL WITHIN TWO (2) BUSINESS DAYS AFTER NOTICE, MANAGER, AS ITS
EXCLUSIVE REMEDY, SHALL HAVE THE RIGHT EITHER TO (I) ADVANCE SUCH ADDITIONAL
WORKING CAPITAL OR (II) TERMINATE THIS AGREEMENT ON TEN (10) DAYS’ ADVANCE
WRITTEN NOTICE TO OWNER; PROVIDED, HOWEVER, SUCH NOTICE OF TERMINATION SHALL BE
VOID AB INITIO IF OWNER ADVANCES THE REQUESTED FUNDS NECESSARY TO PAY OPERATING
COSTS AND SUCH GST PRIOR TO THE END OF THE TENTH (10TH) DAY AFTER THE RECEIPT OF
SUCH TERMINATION NOTICE.  IF MANAGER FAILS TO EITHER MAKE SUCH ADVANCE OR GIVE
NOTICE OF TERMINATION WITHIN TEN (10) DAYS, THEN AFTER THE EXPIRATION OF SUCH
TWO (2) BUSINESS DAYS, OWNER MAY ELECT BY WRITTEN NOTICE TO MANAGER TO TERMINATE
THIS AGREEMENT, WHICH TERMINATION SHALL BE EFFECTIVE TEN (10) DAYS AFTER THE
DATE SUCH NOTICE IS GIVEN.  UPON THE EXPIRATION OR EARLIER TERMINATION OF THE
TERM, THE WORKING CAPITAL OF THE HOTELS SHALL BE APPLIED TO PAY ALL OPERATING
COSTS, SUCH GST AND ALL AMOUNTS OWED TO OWNER TO THE EXTENT GROSS REVENUES ARE
INSUFFICIENT.  THEREAFTER, MANAGER SHALL BE ENTITLED TO RETAIN THE INITIAL
WORKING CAPITAL, AND THE BALANCE OF THE WORKING CAPITAL SHALL BELONG TO OWNER. 
ALL REFUNDS AND (THE CASH EQUIVALENTS OF) ANY INPUT CREDITS IN RESPECT TO GST
PAID FROM WORKING CAPITAL SHALL REMAIN PART OF THE WORKING CAPITAL.

 

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5.2           RESERVE ACCOUNT.

 

(A)           MANAGER SHALL TRANSFER FROM THE BANK ACCOUNTS TO THE RESERVE
ACCOUNT IN CASH ON OR BEFORE THE 25TH DAY OF EACH FISCAL MONTH, BEGINNING ON THE
RESERVE EFFECTIVE DATE AND CONTINUING FOR EACH AND EVERY MONTH DURING THE TERM,
AN AGGREGATE AMOUNT EQUAL TO EACH HOTEL’S RESERVE PERCENTAGE APPLICABLE TO THE
CALENDAR YEAR IN WHICH THE PRIOR FISCAL MONTH OCCURRED TIMES THE GROSS REVENUES
AT SUCH HOTEL FOR THE PRIOR FISCAL MONTH.  THE AMOUNT TO BE CONTRIBUTED TO THE
RESERVE ACCOUNT ON ACCOUNT OF THE GROSS REVENUES OF THE CANADIAN HOTELS SHALL BE
CALCULATED USING CANADIAN DOLLARS BUT SHALL BE CONTRIBUTED TO THE RESERVE
ACCOUNT IN UNITED STATES DOLLARS IN ACCORDANCE WITH SECTION 24.24.  SUBJECT TO
THE TERMS OF SECTION 5.2(G) AND 5.2(H), AMOUNTS IN THE RESERVE ACCOUNT ARE TO
PAY FOR CAPITAL REPLACEMENTS UNDERTAKEN AFTER THE EFFECTIVE DATE REQUIRED TO
MAINTAIN ANY AND ALL OF THE HOTELS IN ACCORDANCE WITH THE OPERATING STANDARDS
AND THE BRAND STANDARDS; PROVIDED, HOWEVER, NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY, NO ADDITIONAL COST OR EXPENSE SHALL BE INCURRED OR
PAID IN CONNECTION WITH ANY CAPITAL REPLACEMENTS MADE DURING THE LAST TWO
(2) YEARS OF THE TERM TO THE EXTENT ATTRIBUTABLE SOLELY TO COMPLYING WITH THE
BRAND STANDARDS.  THE AMOUNTS SO PAID INTO THE RESERVE ACCOUNT SHALL BE RECORDED
ON THE HOTELS’ BOOKS OF ACCOUNT AS “RESERVE FOR FF&E REPLACEMENTS.”  EXCEPT AS
EXPRESSLY PROVIDED HEREIN, ANY EXPENDITURES FOR CAPITAL REPLACEMENTS DURING ANY
FISCAL YEAR WHICH HAVE BEEN APPROVED IN THE YEARLY CAPITAL REPLACEMENTS BUDGET
MAY BE MADE WITHOUT OWNER’S FURTHER APPROVAL AND, TO THE EXTENT AVAILABLE, MAY
BE MADE BY MANAGER FROM THE RESERVE ACCOUNT.  ANY AMOUNTS REMAINING IN THE
RESERVE ACCOUNT AT THE CLOSE OF EACH FISCAL YEAR WILL BE CARRIED FORWARD AND
RETAINED IN THE RESERVE ACCOUNT.  ANY AND ALL PORTIONS OF THE HOTELS WHICH ARE
SCRAPPED OR REMOVED IN CONNECTION WITH THE MAKING OF ANY MAJOR OR NON-MAJOR
REPAIRS, RENOVATIONS, ADDITIONS, ALTERATIONS, IMPROVEMENTS, REMOVALS OR
REPLACEMENTS AT THE HOTELS SHALL BE DISPOSED OF BY MANAGER AND ANY NET PROCEEDS
THEREOF SHALL BE DEPOSITED IN THE RESERVE ACCOUNT AND NOT INCLUDED IN GROSS
REVENUES.  IN ADDITION, ANY PROCEEDS FROM THE SALE OF FF&E NO LONGER NECESSARY
TO THE OPERATION OF THE HOTELS AND ANY REFUNDS OR (THE CASH EQUIVALENTS OF)
INPUT CREDITS ATTRIBUTABLE TO GST PAID WITH FUNDS FROM THE RESERVE ACCOUNT SHALL
BE ADDED TO THE RESERVE ACCOUNT.  SUBJECT TO SECTION 5.2(H), MANAGER SHALL BE
ENTITLED TO USE FUNDS IN THE RESERVE ACCOUNT TO MAKE CAPITAL REPLACEMENTS AT ANY
AND ALL OF THE HOTELS REGARDLESS OF THE HOTEL FROM WHICH SUCH FUNDS ORIGINATE. 
TO THE EXTENT THAT THE COST OF ANY SUCH CAPITAL REPLACEMENTS ARE TO BE PAID FOR
IN A CURRENCY OTHER THAN UNITED STATES DOLLARS, MANAGER SHALL EXCHANGE AN
APPROPRIATE PORTION OF THE FUNDS IN THE RESERVE ACCOUNT INTO SUCH OTHER CURRENCY
AT THE

 

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BEST RATES AND TERMS COMMERCIALLY AVAILABLE TO MANAGER AT THE TIME OF SUCH
EXCHANGE FOR SUCH PURPOSE ON OR ABOUT THE DATE SUCH FUNDS ARE WITHDRAWN FROM THE
RESERVE ACCOUNT AND APPLIED TO PAY SUCH COSTS IN ACCORDANCE WITH MANAGER’S
GENERAL PRACTICE FOR CAPITAL REPLACEMENTS.  ALL COSTS OF SUCH EXCHANGE SHALL BE
OPERATING COSTS.

 

(B)           SUBJECT TO THE TERMS OF SECTION 5.6, MANAGER SHALL BE THE ONLY
PARTY ENTITLED TO WITHDRAW FUNDS FROM THE RESERVE ACCOUNT UNTIL A MANAGER
DEFAULT SHALL OCCUR.

 

(C)           SUBJECT TO THE TERMS OF SECTIONS 5.2(F), 5.2(G) AND 5.2(H),
ADDITIONAL AMOUNTS SHALL BE FUNDED INTO THE RESERVE ACCOUNT TO PAY FOR CAPITAL
REPLACEMENTS AS FOLLOWS:

 

(I)  EITHER OWNER OR MANAGER MAY PROPOSE THAT ADDITIONAL FUNDS BE FUNDED INTO
THE RESERVE ACCOUNT.

 

(II)  IF BOTH PARTIES GIVE THEIR APPROVAL TO A PROPOSED FUNDING WITHIN TWENTY
(20) BUSINESS DAYS AFTER A REQUEST FOR SUCH APPROVAL IS GIVEN FROM ONE PARTY TO
THE OTHER, OWNER SHALL (OR SHALL CAUSE PURCHASER TO) FUND THE APPROVED AMOUNT
INTO THE RESERVE ACCOUNT WITHIN TWENTY (20) BUSINESS DAYS AFTER BOTH PARTIES
APPROVE IN WRITING OF SUCH FUNDING PROVIDED THAT THERE IS THEN NO UNCURED
MANAGER DEFAULT.  NEITHER PARTY SHALL UNREASONABLY WITHHOLD ITS APPROVAL OF SUCH
A PROPOSED FUNDING; PROVIDED, HOWEVER, NO PURCHASER AT FORECLOSURE OF AN
AUTHORIZED MORTGAGE OR GRANTEE OF A DEED IN LIEU OF SUCH FORECLOSURE NOR ANY
PERSON CLAIMING BY, THROUGH OR UNDER SUCH PURCHASER OR GRANTEE SHALL HAVE AN
OBLIGATION TO SO NOT WITHHOLD ITS CONSENT; PROVIDED FURTHER, HOWEVER, OWNER WILL
CONSIDER THE LIKELIHOOD OF ITS RECEIVING THE INCREASE IN OWNER’S SECOND PRIORITY
WHICH WOULD RESULT FROM ITS MAKING SUCH ADVANCE AS WELL AS THE EFFECT ON THE
VALUE OF THE HOTELS RESULTING FROM THE DELAY OR FAILURE IN MAKING THE PROPOSED
CAPITAL REPLACEMENTS.  UPON SUCH FUNDING, OWNER’S SECOND PRIORITY WILL BE
ADJUSTED AS PROVIDED IN THE DEFINITION OF SUCH TERM.

 

(III)  IF OWNER PROPOSES IN WRITING SUCH FUNDING FOR THE PURPOSE OF MAKING
PARTICULAR CAPITAL REPLACEMENTS BUT MANAGER DOES NOT APPROVE OF THE SAME IN
WRITING WITHIN TWENTY (20) BUSINESS DAYS AFTER OWNER GIVES SUCH PROPOSAL TO
MANAGER, OWNER SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO MAKE SUCH
FUNDING, AND MANAGER SHALL CAUSE SUCH CAPITAL REPLACEMENTS TO BE MADE WITH THE
AMOUNTS SO

 

41

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FUNDED UNLESS SUCH CAPITAL REPLACEMENTS CONFLICT WITH THE APPLICABLE BRAND
STANDARDS.

 

(IV)  IF MANAGER PROPOSES IN WRITING SUCH FUNDING FOR THE PURPOSE OF ONE OR MORE
PARTICULAR CAPITAL REPLACEMENTS AND OWNER DOES NOT APPROVE OF THE SAME IN
WRITING WITHIN TWENTY (20) BUSINESS DAYS AFTER SUCH PROPOSAL IS GIVEN TO OWNER,
MANAGER SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO EITHER PROVIDE THE
PROPOSED FUNDING ITSELF OR, IF SUCH CAPITAL REPLACEMENTS ARE SET FORTH IN THE
CAPITAL REPLACEMENTS BUDGET OR ARE REQUIRED TO COMPLY WITH THE OPERATING
STANDARDS, APPLICABLE BRAND STANDARDS, INSURANCE REQUIREMENTS OR LEGAL
REQUIREMENTS AND AT THE TIME OF THE GIVING OF SUCH PROPOSAL TO OWNER, THE FUNDS
IN THE RESERVE ACCOUNT SHALL BE INSUFFICIENT FOR SUCH CAPITAL REPLACEMENTS,
REQUIRE OWNER TO PROVIDE (OR CAUSE PURCHASER TO PROVIDE) THE PROPOSED FUNDING. 
IF OWNER OR PURCHASER PROVIDES SUCH FUNDING, THE OWNER’S FIRST PRIORITY WILL BE
ADJUSTED AS PROVIDED IN THE DEFINITION OF THAT TERM.

 

(V)  NOTWITHSTANDING ANYTHING CONTAINED IN THIS SECTION 5.2(C) TO THE CONTRARY,
NEITHER OWNER NOR MANAGER SHALL REQUEST THE OTHER PARTY TO FUND ANY AMOUNTS WITH
RESPECT TO THE BALTIMORE CENTRAL PLANT EXCEPT TO THE EXTENT THAT SUCH AMOUNTS
RELATE TO THE PORTION OF THE BALTIMORE CENTRAL PLANT THAT IS ALLOCATED TO THE
BALTIMORE HOTEL IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE BALTIMORE
DECLARATION AND THE BALTIMORE MAINTENANCE MEMORANDUM.

 

(D)           IF OWNER SHALL FAIL TO DISBURSE (OR CAUSE PURCHASER TO DISBURSE)
FUNDS TO MANAGER FOR DEPOSIT INTO THE RESERVE ACCOUNT IN VIOLATION OF
SECTION 5.2(C), WHICH FAILURE CONTINUES FOR FIVE (5) DAYS AFTER THE GIVING OF
NOTICE FROM MANAGER TO OWNER, THEN, IN ADDITION TO MANAGER’S OTHER REMEDIES
HEREUNDER OR UNDER THE HPT GUARANTY (AS DEFINED IN THE PURCHASE AGREEMENT),
MANAGER SHALL BE ENTITLED, BUT NOT OBLIGATED, TO DEPOSIT IN THE RESERVE ACCOUNT
THE AMOUNT OF FUNDS WHICH OWNER SO FAILED TO DISBURSE.

 

(E)           UPON THE EXPIRATION OR EARLIER TERMINATION OF THE TERM, MANAGER
SHALL DISBURSE TO PURCHASER, OR AS PURCHASER SHALL DIRECT, ALL AMOUNTS REMAINING
IN THE RESERVE ACCOUNT AFTER PAYMENTS OF ALL EXPENSES ON ACCOUNT OF CAPITAL
REPLACEMENTS APPROPRIATELY INCURRED BY MANAGER DURING THE TERM.

 

(F)            UNLESS AND UNTIL THE AFFILIATES OF THE MANAGER WHICH SOLD THE
HOTELS TO PURCHASER AND THE STOCK OF THE OWNER OF THE PR PROPERTY TO AN
AFFILIATE OF OWNER HAVE EXPENDED $25,000,000 (NET OF ANY APPLICABLE GST THAT IS
REFUNDABLE) OF THEIR OWN

 

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FUNDS TO MAKE CAPITAL REPLACEMENTS AT THE POOLED FF&E HOTELS (OTHER THAN THE
BALTIMORE HOTEL), OWNER SHALL HAVE NO OBLIGATION TO MAKE OR TO CAUSE PURCHASER
TO MAKE ANY ADVANCES TO THE RESERVE ACCOUNT.

 

(G)           NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
OWNER ADVISES MANAGER THAT IN OWNER’S OPINION, THE FAIR MARKET VALUE OF ALL
PERSONAL PROPERTY OF PURCHASER AT, ABOUT OR WHICH FORMS A PART OF A HOTEL IS
EQUAL TO OR EXCEEDS THIRTEEN AND ONE-HALF PERCENT (13.5%) OF THE FAIR MARKET
VALUE OF ALL PROPERTY OF PURCHASER PERTAINING TO SUCH HOTEL (INCLUDING ALL SUCH
PERSONAL PROPERTY, THE BUILDING AND THE UNDERLYING LAND OR GROUND LEASE),
MANAGER AND ITS AFFILIATES SHALL NOT USE FUNDS FROM THE RESERVE ACCOUNTS OR
WHICH ARE REQUIRED TO BE EXPENDED PURSUANT TO THE PURCHASE AGREEMENT TO PURCHASE
ADDITIONAL PERSONAL PROPERTY FOR USE AT, ABOUT OR AS PART OF SUCH HOTEL WITHOUT
OWNER’S PRIOR WRITTEN CONSENT, WHICH CONSENT MAY BE GRANTED OR WITHHELD IN
OWNER’S SOLE AND ABSOLUTE JUDGMENT.

 

(H)           NOTWITHSTANDING ANYTHING CONTAINED IN THIS SECTION 5.2 TO THE
CONTRARY, OWNER WILL DEPOSIT (OR WILL CAUSE PURCHASER TO DEPOSIT) $1,000,000
INTO THE RESERVE ACCOUNT AS OF JANUARY 1, 2007 AND AN ADDITIONAL $1,300,000 INTO
THE RESERVE ACCOUNT AS OF JANUARY 1, 2008; PROVIDED, HOWEVER, THAT, SUBJECT TO
SECTION 5.2(G), MANAGER SHALL APPLY ALL SUCH AMOUNTS TO THE COSTS ASSOCIATED
WITH REBRANDING THE BALTIMORE HOTEL AS AN INTERCONTINENTAL HOTEL (INCLUDING,
WITHOUT LIMITATION, ANY CAPITAL REPLACEMENTS ASSOCIATED WITH SUCH REBRANDING) OR
TO REIMBURSE MANAGER FOR ANY SUCH REBRANDING COSTS TO THE EXTENT PREVIOUSLY
INCURRED DIRECTLY BY MANAGER.

 

(I)            IN ADDITION, OWNER SHALL DEPOSIT (OR CAUSE PURCHASER TO DEPOSIT)
$1,420,000 INTO THE RESERVE ACCOUNT, AND MANAGER SHALL DEPOSIT $400,000 INTO THE
RESERVE ACCOUNT, IN EACH CASE ON OR BEFORE THE DATE WHICH IS SIX (6) MONTHS
FOLLOWING THE EFFECTIVE DATE WITH RESPECT TO THE BALTIMORE HOTEL.  MANAGER SHALL
APPLY ALL AMOUNTS SO DEPOSITED BY OWNER OR PURCHASER TO THE COSTS OF REPLACING
THE ROOF MEMBRANE AS CONTEMPLATED BY SECTION 4.4 OF THE BALTIMORE DECLARATION. 
MANAGER SHALL APPLY ALL AMOUNTS SO DEPOSITED BY MANAGER TO THE COSTS OF MAKING
CERTAIN UPGRADES TO THE BUILDING SYSTEMS AT THE BALTIMORE HOTEL.  BOTH OWNER AND
MANAGER ACKNOWLEDGE AND AGREE THAT (I) NEITHER OF THEM SHALL BE ENTITLED TO ANY
MANNER OF REIMBURSEMENT OR REFUND FOR ANY SUCH AMOUNTS SO DEPOSITED (INCLUDING,
WITHOUT LIMITATION, ANY ADJUSTMENT TO THE BASE PRIORITY AMOUNT OR ANY RETURN OR
REIMBURSEMENT FOR SUCH AMOUNTS UNDER SECTION 10.1); (II) NEITHER OF THEM SHALL
BE REQUIRED TO DEPOSIT ANY ADDITIONAL AMOUNT INTO THE RESERVE ACCOUNT UNDER THIS
SECTION 5.2(I) EVEN

 

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IF THE AMOUNTS SO DEPOSITED ARE NOT SUFFICIENT TO COVER ALL OF THE COSTS OF THE
REPAIRS OR UPGRADES TO WHICH THEY APPLY; AND (III) IF THE COST OF REPLACING THE
ROOF MEMBRANE AS CONTEMPLATED BY SECTION 4.4 OF THE BALTIMORE DECLARATION
EXCEEDS $1,420,000, THEN ANY AND ALL EXCESS COSTS FOR COMPLETING SUCH ROOF
REPAIRS SHALL BE FUNDED USING THE OTHER AMOUNTS FROM THE RESERVE ACCOUNT.

 

5.3           ADDITIONAL REQUIREMENTS FOR RESERVE.  ALL EXPENDITURES FROM THE
RESERVE ACCOUNT SHALL BE (AS TO BOTH THE AMOUNT OF EACH SUCH EXPENDITURE AND THE
TIMING THEREOF) BOTH REASONABLE AND NECESSARY GIVEN THE OBJECTIVE THAT THE
HOTELS WILL BE MAINTAINED AND OPERATED TO A STANDARD COMPARABLE TO COMPETITIVE
PROPERTIES AND IN ACCORDANCE WITH THE OPERATING STANDARDS AND THE APPLICABLE
BRAND STANDARDS.

 

5.4           OWNERSHIP OF REPLACEMENTS.  ALL CAPITAL REPLACEMENTS MADE PURSUANT
TO THIS AGREEMENT AND ALL AMOUNTS IN THE RESERVE ACCOUNT SHALL BE THE PROPERTY
OF OWNER OR PURCHASER, AS APPLICABLE, AS PROVIDED UNDER THE LEASE.

 

5.5           NO ADDITIONAL CONTRIBUTIONS.  EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT, NEITHER OWNER NOR PURCHASER SHALL, UNDER ANY
CIRCUMSTANCES, BE REQUIRED TO, OR PROVIDE FUNDS TO, BUILD OR REBUILD ANY
IMPROVEMENT AT THE HOTEL, OR MAKE ANY REPAIRS, REPLACEMENTS, ALTERATIONS,
RESTORATIONS OR RENEWALS OF ANY NATURE OR DESCRIPTION TO THE HOTEL, WHETHER
ORDINARY OR EXTRAORDINARY, STRUCTURAL OR NONSTRUCTURAL, FORESEEN OR UNFORESEEN.

 

5.6           POOLED RESERVES.  IT IS UNDERSTOOD AND AGREED THAT, SUBJECT TO
SECTION 5.2(H), SO LONG AS THE PR PROPERTY IS A POOLED FF&E HOTEL, FUNDS
DEPOSITED IN THE RESERVE ACCOUNT PURSUANT TO THIS AGREEMENT AND THE FF&E RESERVE
UNDER PR LEASE SHALL BE MAINTAINED AND USED ON A CONSOLIDATED BASIS SUCH THAT
ALL AMOUNTS TO BE DEPOSITED IN THE RESERVE ACCOUNT AND THE FF&E RESERVE SHALL BE
DEPOSITED IN A SINGLE ACCOUNT AND MANAGER AND PR TENANT MAY APPLY ANY FUNDS
THEREIN TO ANY OF THE POOLED FF&E HOTELS IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT AND PR LEASE.

 

ARTICLE 6

 

BRAND STANDARDS AND MANAGER’S CONTROL

 

6.1           BRAND STANDARDS.  MANAGER SHALL OPERATE EACH HOTEL AS A STAYBRIDGE
SUITES, INTERCONTINENTAL, CROWNE PLAZA OR HOLIDAY INN, AS APPLICABLE, HOTEL IN
ACCORDANCE WITH THE TERMS OF THIS

 

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AGREEMENT, THE APPLICABLE BRAND STANDARDS AND THE OPERATING STANDARDS.  MANAGER
AND ITS AFFILIATES WHICH OWN THE APPLICABLE SYSTEM MARKS AND BRAND STANDARDS
RESERVE THE RIGHT TO REVISE AND AMEND SUCH SYSTEM MARKS OR BRAND STANDARDS FROM
TIME TO TIME ON A NON-DISCRIMINATORY BASIS.  OWNER ALSO AGREES THAT THE HOTELS
WILL BE REQUIRED TO PARTICIPATE IN APPLICABLE BRAND-WIDE OR AREA PROGRAMS THAT
ARE IMPLEMENTED AFTER THE DATE HEREOF FROM TIME TO TIME BY MANAGER OR ITS
AFFILIATES WITH RESPECT TO THE APPLICABLE BRAND.  THE ALLOCABLE COST OF
PARTICIPATION IN SUCH PROGRAMS (TO THE EXTENT NOT DUPLICATIVE OF THE SERVICES
FOR WHICH THE MANAGEMENT FEE IS BEING PAID) SHALL BE OPERATING COSTS OF THE
HOTEL TO THE EXTENT THE SAME ARE CONSISTENT IN ALL MATERIAL RESPECTS WITH THE
AMOUNTS FOR THE SAME INCLUDED IN THE APPLICABLE YEARLY BUDGET.

 

6.2           MANAGER’S CONTROL.  SUBJECT TO THE TERMS OF THIS AGREEMENT,
MANAGER SHALL HAVE UNINTERRUPTED CONTROL OVER THE OPERATION OF THE HOTELS. 
OWNER ACKNOWLEDGES THAT UNDER THIS AGREEMENT, OWNER DELEGATES ALL AUTHORITIES
AND RESPONSIBILITIES FOR OPERATION OF THE HOTELS TO MANAGER PROVIDED, HOWEVER,
MANAGER SHALL NOT BE ENTITLED TO MAKE ANY AGREEMENT OR COMMITMENT BINDING ON
OWNER EXCEPT AS HEREIN EXPRESSLY PROVIDED.  MANAGER SHALL BE SOLELY RESPONSIBLE
FOR DETERMINING ROOM RATES, FOOD AND BEVERAGE MENU PRICES, CHARGES TO GUESTS FOR
OTHER HOTEL SERVICES AND THE TERMS OF GUEST OCCUPANCY AND ADMITTANCE TO THE
HOTELS, USE OF ROOMS FOR COMMERCIAL PURPOSES, POLICIES RELATING TO
ENTERTAINMENT, LABOR POLICIES, PUBLICITY AND PROMOTION ACTIVITIES AND TECHNOLOGY
SERVICES AND EQUIPMENT TO BE USED IN THE HOTEL.  MANAGER SHALL REVIEW WITH OWNER
FROM TIME TO TIME, AND DURING THE ANNUAL REVIEW OF THE YEARLY BUDGET, MATERIAL
CHANGES IN POLICIES, PRACTICES AND PROCEDURES AND THEIR EFFECT ON THE FINANCIAL
PERFORMANCE OF THE HOTELS.

 

6.3           ARBITRATION.  ANY DISPUTE UNDER THIS ARTICLE 6 SHALL BE RESOLVED
BY ARBITRATION.

 

ARTICLE 7

 

OPERATION OF THE HOTEL

 

7.1           PERMITS.  MANAGER, AS AN OPERATING COST, SHALL OBTAIN AND MAINTAIN
IN ITS NAME (OR OWNER’S OR PURCHASER’S NAME TO THE EXTENT THE SAME IS REQUIRED
BY APPLICABLE LEGAL REQUIREMENTS) IN FULL FORCE AND EFFECT ALL NECESSARY
OPERATING LICENSES AND PERMITS, INCLUDING LIQUOR, BAR, RESTAURANT, SIGN AND
HOTEL LICENSES, AS MAY BE REQUIRED FOR THE OPERATION OF THE HOTELS IN ACCORDANCE
WITH THIS AGREEMENT, THE APPLICABLE BRAND STANDARDS AND THE OPERATING
STANDARDS.  WITHOUT LIMITING THE FOREGOING,

 

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MANAGER SHALL COMPLY WITH ALL OF THE OBLIGATIONS OF PURCHASER UNDER SECTION 8.5
OF THE BALTIMORE PURCHASE AGREEMENT.  OWNER AND/OR PURCHASER SHALL REASONABLY
COOPERATE WITH MANAGER IN OBTAINING ANY SUCH OPERATING LICENSES OR PERMITS. 
EXCEPT AS OTHERWISE PROVIDED IN THE PURCHASE AGREEMENT, ANY COSTS OR EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES) INCURRED BY OWNER
AND/OR PURCHASER IN CONNECTION THEREWITH SHALL CONSTITUTE OPERATING COSTS. 
MANAGER WILL USE REASONABLE EFFORTS TO COMPLY WITH ALL LEGAL REQUIREMENTS
IMPOSED IN CONNECTION WITH ANY SUCH LICENSES AND PERMITS AND AT ALL TIMES USE
COMMERCIALLY REASONABLE EFFORTS TO MANAGE THE HOTELS IN ACCORDANCE WITH, AND
CAUSE THE HOTELS TO COMPLY WITH, SUCH LEGAL REQUIREMENTS, ANY OTHER LEGAL
REQUIREMENTS AND INSURANCE REQUIREMENTS APPLICABLE TO ANY HOTEL.

 

7.2           EQUIPMENT AND SUPPLIES.  MANAGER SHALL PROCURE PURSUANT TO THE
YEARLY BUDGETS ALL SUCH OPERATING SUPPLIES AND OPERATING EQUIPMENT AS MANAGER
DEEMS NECESSARY FOR THE NORMAL AND ORDINARY COURSE OF OPERATION OF THE HOTELS IN
ACCORDANCE WITH THE APPLICABLE BRAND STANDARDS AND OPERATING STANDARDS. 
NOTWITHSTANDING THE FOREGOING, MANAGER SHALL HAVE NO OBLIGATION TO PROCURE
OPERATING SUPPLIES AND OPERATING EQUIPMENT FOR INFRASTRUCTURE AND/OR EQUIPMENT
WHICH IS/ARE NOT LOCATED WITHIN THE BALTIMORE HOTEL AND WHICH IS/ARE NOT THE
RESPONSIBILITY OF THE OWNER OF THE BALTIMORE HOTEL (INCLUDING, WITHOUT
LIMITATION, THE BALTIMORE HEALTH CLUB AND THE BALTIMORE CENTRAL PLANT) TO
MAINTAIN, REPAIR OR REPLACE.

 

7.3           PERSONNEL.

 

(A)           ALL PERSONNEL EMPLOYED AT THE HOTELS WILL BE EMPLOYEES OF MANAGER
OR ITS AFFILIATES.  MANAGER WILL HIRE, SUPERVISE, DIRECT, DISCHARGE AND
DETERMINE THE COMPENSATION, OTHER BENEFITS AND TERMS OF EMPLOYMENT OF ALL
PERSONNEL WORKING IN THE HOTELS; PROVIDED, HOWEVER, (I) MANAGER SHALL MAKE NO
FINAL DECISION WITH RESPECT TO HIRING THE GENERAL MANAGER FOR ANY HOTEL WITHOUT
FIRST CONSULTING WITH OWNER AND (II) MANAGER SHALL COMPLY WITH ALL OF THE
OBLIGATIONS OF OWNER’S AFFILIATE AND/OR MANAGER UNDER SECTION 8.6 OF THE
BALTIMORE PURCHASE AGREEMENT (EXCEPT WITH RESPECT TO ANY EMPLOYEES WHO WORK IN
THE BALTIMORE PARKING GARAGE).  SUBJECT TO THE FOREGOING PROVISO, MANAGER, IN
THE EXERCISE OF REASONABLE DISCRETION AND BUSINESS JUDGMENT, WILL BE THE SOLE
JUDGE OF THE FITNESS AND QUALIFICATIONS OF SUCH PERSONNEL AND IS VESTED WITH
ABSOLUTE DISCRETION IN THE HIRING, SUPERVISING, DIRECTING, DISCHARGING AND
DETERMINING THE COMPENSATION, OTHER BENEFITS AND TERMS OF EMPLOYMENT OF SUCH
PERSONNEL.  IN SUCH DISCRETION, MANAGER MAY ELECT TO STAFF CERTAIN FUNCTIONS AT
OFFSITE OR REGIONAL LOCATIONS, OR TO

 

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PROVIDE EMPLOYEE BENEFITS ON AN APPLICABLE BRAND-WIDE OR OTHER MULTI-LOCATION
BASIS AND SHALL EQUITABLY ALLOCATE THE EMPLOYEE COSTS AMONG THE HOTELS
PARTICIPATING IN SUCH STAFFING OR BENEFITS.  SUBJECT TO MANAGER’S RIGHTS TO
APPLY GROSS REVENUES TO OPERATING COSTS, THE MANAGER SHALL BE RESPONSIBLE FOR
(A) THE PAYMENT OF ALL COMPENSATION OWING TO ITS EMPLOYEES, (B) THE PROVISION OF
ANY BENEFITS, STATUTORY OR OTHERWISE, EARNED, INCURRED OR ACCRUED BY ANY OF ITS
EMPLOYEES, AND (C) THE PAYMENT OR THE DEDUCTION FROM THE COMPENSATION AND/OR
BENEFITS OF ITS EMPLOYEES, AS THE CASE MAY BE, AND THE REMITTANCE TO THE
APPROPRIATE GOVERNMENT AGENCIES OF SUCH SUMS AS MAY BE REQUIRED TO BE PAID BY AN
EMPLOYER OR WITHHELD FROM THE EMPLOYEES’ COMPENSATION AND/OR BENEFITS UNDER THE
PROVISION OF ANY LEGAL REQUIREMENTS.  OWNER SHALL NOT INTERFERE WITH THE
PERFORMANCE OF EMPLOYMENT DUTIES OF, OR GIVE ORDERS OR INSTRUCTIONS TO, ANY
PERSONNEL EMPLOYED AT THE HOTEL.  EXCEPT AS OTHERWISE PROVIDED HEREIN, OPERATING
COSTS WILL INCLUDE ALL EXPENSES, COSTS OR CHARGES WHICH ARE ALLOCABLE TO THE
TERM AND ARE RELATED TO OR INCIDENTAL TO ANY ON-SITE PERSONNEL EMPLOYED IN THE
OPERATION OF THE HOTELS (INCLUDING, WITHOUT LIMITATION, SALARIES, WAGES, OTHER
COMPENSATION, BENEFIT CONTRIBUTIONS AND PREMIUMS, NET OF AMOUNTS PAID BY HOTEL
EMPLOYEES; STOP-LOSS INSURANCE PREMIUMS; GROUP HEALTH PLAN BENEFIT PAYMENTS IN
EXCESS OF CONTRIBUTION AND PREMIUM AMOUNTS PAID BY HOTEL EMPLOYEES; PAY FOR
VACATION, HOLIDAYS, SICK LEAVE AND OTHER LEAVES OF ABSENCE; WORKERS’
COMPENSATION PREMIUMS; WORKERS’ COMPENSATION BENEFIT PAYMENTS PAID BY MANAGER;
REASONABLE AND CUSTOMARY ADMINISTRATIVE FEES AND TAXES; AND SEVERANCE BENEFITS
APPLICABLE UNDER MANAGER’S THEN CURRENT HUMAN RESOURCES POLICIES).

 

(B)           MANAGER SHALL COMPLY WITH ALL LEGAL REQUIREMENTS PERTAINING TO
LABOR RELATIONS, THE PERSONNEL EMPLOYED BY IT PURSUANT TO THIS AGREEMENT AND
THEIR EMPLOYMENT.  MANAGER SHALL NOT ENTER INTO ANY WRITTEN EMPLOYMENT
AGREEMENTS WITH ANY PERSON WHICH PURPORT TO BIND THE OWNER WITHOUT OBTAINING
OWNER’S CONSENT, WHICH CONSENT MAY BE WITHHELD IN OWNER’S SOLE AND ABSOLUTE
DISCRETION.  IF EITHER MANAGER OR OWNER SHALL BE REQUIRED, PURSUANT TO ANY SUCH
LEGAL REQUIREMENT, TO RECOGNIZE A LABOR UNION OR TO ENTER INTO COLLECTIVE
BARGAINING WITH A LABOR UNION, THE PARTY SO REQUIRED SHALL PROMPTLY NOTIFY THE
OTHER.  THE TERMS OF THIS SECTION 7.3(B) SHALL SURVIVE THE EXPIRATION OR EARLIER
TERMINATION OF THIS AGREEMENT.  MANAGER SHALL BE THE “SUCCESSOR EMPLOYER” UNDER
ANY COLLECTIVE BARGAINING AGREEMENTS APPLICABLE TO THE HOTELS AS OF THE CLOSING
AND UNDER APPLICABLE LEGAL REQUIREMENTS.

 

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(C)           NO EMPLOYEE OF THE HOTELS SHALL RESIDE AT THE HOTELS WITHOUT THE
PRIOR WRITTEN APPROVAL OF OWNER.  NO PERSON SHALL BE GIVEN GRATUITOUS
ACCOMMODATIONS OR SERVICES WITHOUT PRIOR APPROVAL OF OWNER EXCEPT IN ACCORDANCE
WITH USUAL PRACTICES OF THE APPLICABLE BRAND AND THE HOTEL AND TRAVEL INDUSTRY.

 

(D)           TO THE EXTENT CONSISTENT WITH THE APPLICABLE YEARLY BUDGET,
OPERATING COSTS MAY INCLUDE UP TO THE FOLLOWING AMOUNTS PER FISCAL YEAR, FOR
TRAVEL RELATED EXPENSES OF MANAGER’S SENIOR OPERATIONAL PERSONNEL IN CONNECTION
WITH THEIR VISITS TO SUCH HOTEL:

 

Hotel Type

 

Amount

 

 

 

 

 

Staybridge Hotels

 

$

5,000

 

 

 

 

 

Intercontinental Hotels

 

$

10,000

 

 

 

 

 

Crowne Plaza

 

$

10,000

 

 

 

 

 

Holiday Inn Hotels

 

$

5,000

 

 

Said amounts shall be adjusted every January 1 starting in 2006 to reflect the
percentage change in the Consumer Price Index since the prior January 1.  Any
amounts in excess of the foregoing shall be Manager’s sole responsibility and
shall not be an Operating Cost.

 

(e)           With respect to Hotels located in Ontario, Canada, the Manager
shall register, if not already registered, with the Workplace Safety and
Insurance Board (“WSIB”).  Immediately prior to the commencement of the Term and
at 60-day intervals thereafter, Manager shall request, in writing, to the WSIB
the necessary specific clearance certificate to be issued by the WSIB to Manager
and Owner confirming that Manager’s WSIB account is in good standing.  Manager
shall, at all times, accurately disclose all information required by the WSIB
and shall pay all amounts owing with respect to Workplace Safety and Insurance
coverage for its employees within the time period specified by the WSIB.

 

7.4           SALES, MARKETING AND ADVERTISING.  MANAGER SHALL AND/OR SHALL
CAUSE ONE OR MORE OF ITS AFFILIATES TO:

 

(A)           ADVERTISE AND PROMOTE THE BUSINESS OF THE HOTELS;

 

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(B)           INSTITUTE AND SUPERVISE A SALES AND MARKETING PROGRAM FOR THE
HOTELS;

 

(C)           INCLUDE THE HOTELS IN MANAGER’S AND ITS AFFILIATES’ LOCAL,
REGIONAL AND WORLDWIDE PROMOTIONAL AND ADVERTISING PROGRAMS, IN EACH CASE,
RELATED TO THE APPLICABLE BRAND;

 

(D)           REPRESENT THE HOTELS THROUGH MANAGER’S AND ITS AFFILIATES’
WORLDWIDE SALES OFFICES;

 

(E)           INCLUDE THE HOTELS IN THE APPLICABLE LOYALTY PROGRAMS, INCLUDING,
WITHOUT LIMITATION, INCLUSION OF THE HOTELS IN PROMOTIONAL MATERIALS DISTRIBUTED
TO PARTICIPANTS OF SUCH PROGRAM;

 

(F)            COORDINATE THE HOTELS’ PARTICIPATION IN TRAVEL PROGRAMS MARKETED
BY AIRLINES, TRAVEL AGENTS AND GOVERNMENT TOURIST DEPARTMENTS WHEN MANAGER
DETERMINES SUCH PARTICIPATION TO BE ADVISABLE; AND

 

(G)           CAUSE THE HOTELS TO PARTICIPATE IN SALES AND PROMOTIONAL CAMPAIGNS
AND ACTIVITIES INVOLVING COMPLIMENTARY ROOMS, FOOD AND BEVERAGES TO BONA FIDE
TRAVEL AGENTS, TOURIST OFFICIALS AND AIRLINE REPRESENTATIVES WHERE MANAGER HAS
DETERMINED THAT SUCH PARTICIPATION IS IN FURTHERANCE OF THE HOTELS’ BUSINESS AND
IS CUSTOMARY IN THE TRAVEL INDUSTRY OR IN THE PRACTICES AND POLICIES OF MANAGER.

 

7.5           RESERVATION AND COMMUNICATION SERVICES.  THE HOTELS SHALL BE
INCLUDED AS PARTICIPATING HOTELS ON THE RESERVATION SYSTEM OPERATED BY MANAGER,
ITS AFFILIATES OR AGENT(S) FOR THE BENEFIT OF STAYBRIDGE SUITES,
INTERCONTINENTAL, CROWNE PLAZA OR HOLIDAY INN, AS APPLICABLE, HOTELS FROM AND
AFTER THE EFFECTIVE DATE.  MANAGER WILL PROVIDE (OR WILL CAUSE ITS AFFILIATES TO
PROVIDE) THE FOLLOWING SERVICES TO THE HOTELS THROUGH THE RESERVATION SYSTEM:

 

(A)           ACCEPTANCE OF RESERVATIONS FOR THE HOTELS THROUGH THE APPLICABLE
RESERVATION SYSTEM FROM INDIVIDUAL CUSTOMERS AND GROUPS WHO CONTACT MANAGER (OR
ITS AFFILIATES OR AGENTS) DIRECTLY OR THROUGH A REGIONAL RESERVATION OR SALE
OFFICE OF MANAGER OR ITS AFFILIATES OR AGENTS;

 

(B)           ACCEPTANCE OF RESERVATIONS FOR THE HOTELS THROUGH OTHER HOTELS IN
THE APPLICABLE BRAND;

 

(C)           ACCEPTANCE OF RESERVATIONS FOR THE HOTELS THROUGH THE RESERVATION
SYSTEMS OF OTHER PROVIDERS IN THE TRAVEL INDUSTRY,

 

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INCLUDING, WITHOUT LIMITATION, GLOBAL DISTRIBUTION SYSTEMS AND GENERAL SALES
AGENCIES WITH WHICH MANAGER (OR ITS AFFILIATES) MAY HAVE AGREEMENTS FROM TIME TO
TIME, WHEREBY THE RESERVATION SYSTEMS OF SUCH PARTIES ARE AVAILABLE FOR
COMMUNICATION OF RESERVATIONS TO HOTELS IN THE APPLICABLE BRAND;

 

(D)                                 ACCEPTANCE OF RESERVATIONS FOR THE HOTELS
RECEIVED THROUGH ALTERNATIVE COMMUNICATIONS CHANNELS SUCH AS THE INTERNET; AND

 

(E)                                  ACCESS TO THE HOTELS OF THE COMMUNICATIONS
NETWORK USED BY MANAGER (OR ITS AFFILIATES) FOR COMMUNICATION BETWEEN IT AND
HOTELS IN THE APPLICABLE BRAND.

 

7.6                                 MAINTENANCE AND REPAIRS.  SUBJECT TO THE
TERMS HEREOF, MANAGER SHALL PROMPTLY MAKE OR CAUSE TO BE MADE ALL REPAIRS,
REPLACEMENTS, CORRECTIONS, MAINTENANCE, ALTERATIONS, IMPROVEMENTS, RENOVATIONS,
INSTALLATIONS, RENEWALS AND ADDITIONS (COLLECTIVELY, “REPAIRS”) OF EVERY KIND
AND NATURE, WHETHER INTERIOR OR EXTERIOR, STRUCTURAL OR NONSTRUCTURAL, ORDINARY
OR EXTRAORDINARY, FORESEEN OR UNFORESEEN OR ARISING BY REASON OF A CONDITION
EXISTING PRIOR TO THE COMMENCEMENT OF THE TERM (CONCEALED OR OTHERWISE)
NECESSARY OR APPROPRIATE TO MAINTAIN THE HOTELS (INCLUDING ALL PRIVATE ROADWAYS,
SIDEWALKS AND CURBS LOCATED THEREON) FOR WHICH OWNER, PURCHASER OR A HOTEL HAS
RESPONSIBILITY IN GOOD ORDER AND REPAIR, REASONABLE WEAR AND TEAR EXCEPTED
(WHETHER OR NOT THE NEED FOR SUCH REPAIRS OCCURS AS A RESULT OF OWNER’S OR
MANAGER’S USE, ANY PRIOR USE, INSURANCE REQUIREMENTS, THE ELEMENTS OR THE AGE OF
THE HOTELS, OR ANY PORTION THEREOF), AND IN CONFORMITY WITH LEGAL REQUIREMENTS
(INCLUDING, WITHOUT LIMITATION, RETAINING ALL CONSTRUCTION LIEN HOLDBACKS UNDER
THE CONSTRUCTION LIEN ACT (ONTARIO) AND RELEASING SUCH HOLDBACKS ONLY WHEN ALL
LIENS HAVE EXPIRED OR BEEN DISCHARGED OR VACATED, ALL NOTICES HAVE BEEN
WITHDRAWN, AND THE TIME PERIOD FOR FILING ANY LIENS HAS EXPIRED), APPLICABLE
BRAND STANDARDS AND THE OPERATING STANDARDS.  ALL REPAIRS SHALL BE MADE IN A
GOOD, WORKMANLIKE MANNER, CONSISTENT WITH MANAGER’S AND INDUSTRY STANDARDS FOR
LIKE HOTELS IN LIKE LOCALES, IN ACCORDANCE WITH ALL APPLICABLE LEGAL
REQUIREMENTS AND INSURANCE REQUIREMENTS.  TO THE EXTENT SUCH REPAIRS CANNOT BE
PERFORMED BY MANAGER’S ON-SITE STAFF, MANAGER SHALL BE ENTITLED TO CAUSE SUCH
REPAIRS TO BE PERFORMED BY THIRD PARTIES OR, SUBJECT TO OWNER’S PRIOR APPROVAL,
AFFILIATES OF MANAGER ACTING UNDER SEPARATE TECHNICAL SERVICES AGREEMENTS
PURSUANT TO SECTION 11.1.

 

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7.7                                 MATERIAL REPAIRS.

 

(A)                                  EXCEPT AS SET FORTH IN SECTION 7.7(B),
PRIOR TO MAKING ANY MATERIAL REPAIR, MANAGER SHALL SUBMIT, TO OWNER IN WRITING,
A PROPOSAL SETTING FORTH, IN REASONABLE DETAIL, THE PROPOSED MATERIAL REPAIR AND
SHALL PROVIDE TO OWNER SUCH PLANS AND SPECIFICATIONS, AND SUCH PERMITS,
LICENSES, CONTRACTS AND SUCH OTHER INFORMATION CONCERNING THE SAME AS OWNER MAY
REASONABLY REQUEST.  OWNER SHALL HAVE TWENTY (20) BUSINESS DAYS TO APPROVE OR
DISAPPROVE ALL MATERIALS SUBMITTED TO OWNER, IN CONNECTION WITH ANY SUCH
PROPOSAL; PROVIDED, HOWEVER, (I) OWNER MAY NOT WITHHOLD ITS APPROVAL OF A
MATERIAL REPAIR WITH RESPECT TO SUCH ITEMS AS ARE (A) REQUIRED IN ORDER FOR THE
HOTELS TO COMPLY WITH APPLICABLE BRAND STANDARDS (EXCEPT DURING THE LAST TWO
(2) YEARS OF THE TERM AS SET FORTH IN SECTION 5.2(A)) OR OPERATING STANDARDS; OR
(B) REQUIRED BY REASON OF OR UNDER ANY INSURANCE REQUIREMENT OR LEGAL
REQUIREMENT, OR OTHERWISE REQUIRED FOR THE CONTINUED SAFE AND ORDERLY OPERATION
OF EACH HOTEL AND (II) OWNER’S APPROVAL SHALL NOT BE REQUIRED WITH RESPECT TO
THE COST OF ANY PROPOSED MATERIAL REPAIR IF THE SAME IS SET FORTH AS A SEPARATE
LINE ITEM IN THE THEN APPLICABLE APPROVED CAPITAL REPLACEMENTS BUDGET.  IF OWNER
FAILS TO DISAPPROVE OF SUCH MATERIAL REPAIR WITHIN SUCH TWENTY (20) BUSINESS
DAYS, OWNER SHALL BE DEEMED TO HAVE APPROVED SAME.

 

(B)                                 IN THE EVENT THAT A CONDITION SHOULD EXIST
IN OR ABOUT A HOTEL OF AN EMERGENCY NATURE OR IN VIOLATION OF APPLICABLE LEGAL
REQUIREMENTS OR INSURANCE REQUIREMENTS, INCLUDING STRUCTURAL CONDITIONS, WHICH
REQUIRES IMMEDIATE REPAIR NECESSARY TO PREVENT IMMINENT DANGER OR DAMAGE TO
PERSONS OR PROPERTY, MANAGER IS HEREBY AUTHORIZED TO TAKE ALL STEPS AND TO MAKE
ALL EXPENDITURES NECESSARY TO REPAIR AND CORRECT ANY SUCH CONDITION, REGARDLESS
OF WHETHER PROVISIONS HAVE BEEN MADE IN THE APPLICABLE YEARLY BUDGET FOR ANY
SUCH EXPENDITURES OR IF SUFFICIENT FUNDS EXIST IN THE RESERVE ACCOUNTS.  UPON
THE OCCURRENCE OF SUCH AN EVENT OR CONDITION, MANAGER WILL COMMUNICATE TO OWNER
ALL AVAILABLE INFORMATION REGARDING SUCH EVENT OR CONDITION AS SOON AS
REASONABLY POSSIBLE AND WILL TAKE REASONABLE STEPS TO OBTAIN OWNER’S APPROVAL
BEFORE INCURRING SUCH EXPENSES.  EXPENDITURES UNDER THIS SECTION 7.7(B) SHALL BE
PAID FROM THE RESERVE ACCOUNT TO THE EXTENT SUCH EXPENDITURE IS PROPERLY
CONSIDERED A CAPITAL REPLACEMENT.

 

(C)                                  NO CAPITAL REPLACEMENTS SHALL BE MADE WHICH
WOULD TIE-IN OR CONNECT A HOTEL WITH ANY OTHER IMPROVEMENTS ON PROPERTY ADJACENT
TO SUCH HOTEL (AND NOT PART OF ITS SITE) INCLUDING, WITHOUT LIMITATION, TIE-INS
OF BUILDINGS OR OTHER STRUCTURES OR UTILITIES (OTHER THAN CONNECTIONS TO PUBLIC
OR PRIVATE UTILITIES) WITHOUT THE PRIOR WRITTEN APPROVAL OF OWNER, WHICH

 

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APPROVAL MAY BE GRANTED OR WITHHELD IN OWNER’ SOLE AND ABSOLUTE DISCRETION;
PROVIDED, HOWEVER, OWNER SHALL BE REASONABLE IN APPROVING ANY SUCH CAPITAL
REPLACEMENTS THAT WOULD TIE IN OR CONNECT THE BALTIMORE HOTEL TO ANY OTHER
ELEMENTS IN THE DEVELOPMENT IN WHICH THE BALTIMORE HOTEL IS LOCATED.

 

7.8                                 LIENS; CREDIT.  MANAGER SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO PREVENT ANY LIENS FROM BEING FILED AGAINST
ANY HOTEL WHICH ARISE FROM ANY REPAIRS IN OR TO SUCH HOTELS.  MANAGER SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO CAUSE THE RELEASE OF ANY SUCH LIENS FROM THE
HOTELS.  IF ANY SUCH LIEN ARISES AS A RESULT OF OR IN CONNECTION WITH A MANAGER
DEFAULT, THEN MANAGER SHALL BEAR THE COST OF OBTAINING THE LIEN RELEASE
(EXCLUSIVE OF THE COST OF THE REPAIR TO WHICH IT PERTAINS, UNLESS MANAGER IS
OTHERWISE RESPONSIBLE THEREFOR) AND THE SAME SHALL NOT CONSTITUTE AN OPERATING
COST.  IN NO EVENT SHALL ANY PARTY BORROW MONEY IN THE NAME OF, OR PLEDGE THE
CREDIT OF, ANY OTHER PARTY.  MANAGER SHALL NOT ALLOW ANY LIEN TO EXIST WITH
RESPECT TO ITS INTEREST IN THIS AGREEMENT.  MANAGER SHALL NOT FINANCE THE COST
OF ANY REPAIR BY THE GRANTING OF A LIEN ON, OR SECURITY INTEREST IN, ANY HOTEL
OR MANAGER’S INTEREST THEREIN OR HEREUNDER.

 

7.9                                 REAL ESTATE AND PERSONAL PROPERTY TAXES. 
MANAGER SHALL PAY AS OPERATING COSTS ON BEHALF OF OWNER, PRIOR TO DELINQUENCY,
ALL TAXES AND ASSESSMENTS WHICH MAY BECOME A LIEN ON, OR ARE ASSESSED AGAINST,
ANY HOTEL OR ANY COMPONENT THEREOF AND WHICH MAY BE DUE AND PAYABLE FOR THE
TERM, UNLESS PAYMENT THEREOF IS BEING CONTESTED BY MANAGER, AS HEREINAFTER
PROVIDED, ENFORCEMENT IS STAYED AND THE AMOUNT SO CONTESTED IS ESCROWED OR
GUARANTEED IN A FORM SATISFACTORY TO OWNER.  OWNER SHALL, PROMPTLY AFTER RECEIPT
THEREOF BY OWNER, GIVE MANAGER COPIES OF ALL NOTICES AS TO ALL SUCH TAXES AND
ASSESSMENTS.

 

7.10                           GST AND RST.  THE PARTIES ACKNOWLEDGE THAT THE
OWNER IS THE SUPPLIER OF HOTEL SERVICES AND THAT THE MANAGER ACTS AS THE OWNER’S
AGENT IN MAKING SUPPLIES TO THE PUBLIC OF HOTEL SERVICES.  THE OWNER AUTHORIZES
MANAGER TO PREPARE AND FILE GST AND RST RETURNS ON BEHALF OF THE OWNER, IN THE
OWNER’S NAME, AND USING THE OWNER’S GST OR RST REGISTRATION NUMBER OR VENDOR
PERMIT NUMBER AS THE CASE MAY BE.  MANAGER SHALL APPLY WORKING CAPITAL TO THE
PAYMENT OF GST PAYABLE BY OWNER WITH RESPECT TO ITEMS WHICH MANAGER PAYS ON
OWNER’S BEHALF AND SHALL COOPERATE WITH OWNER TO MAKE THE WORKING CAPITAL
AVAILABLE TO OWNER TO PAY GST PAYABLE BY OWNER WITH RESPECT TO ITEMS WHICH
MANAGER DOES NOT PAY ON OWNER’S BEHALF, INCLUDING WITHOUT LIMITATION RENT PAID
UNDER THE LEASE.  OWNER SHALL PROVIDE MANAGER WITH DETAILS OF ANY GST OR RST
COLLECTED OR PAID BY IT DIRECTLY WHICH DETAIL

 

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IS NOT OTHERWISE AVAILABLE TO MANAGER.  MANAGER ACKNOWLEDGES THAT PURSUANT TO
THE LEASE, ALL AMOUNTS IN THE RESERVE ACCOUNT AND ALL GOODS OR SERVICES
PURCHASED WITH SUCH FUNDS BELONG TO PURCHASER.  ACCORDINGLY, GST PAID FROM THE
FUNDS IN THE RESERVE ACCOUNT SHALL NOT BE REFLECTED ON OWNER’S GST RETURNS.

 

7.11                           CONTEST.  MANAGER SHALL HAVE THE RIGHT IN
MANAGER’S OR OWNER’S NAME TO CONTEST OR PROTEST ANY TAX OR ASSESSMENT OR
PROPOSED ASSESSMENT WHICH MAY BECOME A LIEN ON, OR BE ASSESSED AGAINST, ANY
HOTEL OR ANY COMPONENT THEREOF DUE AND FOR THE TERM OR ANY LEGAL REQUIREMENT
PAYABLE BY APPROPRIATE LEGAL PROCEEDINGS, CONDUCTED IN GOOD FAITH AND WITH DUE
DILIGENCE, PROVIDED THAT (A) SUCH CONTEST SHALL NOT CAUSE PURCHASER OR OWNER TO
BE IN DEFAULT UNDER ANY AUTHORIZED MORTGAGE, (B) NO PART OF A HOTEL NOR ANY
GROSS REVENUES THEREFROM SHALL BE IN ANY IMMEDIATE DANGER OF SALE, FORFEITURE,
ATTACHMENT OR LOSS, AND (C) OWNER AND PURCHASER ARE NOT EXPOSED TO ANY RISK FOR
CRIMINAL OR CIVIL LIABILITY.  THE REASONABLE COST AND EXPENSES OF SUCH CONTEST
OR PROTEST SHALL BE OPERATING COSTS.

 

7.12                           PRIVACY.  MANAGER SHALL CONDUCT THE BUSINESS OF
THE HOTELS IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL APPLICABLE LEGAL
REQUIREMENTS GOVERNING PRIVACY AND THE PROTECTION OF PERSONAL INFORMATION
(INCLUDING, INTER ALIA, THE PERSONAL INFORMATION OF PATRONS AND EMPLOYEES OF THE
HOTELS), INCLUDING THE PERSONAL INFORMATION PROTECTION AND ELECTRONIC DOCUMENTS
ACT (CANADA).  THE MANAGER SHALL IMPLEMENT A WRITTEN PRIVACY POLICY WHICH
GOVERNS THE COLLECTION, USE AND DISCLOSURE OF PERSONAL INFORMATION AND SHALL
COMPLY IN ALL MATERIAL RESPECTS WITH SUCH POLICY.

 

ARTICLE 8

 

FISCAL MATTERS

 

8.1                                 ACCOUNTING MATTERS.

 

(A)                                  MANAGER SHALL MAINTAIN BOOKS AND RECORDS
REFLECTING THE RESULTS OF HOTEL OPERATIONS ON AN ACCRUAL BASIS IN ACCORDANCE
WITH THE UNIFORM SYSTEM OF ACCOUNTS AND THE ACCOUNTING PRINCIPLES.  OWNER AND
MANAGER AND THEIR RESPECTIVE INDEPENDENT ACCOUNTING FIRMS AND REPRESENTATIVES
WILL HAVE THE RIGHT TO EXAMINE SUCH BOOKS AND RECORDS OF THE HOTELS AT ANY
REASONABLE TIME AND TO MAKE AND RETAIN COPIES THEREOF.  MANAGER SHALL RETAIN,
FOR AT LEAST THREE (3) YEARS AFTER THE EXPIRATION OF EACH FISCAL YEAR,
REASONABLY ADEQUATE RECORDS SHOWING GROSS REVENUES AND APPLICATIONS THEREOF FOR
THE HOTELS FOR SUCH FISCAL

 

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YEAR (WHICH OBLIGATION SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF
THE TERM).

 

(B)                                 ON OR BEFORE THE TWENTY-FIFTH (25TH) DAY
AFTER THE END OF EACH FISCAL MONTH, MANAGER SHALL FURNISH (OR SHALL CAUSE ITS
AFFILIATES TO FURNISH) OWNER WITH A DETAILED OPERATING STATEMENT SETTING FORTH
THE RESULTS OF OPERATIONS AT THE HOTELS WITH RESPECT TO SUCH MONTH AND
YEAR-TO-DATE SHOWING FOR EACH HOTEL AND FOR ALL OF THE FF&E POOLED HOTELS, GROSS
REVENUES, ROOMS REVENUES, REVENUE PER AVAILABLE ROOM, OCCUPANCY PERCENTAGE AND
AVERAGE DAILY RATE, OPERATING COSTS, OPERATING PROFIT, THE APPLICATIONS AND
DISTRIBUTIONS THEREOF AND ANY OWNER’S PERCENTAGE PRIORITY TOGETHER WITH AN
OFFICER’S CERTIFICATE.  SUCH STATEMENTS MAY BE PROVIDED ELECTRONICALLY TO OWNER.

 

(C)                                  NOT LESS THAN TEN (10) DAYS PRIOR TO THE
DATE ON WHICH OWNER OR ANY OF ITS AFFILIATES ARE REQUIRED TO FILE AUDITED
FINANCIAL STATEMENTS WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
(BUT IN ALL EVENTS ON OR BEFORE FEBRUARY 15 OF EACH YEAR), MANAGER SHALL DELIVER
TO OWNER AND PURCHASER AN OFFICER’S CERTIFICATE (THE “8.1(C) STATEMENT”) SETTING
FORTH FOR THE PRIOR YEAR THE TOTALS FOR EACH HOTEL AND FOR ALL OF THE FF&E
POOLED HOTELS OF GROSS REVENUES AND OPERATING COSTS, THE CALCULATION OF OWNER’S
PERCENTAGE PRIORITY AND THE RESIDUAL DISTRIBUTION, ADDITIONAL RENT UNDER THE PR
LEASE (IF APPLICABLE) AND DEPOSITS TO, AND EXPENDITURES FROM, THE RESERVE
ACCOUNT TOGETHER WITH AN AGREED UPON PROCEDURE LETTER WITH RESPECT THERETO.  THE
COST OF OBTAINING SUCH LETTER SHALL BE AN OPERATING COST.

 

(D)                                 IF ANY AMOUNTS DUE TO OWNER AS SHOWN IN AN
OFFICER’S CERTIFICATE OR AUDIT PROVIDED PURSUANT TO SECTIONS 8.1(F) OR 17.4
EXCEED THE AMOUNTS PREVIOUSLY PAID WITH RESPECT THERETO TO OWNER, MANAGER SHALL
PAY SUCH EXCESS TO OWNER AT SUCH TIME AS THE OFFICER’S CERTIFICATE OR AUDIT IS
DELIVERED, TOGETHER WITH INTEREST AT THE INTEREST RATE FROM THE DATE DUE.  (ANY
SUCH INTEREST WHICH ACCRUES AFTER THE DAY THAT IS TEN (10) BUSINESS DAYS AFTER
THE DATE ON WHICH THE 8.1(C) STATEMENT IS DELIVERED OR IS DUE AND ANY SUCH
INTEREST WHICH RESULTS FROM MANAGER’S WILLFUL UNDERSTATEMENT OF AMOUNTS DUE TO
OWNER SHALL NOT BE OPERATING COSTS, BUT SHALL BE PAID BY MANAGER.)  IF OWNER’S
PERCENTAGE PRIORITY DUE AS SHOWN IN AN OFFICER’S CERTIFICATE OR AUDIT IS LESS
THAN THE AMOUNT PREVIOUSLY PAID WITH RESPECT THERETO TO OWNER, OWNER SHALL BE
ENTITLED TO RETAIN THE SAME BUT SHALL CREDIT SUCH OVERPAYMENT AGAINST THE NEXT
INSTALLMENT OF OWNER’S PERCENTAGE PRIORITY.  IF ANY MANAGEMENT FEE DUE TO
MANAGER AS SHOWN ON AN OFFICER’S CERTIFICATE OR AUDIT IS LESS THAN THE AMOUNT
PREVIOUSLY PAID TO MANAGER ON ACCOUNT THEREOF,

 

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MANAGER SHALL, WITHIN TEN (10) BUSINESS DAYS AFTER THE DATE ON WHICH SUCH
OFFICER’S CERTIFICATE OR AUDIT IS DELIVERED, DEPOSIT THE OVERPAYMENT IN THE BANK
ACCOUNTS.  IF THE RESIDUAL DISTRIBUTION DUE AS SHOWN ON THE OFFICER’S
CERTIFICATE OR AUDIT IS LESS THAN THE AMOUNT PREVIOUSLY PAID TO OWNER WITH
RESPECT THERETO, OWNER SHALL PROMPTLY DEPOSIT (OR DELIVER TO MANAGER WHO WILL IN
TURN DEPOSIT) THE OVERPAYMENT IN THE BANK ACCOUNTS.  IN NO EVENT SHALL (I) ANY
AMOUNT PREVIOUSLY DEPOSITED IN THE RESERVE ACCOUNT BE WITHDRAWN THEREFROM
PURSUANT TO THIS ARTICLE 8 OR (II) DISTRIBUTIONS OF OWNER’S FIRST PRIORITY BE
SUBJECT TO ADJUSTMENT.

 

(E)                                  IN ADDITION, MANAGER SHALL PROVIDE OWNER
WITH INFORMATION RELATING TO THE HOTELS, MANAGER AND ITS AFFILIATES THAT (I) MAY
BE REQUIRED IN ORDER FOR OWNER, PURCHASER OR THEIR AFFILIATES TO PREPARE
FINANCIAL STATEMENTS IN ACCORDANCE WITH ACCOUNTING PRINCIPLES OR TO COMPLY WITH
ANY LEGAL REQUIREMENT INCLUDING, WITHOUT LIMITATION, ANY APPLICABLE TAX AND
SECURITIES LAWS AND REGULATIONS AND THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION’S INTERPRETATION THEREOF, (II) MAY BE REQUIRED FOR OWNER, PURCHASER
OR ANY OF THEIR AFFILIATES TO PREPARE FEDERAL (UNITED STATES AND CANADA), STATE,
PROVINCIAL OR LOCAL TAX RETURNS, INCLUDING, WITHOUT LIMITATION, GST OR (III) IS
OF THE TYPE THAT MANAGER CUSTOMARILY PREPARES FOR OTHER HOTEL OWNERS OR ITSELF.

 

(F)                                    AT OWNER’S ELECTION AND AT OWNER’S COST
EXCEPT AS OTHERWISE PROVIDED HEREIN, A CERTIFIED AUDIT OF THE HOTELS’ OPERATIONS
MAY BE PERFORMED ANNUALLY, AND AFTER THE EXPIRATION DATE, BY A NATIONALLY
RECOGNIZED, INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM APPOINTED BY OWNER.  IN
THE EVENT THAT OWNER ELECTS TO HAVE SUCH AN AUDIT PERFORMED, OWNER MUST GIVE
NOTICE OF ITS ELECTION WITHIN TWELVE (12) MONTHS AFTER ITS RECEIPT OF THE
APPLICABLE 8.1(C) STATEMENT.  ANY DISPUTE CONCERNING THE CORRECTNESS OF AN AUDIT
SHALL BE SETTLED BY ARBITRATION.  MANAGER SHALL PAY THE COST OF ANY AUDIT
REVEALING AN UNDERSTATEMENT OF OWNER’S PERCENTAGE PRIORITY AND THE RESIDUAL
DISTRIBUTION BY MORE THAN THREE PERCENT (3%) IN THE AGGREGATE, AND SUCH COST
SHALL NOT BE AN OPERATING COST.  IN THE EVENT THAT EITHER NO NOTICE OF AUDIT IS
GIVEN WITHIN SAID TWELVE (12) MONTHS, OR NO AUDIT IS IN FACT COMMENCED WITHIN
EIGHTEEN (18) MONTHS AFTER RECEIPT OF THE 8.1(C) STATEMENT, SUCH OPERATING
STATEMENT WILL CONSTITUTE THE FINAL STATEMENT FOR THAT FISCAL YEAR, DEEMED TO
HAVE BEEN APPROVED BY OWNER.

 

(G)                                 MANAGER SHALL MAINTAIN SEPARATE BOOKS AND
RECORDS REGARDING THE OPERATION OF THE BALTIMORE CENTRAL PLANT WHICH BOOKS AND
RECORDS SHALL BE REASONABLY SATISFACTORY TO OWNER AND

 

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OWNER’S AFFILIATE THAT OWNS THE BALTIMORE HOTEL, ALL IN SATISFACTION OF THE
REQUIREMENTS OF THE BALTIMORE MAINTENANCE MEMORANDUM.

 

(H)                                 THE TERMS OF SECTIONS 8.1(A), 8.1(D) AND
8.1(F) AND ANY PROVISIONS REGARDING DISPUTE RESOLUTION SET FORTH IN THIS
SECTION 8.1 SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THE TERM.

 

8.2                                 YEARLY BUDGETS.

 

(A)                                  NOT LESS THAN SIXTY (60) DAYS PRIOR TO THE
FIRST DAY OF EACH FISCAL YEAR AFTER THE 2005 FISCAL YEAR FOR ALL HOTELS EXCEPT
THE BALTIMORE HOTEL, AND NOT LESS THAN SIXTY (60) DAYS PRIOR TO THE FIRST DAY OF
EACH FISCAL YEAR AFTER THE 2006 FISCAL YEAR FOR THE BALTIMORE HOTEL, MANAGER
SHALL SUBMIT TO OWNER FOR OWNER’S APPROVAL A PROPOSED YEARLY BUDGET FOR EACH
HOTEL INCLUDING A PROPOSED CAPITAL REPLACEMENTS BUDGET FOR EACH HOTEL FOR THE
ENSUING FULL OR PARTIAL FISCAL YEAR, AS THE CASE MAY BE.  IF OWNER FAILS TO
DISAPPROVE OF A PROPOSED YEARLY BUDGET WITHIN THIRTY (30) DAYS AFTER THE
SUBMISSION THEREOF TO OWNER FOR ITS APPROVAL, THE SAME SHALL BE DEEMED
APPROVED.  TOGETHER WITH EACH SUCH CAPITAL REPLACEMENTS BUDGET, MANAGER SHALL
PROVIDE TO OWNER A PROPOSED THREE-YEAR CAPITAL FORECAST FOR SUCH HOTEL FOR
OWNER’S REVIEW AND APPROVAL.  MANAGER WILL, FROM TIME TO TIME NOT LESS OFTEN
THAN QUARTERLY, ISSUE PERIODIC FORECASTS OF OPERATING PERFORMANCE TO OWNER
REFLECTING ANY SIGNIFICANT UNANTICIPATED CHANGES, VARIABLES OR EVENTS OR
DESCRIBING SIGNIFICANT ADDITIONAL UNANTICIPATED ITEMS OF INCOME OR EXPENSE. 
MANAGER WILL PROVIDE OWNER WITH THE MATERIAL DATA AND INFORMATION UTILIZED IN
PREPARING THE YEARLY BUDGETS AND THE CAPITAL REPLACEMENTS BUDGETS OR ANY
REVISIONS THEREOF.  MANAGER WILL NOT BE DEEMED TO HAVE MADE ANY GUARANTY,
WARRANTY OR REPRESENTATION WHATSOEVER IN CONNECTION WITH THE YEARLY BUDGETS AND
THE CAPITAL REPLACEMENTS BUDGETS, EXCEPT THAT THE PROPOSED YEARLY BUDGETS,
INCLUDING THE CAPITAL REPLACEMENTS BUDGETS, REFLECT MANAGER’S BEST PROFESSIONAL
ESTIMATES OF THE MATTERS THEY DESCRIBE.  MANAGER SHALL USE ITS REASONABLE
EFFORTS, SUBJECT TO THE OPERATING STANDARDS, TO OPERATE AND MANAGE THE HOTELS IN
ACCORDANCE WITH THEIR RESPECTIVE YEARLY BUDGETS.  THE YEARLY BUDGETS FOR THE
HOTELS (OTHER THAN THE BALTIMORE HOTEL) FOR THE 2005 FISCAL YEAR SHALL BE THOSE
MOST RECENTLY DELIVERED BY MANAGER TO OWNER ON OR BEFORE THE EFFECTIVE DATE. 
THE YEARLY BUDGET FOR THE BALTIMORE HOTEL FOR THE 2006 FISCAL YEAR SHALL BE
DELIVERED BY MANAGER TO OWNER ON OR BEFORE FEBRUARY 28, 2006 AND, IN THE INTERIM
PERIOD BETWEEN THE EFFECTIVE DATE AND FEBRUARY 28, 2006, THE APPLICABLE BUDGET
SHALL BE BASED ON THE ACTUAL AMOUNTS INCURRED BY THE PRIOR OWNER WHILE OPERATING
THE

 

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BALTIMORE HOTEL FOR THE CORRESPONDING PERIOD IN CALENDAR YEAR 2005.

 

(B)                                 IN THE EVENT OWNER DISAPPROVES OR RAISES ANY
OBJECTIONS TO THE PROPOSED YEARLY BUDGET, OR ANY PORTION THEREOF, OR ANY
REVISIONS THERETO, OWNER AND MANAGER SHALL COOPERATE WITH EACH OTHER IN GOOD
FAITH TO RESOLVE THE DISPUTED OR OBJECTIONABLE ITEMS.  IF OWNER DISAPPROVES OF A
PROPOSED YEARLY BUDGET, OWNER WILL DISAPPROVE ON A SPECIFIC LINE-BY-LINE BASIS
TO THE EXTENT REASONABLY PRACTICAL.  ANY DISPUTE WITH RESPECT TO A PROPOSED
YEARLY BUDGET WHICH IS NOT RESOLVED BY THE PARTIES WITHIN THIRTY (30) DAYS AFTER
THE SUBMISSION THEREOF TO OWNER SHALL BE RESOLVED BY ARBITRATION.

 

(C)                                  IN THE EVENT OWNER AND MANAGER ARE NOT ABLE
TO RESOLVE THE DISPUTED OR OBJECTIONABLE MATTERS RAISED BY OWNER IN REGARD TO A
YEARLY BUDGET PRIOR TO THE COMMENCEMENT OF THE APPLICABLE FISCAL YEAR, EITHER
VOLUNTARILY OR BY MEANS OF ARBITRATION, MANAGER IS AUTHORIZED TO OPERATE THE
HOTEL IN ACCORDANCE WITH THE PROPOSED YEARLY BUDGET; PROVIDED, HOWEVER, THAT AS
FOR DISPUTED BUDGET ITEMS, MANAGER MAY NOT EXPEND MORE THAN THE PREVIOUS YEAR’S
BUDGETED AMOUNT FOR SUCH ITEM (IF ANY), INCREASED BY A PERCENTAGE EQUAL TO THE
INCREASE IN (I) THE CONSUMER PRICE INDEX DURING THE LAST YEAR, WITH RESPECT TO
THE NON-CANADIAN HOTELS AND (II) THE CANADIAN CONSUMER PRICE INDEX DURING THE
LAST YEAR, WITH RESPECT TO THE CANADIAN HOTELS, UNLESS SUCH EXPENDITURE IS OF
THE TYPE CONTEMPLATED UNDER SECTION 7.7(B) OR IS FOR AN EXPENSE (SUCH AS REAL
ESTATE TAXES, INSURANCE PREMIUMS OR UTILITIES) WHICH IS BEYOND THE MANAGER’S
REASONABLE CONTROL; PROVIDED FURTHER, HOWEVER, MANAGER SHALL NOT EXPEND ON
ACCOUNT OF CAPITAL REPLACEMENTS IN ANY PERIOD FOR ANY HOTEL AN AMOUNT IN EXCESS
OF FIVE PERCENT (5%) OF SUCH HOTEL’S GROSS REVENUES FOR SUCH PERIOD OTHER THAN
PURSUANT TO AN APPROVED CAPITAL REPLACEMENTS BUDGET OR IN CONNECTION WITH
AMOUNTS DEPOSITED IN THE RESERVE PURSUANT TO SECTION 5.2(H) OR WITH THE PRIOR
WRITTEN CONSENT OF OWNER OR IN CONNECTION WITH THE UP TO $25,000,000 REQUIRED TO
BE EXPENDED BY MANAGER’S AFFILIATES PURSUANT TO SECTION 5.2.1 OF THE PURCHASE
AGREEMENT.  FOR PURPOSES OF THIS SECTION, “INCREASE IN THE CONSUMER PRICE INDEX
DURING THE LAST YEAR” SHALL MEAN THE PERCENTAGE INCREASE IN THE CONSUMER PRICE
INDEX FOR THE TWELVE (12) MONTH PERIOD ENDING IMMEDIATELY PRIOR TO THE DATE OF
SUBMISSION OF THE DISPUTED PROPOSED YEARLY BUDGET, AND “INCREASE IN THE CANADIAN
CONSUMER PRICE INDEX DURING THE LAST YEAR” SHALL MEAN THE PERCENTAGE INCREASE IN
THE CANADIAN CONSUMER PRICE INDEX FOR THE TWELVE (12) MONTH PERIOD ENDING
IMMEDIATELY PRIOR TO THE DATE OF SUBMISSION OF THE DISPUTED PROPOSED YEARLY
BUDGET.

 

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8.3                                 BANK ACCOUNTS.

 

(A)                                  THE REVENUES OF THE HOTELS SHALL BE
DEPOSITED INTO ONE OR MORE BANK ACCOUNTS.  THE BANK ACCOUNTS WILL BE SEPARATE
AND DISTINCT FROM ANY OTHER ACCOUNTS, RESERVES OR DEPOSITS REQUIRED BY THIS
AGREEMENT, AND MANAGER’S DESIGNEES WHO ARE INCLUDED IN THE COVERAGE OF ANY
REQUIRED FIDELITY OR SIMILAR INSURANCE WILL BE THE ONLY PARTIES AUTHORIZED TO
DRAW UPON ANY BANK ACCOUNT; PROVIDED, HOWEVER, SUCH DESIGNEES SHALL ONLY BE
AUTHORIZED TO DRAW UPON A BANK ACCOUNT FOR PURPOSES AUTHORIZED BY THE TERMS OF
THIS AGREEMENT.

 

(B)                                 SO LONG AS THIS AGREEMENT IS IN FULL FORCE
AND EFFECT AND THERE IS NO UNCURED MANAGER DEFAULT, MANAGER SHALL HAVE EXCLUSIVE
CONTROL OF THE BANK ACCOUNTS.  NOTHING CONTAINED HEREIN IS TO BE CONSTRUED AS
PREVENTING MANAGER FROM MAINTAINING SEPARATE PAYROLL ACCOUNTS OR PETTY CASH
FUNDS AND MAKING PAYMENTS THEREFROM AS THE SAME MAY BE CUSTOMARY IN THE HOTEL
BUSINESS OR THE APPLICABLE BRAND STANDARDS.

 

8.4                                 CONSOLIDATED FINANCIALS.  EACH ULTIMATE
PARENT OF MANAGER AND EACH GUARANTOR SHALL FURNISH TO OWNER WITHIN TEN (10) DAYS
AFTER THE FILING BY SUCH ULTIMATE PARENT OR ANY GUARANTOR OF ANY MATERIAL FILING
WITH RESPECT TO THE SECURITIES OF SUCH ULTIMATE PARENT OR SUCH GUARANTOR OR ANY
FINANCIAL STATEMENT WITH ANY GOVERNMENTAL AGENCY, QUASI-GOVERNMENTAL AGENCY OR
STOCK EXCHANGE, A COPY OF THE SAME; PROVIDED, HOWEVER, IF A GUARANTOR OR
ULTIMATE PARENT OF MANAGER IS NOT REQUIRED TO FILE INTERIM AND ANNUAL FINANCIAL
STATEMENTS WITH THE SECURITIES AND EXCHANGE COMMISSION OR ITS EQUIVALENT IN THE
UNITED KINGDOM SUCH GUARANTOR OR ULTIMATE PARENT SHALL FURNISH THE FOLLOWING
STATEMENTS TO OWNER:

 

(A)                                  WITHIN FORTY-FIVE (45) DAYS AFTER EACH
INTERIM PERIOD FOR WHICH SUCH ULTIMATE PARENT OR GUARANTOR PREPARES CONSOLIDATED
FINANCIALS, THE CONSOLIDATED FINANCIALS OF SUCH ULTIMATE PARENT OR GUARANTOR FOR
SUCH PERIOD ACCOMPANIED BY AN OFFICER’S CERTIFICATE; AND

 

(B)                                 WITHIN NINETY (90) DAYS AFTER EACH FISCAL
YEAR OF SUCH ULTIMATE PARENT OR GUARANTOR, THE CONSOLIDATED FINANCIALS OF SUCH
ULTIMATE PARENT OR SUCH GUARANTOR FOR SUCH FISCAL YEAR AUDITED BY A FIRM OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS REASONABLY SATISFACTORY TO OWNER
ACCOMPANIED BY AN OFFICER’S CERTIFICATE.

 

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ARTICLE 9

 

FEES TO MANAGER

 

9.1                                 MANAGEMENT FEES.

 

(A)                                  AS CONSIDERATION FOR THE MANAGEMENT AND
OPERATION OF THE HOTELS BY MANAGER, MANAGER SHALL EARN THE FOLLOWING FEES, WHICH
FEES SHALL BE PAYABLE AS PROVIDED IN SECTION 10.1.

 

(I)  THE BASE MANAGEMENT FEE SHALL BE PAID IN MONTHLY INSTALLMENTS IN ARREARS
BASED ON THE GROSS REVENUES OF THE HOTELS FOR THE PRIOR FISCAL MONTH.  THE BASE
MANAGEMENT FEE FOR ANY PERIOD LESS THAN A FULL TWELVE (12) MONTH FISCAL YEAR
SHALL BE PAID ON THE BASIS OF GROSS REVENUES FOR THAT PERIOD.

 

(II)  THE INCENTIVE MANAGEMENT FEE SHALL BE PAID IN MONTHLY INSTALLMENTS IN
ARREARS.  THE INCENTIVE MANAGEMENT FEE FOR ANY PERIOD LESS THAN A FULL TWELVE
(12) MONTH FISCAL YEAR SHALL BE PAID ON THE BASIS OF GROSS REVENUES FOR THAT
PERIOD.

 

(B)                                 SO LONG AS THE PR PROPERTY SHALL BE A POOLED
FF&E HOTEL, OWNER SHALL BE ENTITLED TO OFFSET AGAINST THE MANAGEMENT FEES ANY
AMOUNTS THEN DUE AND OWING TO OWNER OR ANY OF ITS AFFILIATES UNDER THE PR LEASE
OR THE PR INDEMNITY, AND MANAGER SHALL NOT PAY ITSELF ANY AMOUNT WHICH OWNER IS
SO ENTITLED TO OFFSET.

 

(C)                                  THE PARTIES ACKNOWLEDGE THAT SERVICES
PERFORMED BY THE MANAGER HEREUNDER IN CONNECTION WITH A CANADIAN HOTEL
CONSTITUTE ONE OR MORE “TAXABLE SUPPLIES” FOR GST PURPOSES.  AS A RESULT, GST IS
APPLICABLE AND MUST BE CHARGED AND COLLECTED FROM OWNER BY MANAGER IN ADDITION
TO AND CALCULATED ON THE BASE MANAGEMENT FEE, THE INCENTIVE MANAGEMENT FEE, AND
THAT PART OF THE OPERATING COSTS INCURRED BY THE MANAGER AND REIMBURSED IN
CONNECTION WITH THIS AGREEMENT.

 

9.2                                 SYSTEM FEES.  MANAGER SHALL PAY, AS
OPERATING COSTS ON BEHALF OF OWNER, USUAL AND CUSTOMARY SYSTEM FEES AND
ASSESSMENTS ON AN AREA-WIDE BASIS FOR THE SYSTEMS OF HOTELS COMPRISING THE
APPLICABLE BRAND WHICH CURRENTLY INCLUDE:

 

(A)                                  WITH RESPECT TO THE STAYBRIDGE BRAND, (I) A
RESERVATION AND MARKETING FEE OF THREE PERCENT (3.0%) OF ROOMS REVENUE, (II) A
PRIORITY CLUB FEE OF FOUR AND THREE-QUARTERS PERCENT (4.75%) OF ALL QUALIFYING
FOLIO REVENUE AT A HOTEL TO

 

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PRIORITY CLUB (I.E., THE LOYALTY PROGRAM OF THE BRANDS) MEMBERS, (III) A
TECHNOLOGY FEE EQUAL TO $10.80 PER GUEST ROOM PER MONTH, (IV) AN E-MAIL SERVICE
FEE EQUAL TO $15.00 PER E-MAIL USER PER MONTH AND (V) AN ACCOUNTING FEE OF
$15.00 PER MONTH PER GUEST ROOM;

 

(B)                                 WITH RESPECT TO THE INTERCONTINENTAL BRAND,
(I) A RESERVATION AND MARKETING FEE OF THREE PERCENT (3.0%) OF ROOMS REVENUE,
(II) A PRIORITY CLUB FEE OF FOUR AND THREE-QUARTERS PERCENT (4.75%) OF ALL
QUALIFYING FOLIO REVENUE AT A HOTEL TO PRIORITY CLUB MEMBERS, (III) A TECHNOLOGY
FEE EQUAL TO $10.80 PER GUEST ROOM PER MONTH, (IV) AN E-MAIL SERVICE FEE EQUAL
TO $15.00 PER E-MAIL USER PER MONTH AND (V) AN ACCOUNTING FEE OF $15.00 PER
GUEST ROOM PER MONTH;

 

(C)                                  WITH RESPECT TO THE CROWNE PLAZA BRAND,
(I) A RESERVATION AND MARKETING FEE OF THREE PERCENT (3.0%) OF ROOMS REVENUE,
(II) A PRIORITY CLUB FEE OF FOUR AND THREE-QUARTERS PERCENT (4.75%) OF ALL
QUALIFYING FOLIO REVENUE AT A HOTEL TO PRIORITY CLUB MEMBERS, (III) A TECHNOLOGY
FEE EQUAL TO $10.80 PER GUEST ROOM PER MONTH, (IV) AN E-MAIL SERVICE FEE EQUAL
TO $15.00 PER E-MAIL USER PER MONTH AND (V) AN ACCOUNTING FEE OF $15.00 PER
GUEST ROOM PER MONTH; AND

 

(D)                                 WITH RESPECT TO THE HOLIDAY INN BRAND, (I) A
RESERVATION AND MARKETING FEE OF THREE PERCENT (3.0%) OF ROOMS REVENUE, (II) A
PRIORITY CLUB FEE OF FOUR AND THREE-QUARTERS PERCENT (4.75%) OF ALL QUALIFYING
FOLIO REVENUE AT A HOTEL TO PRIORITY CLUB MEMBERS, (III) A TECHNOLOGY FEE EQUAL
TO $10.80 PER GUEST ROOM PER MONTH, (IV) AN E-MAIL SERVICE FEE EQUAL TO $15.00
PER E-MAIL USER PER MONTH AND (V) AN ACCOUNTING FEE OF $15.00 PER GUEST ROOM PER
MONTH.

 

Each of the foregoing System Fees and other fees were effective as of
December 31, 2005 but shall be adjusted from time to time to reflect the Hotels’
equitable portion of the Manager’s and/or its Affiliates’ actual out-of-pocket
costs for providing the services to which such fees pertain and only in
accordance with changes generally applicable to the Brand in question.  Not less
frequently than annually, Manager shall provide to Owner financial statements
with respect to all fees comparable to the System Fees collected by Manager
and/or its Affiliates and the applications thereof; provided, however, Manager
shall not be obligated to provide such statements with respect to the accounting
fee, the Technology Fee or the e-mail service fees until such time as it has in
place the means of producing such statements.  Manager covenants, warrants and
represents that (i) each hotel in the applicable Brand (other than the

 

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Intercontinental Brand) pays, and shall at all times pay, the same System Fees
for such services and all such System Fees collected by Manager and/or its
Affiliates are, and will be, applied to the cost of providing such services to
all hotels in such Brand, (ii) the e-mail service fees and the accounting fees
being charged under this Agreement are no higher than the amounts being charged
for such services in at least fifty (50%) of the other hotels in the U.S. and
Canada which are being managed by Manager or its Affiliates under management
agreements dated after January 1, 2000 (exclusive of any other management
agreements with Owner or its Affiliates) and the percentages of any increases in
such fees charged under this Agreement shall not be higher than the comparable
percentages of increases charged to such other hotels under such other
management agreements and (iii) the System Fees being charged under this
Agreement for the Intercontinental Brand are no higher than the amounts being
charged in at least fifty (50%) of the other Intercontinental Brand hotels in
the U.S. and Canada which are being managed by Manager or its Affiliates under
management agreements dated on or after January 1, 2000 (exclusive of any other
management agreements with Owner or its Affiliates) and the percentages of any
increases in such fees charged under this Agreement shall not be higher than the
comparable percentages of increases charged to such other hotels under such
other management agreements.  Other than with respect to the System Fees for the
InterContinental Hotels, Manager or its Affiliates shall not make any profits
from the System Fees except to the extent that such profit for any year shall be
applied to the cost of providing such services in the subsequent year or future
years; provided, however, Manager and its Affiliates shall not retain any such
profits for an unreasonable period of time.  Any disputes under this Section 9.2
shall be resolved by Arbitration.

 

All System Fees and e-mail service fees and accounting fees described above
shall accrue monthly, when billed, but in no event shall any such fees accrue
prior to the end of the month for which they are incurred.

 

ARTICLE 10

 

DISBURSEMENTS

 

10.1                           DISBURSEMENT OF FUNDS.  AS AND WHEN RECEIVED BY
MANAGER OR THE HOTELS, ALL GROSS REVENUES FROM ALL OF THE HOTELS SHALL BE
DEPOSITED INTO THE BANK ACCOUNTS AND, SUBJECT TO THE TERMS OF SECTIONS 8.1 AND
10.7, APPLIED IN THE FOLLOWING ORDER OF PRIORITY TO THE EXTENT AVAILABLE:

 

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(A)                                  FIRST, TO PAY ALL OPERATING COSTS;

 

(B)                                 SECOND, TO FUND THE RESERVE ACCOUNT AS
REQUIRED BY SECTION 5.2 FOR THE PREVIOUS FISCAL MONTH;

 

(C)                                  THIRD, TO OWNER, ALL ACCRUED BUT UNPAID
OWNER’S FIRST PRIORITY FOR THE FISCAL YEAR TO WHICH SUCH GROSS REVENUES PERTAIN
(NET OF AMOUNTS THERETOFORE PAID FROM GROSS REVENUES BY MANAGER ON BEHALF OF
OWNER ON ACCOUNT OF DEBT SERVICE DUE UNDER AN AUTHORIZED MORTGAGE AS PROVIDED IN
SECTION 4.3(C));

 

(D)                                 FOURTH, (I) TO REIMBURSE MANAGER FOR ANY
AMOUNTS ADVANCED BY MANAGER PURSUANT TO SECTION 5.2(D) TOGETHER WITH INTEREST ON
THE OUTSTANDING AMOUNTS THEREOF AT THE INTEREST RATE (DETERMINED AS OF THE DATE
OF THE APPLICABLE ADVANCE) AND (II) TO PAY FOR CAPITAL REPLACEMENTS WHICH OWNER
FAILED TO TIMELY FUND IN VIOLATION OF SECTION 5.2(D);

 

(E)                                  FIFTH, TO FUND THE RESERVE ACCOUNT TO THE
EXTENT THAT THE AGGREGATE AMOUNTS PREVIOUSLY FUNDED FOR PRIOR PERIODS IS LESS
THAN THE AMOUNT REQUIRED TO BE FUNDED FOR SUCH PERIODS PURSUANT TO THE TERMS OF
SECTION 5.2;

 

(F)                                    SIXTH, TO MANAGER, INTEREST AT THE
INTEREST RATE (DETERMINED AS OF THE DATE OF THE APPLICABLE ADVANCE) ON ANY
OUTSTANDING AMOUNTS ADVANCED BY MANAGER PURSUANT TO SECTION 15.2(D);

 

(G)                                 SEVENTH, TO MANAGER, ANY ACCRUED BUT UNPAID
BASE MANAGEMENT FEE FOR THE FISCAL YEAR TO WHICH SUCH GROSS REVENUES PERTAIN BUT
NOT FOR ANY OTHER PERIOD;

 

(H)                                 EIGHTH, TO OWNER, ALL ACCRUED BUT UNPAID
OWNER’S SECOND PRIORITY FOR THE FISCAL YEAR TO WHICH SUCH GROSS REVENUES PERTAIN
BUT NOT FOR ANY OTHER PERIOD (AND, WITHOUT DUPLICATION FOR AMOUNTS NETTED UNDER
SECTION 10.1(C), NET OF AMOUNTS THERETOFORE PAID FROM GROSS REVENUES BY MANAGER
ON BEHALF OF OWNER ON ACCOUNT OF DEBT SERVICE DUE UNDER AN AUTHORIZED MORTGAGE
AS PROVIDED IN SECTION 4.3(C));

 

(I)                                     NINTH, (COMMENCING IN 2007 FOR ALL
HOTELS OTHER THAN THE BALTIMORE HOTEL AND COMMENCING IN 2008 FOR THE BALTIMORE
HOTEL) TO OWNER, ALL ACCRUED BUT UNPAID OWNER’S PERCENTAGE PRIORITY FOR ALL OF
THE HOTELS;

 

(J)                                     TENTH, TO REIMBURSE OWNER FOR ANY
ADVANCES MADE BY OWNER TO WORKING CAPITAL;

 

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(K)                                  ELEVENTH, TO REIMBURSE MANAGER FOR ANY
ADVANCES MADE BY MANAGER TO WORKING CAPITAL IN EXCESS OF THE INITIAL WORKING
CAPITAL;

 

(L)                                     TWELFTH, TO REPLENISH ANY PORTION OF THE
DEPOSIT WHICH HAS BEEN DRAWN UPON, REGARDLESS OF WHETHER SUCH DRAW WAS MADE IN
CONNECTION WITH THE SECURED OBLIGATIONS OR OTHERWISE;

 

(M)                               THIRTEENTH, PRIOR TO THE SEVERANCE DATE,
PROVIDED THE GUARANTOR IS NOT IN DEFAULT OF ANY OF ITS OBLIGATIONS UNDER THE
GUARANTY, TO REIMBURSE THE GUARANTOR FOR ANY UNREIMBURSED PAYMENTS MADE BY IT ON
ACCOUNT OF THE GUARANTEED OBLIGATIONS UNDER THE GUARANTY; PROVIDED, HOWEVER, IF
THE GUARANTOR SHALL HAVE PROVIDED COLLATERAL (AS DEFINED IN THE GUARANTY) UNDER
THE GUARANTY, THEN THE AMOUNT TO BE REIMBURSED TO THE GUARANTOR UNDER THIS
SECTION 10.1(M) SHALL BE DISBURSED TO OWNER, TO BE HELD BY OWNER AS COLLATERAL
FOR THE GUARANTOR’S OBLIGATIONS UNDER THE GUARANTY UNTIL THE OUTSTANDING BALANCE
UNDER THE GUARANTY IS EQUAL TO ZERO DOLLARS ($0); PROVIDED FURTHER, HOWEVER,
THAT ANY AMOUNTS WHICH WOULD OTHERWISE BE REIMBURSED TO THE GUARANTOR SHALL
FIRST BE APPLIED TO ANY AMOUNT DUE UNDER THE PR GUARANTY;

 

(N)                                 FOURTEENTH, TO REIMBURSE OWNER FOR ANY
ADVANCES MADE BY OWNER OR PURCHASER TO THE RESERVE ACCOUNT PURSUANT TO
SECTION 5.2(C)(III);

 

(O)                                 FIFTEENTH, TO REIMBURSE MANAGER FOR
(I) OUTSTANDING ADVANCES MADE BY MANAGER PURSUANT TO SECTION 15.2(D) TO THE
EXTENT THEN DUE AND PAYABLE AND (II) OTHER CONTRIBUTIONS MADE BY IT TO THE
RESERVE ACCOUNT OTHER THAN PURSUANT TO SECTION 5.2(D) OR SECTION 5.2(F);

 

(P)                                 SIXTEENTH, TO OWNER, ALL ACCRUED AND UNPAID
OWNER’S FIRST PRIORITY FOR PRIOR PERIODS;

 

(Q)                                 SEVENTEENTH, TO PAY MANAGER ACCRUED BUT
UNPAID BASE MANAGEMENT FEES FOR PRIOR PERIODS;

 

(R)                                    EIGHTEENTH, TO OWNER, ALL ACCRUED AND
UNPAID OWNER’S SECOND PRIORITY FOR PRIOR PERIODS; AND

 

(S)                                  NINETEENTH, TO MANAGER, THE INCENTIVE
MANAGEMENT FEE.

 

10.2                           RESIDUAL DISTRIBUTION.  SIMULTANEOUSLY WITH THE
MAKING OF EACH PAYMENT OF THE INCENTIVE MANAGEMENT FEE, THE THEN REMAINING GROSS
REVENUES WILL BE DISBURSED TO OWNER.  EXCEPT AS HEREIN PROVIDED, MANAGER SHALL
HAVE NO RESPONSIBILITY TO INCUR

 

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OPERATING COSTS OR UNDERTAKE ANY CAPITAL REPLACEMENT EXCEPT TO THE EXTENT
MANAGER IS REASONABLY ASSURED THAT FUNDS TO PAY SUCH OPERATING COSTS AND FOR
SUCH CAPITAL REPLACEMENTS WILL BE TIMELY AVAILABLE.

 

10.3                           OWNER’S FIRST PRIORITY.  OWNER’S FIRST PRIORITY
SHALL BE DUE AND PAYABLE IN ADVANCE IN EQUAL MONTHLY INSTALLMENTS ON THE FIRST
DAY OF EACH FISCAL MONTH, PRO-RATED FOR ANY PARTIAL MONTH, REGARDLESS OF ANY
INADEQUACY OF GROSS REVENUES OR OPERATING PROFITS.  IF ANY INSTALLMENT OF
OWNER’S FIRST PRIORITY IS NOT PAID WHEN DUE, THE SAME SHALL ACCRUE INTEREST AT
THE INTEREST RATE.  (SUCH INTEREST SHALL BE PAYABLE ON DEMAND, SHALL NOT BE AN
OPERATING COST, AND SHALL BE PAID BY MANAGER.)  APPROPRIATE ADJUSTMENTS SHALL BE
MADE TO REFLECT ANY CHANGE IN OWNER’S FIRST PRIORITY ON ACCOUNT OF ADVANCES MADE
PURSUANT TO SECTIONS 5.2(C) OR 15.2 BY OWNER OR PURCHASER WHEN SUCH ADVANCES ARE
MADE, PROVIDED ANY ADDITIONAL AMOUNTS OF OWNER’S FIRST PRIORITY DUE BY REASON OF
ANY SUCH ADVANCE FOR THE MONTH IN WHICH SUCH ADVANCE IS MADE SHALL NOT BE DUE
AND PAYABLE UNTIL THE FIRST BUSINESS DAY OF THE MONTH NEXT AFTER THE DATE AS OF
WHICH SUCH CHANGE OCCURS.  AS INSTALLMENTS OF OWNER’S FIRST PRIORITY ARE TO BE
PAID IN ADVANCE, MANAGER MAY ADVANCE AMOUNTS DUE ON ACCOUNT OF A MONTHLY
INSTALLMENT OF OWNER’S FIRST PRIORITY FOR A FISCAL MONTH AND REIMBURSE ITSELF
FROM OPERATING PROFITS FOR SUCH FISCAL MONTH THE AMOUNTS SO ADVANCED; PROVIDED,
HOWEVER, IF OPERATING PROFITS OF ALL OF THE HOTELS FOR SUCH FISCAL MONTH IN
EXCESS OF THE AMOUNT TO BE CONTRIBUTED TO THE RESERVE ACCOUNT PURSUANT TO
SECTION 5.2 ARE INSUFFICIENT TO MAKE SUCH REIMBURSEMENTS, THE AMOUNT OF SUCH
INSUFFICIENCY SHALL BE DEEMED AN ADVANCE UNDER THE PR GUARANTY TO THE EXTENT ANY
AMOUNT IS OWED THEREUNDER AND THEN AN ADVANCE TO WORKING CAPITAL, AND MANAGER
SHALL BE ENTITLED TO THE REIMBURSEMENT THEREOF ONLY PURSUANT TO SECTION 10.1(K);
PROVIDED, HOWEVER, UNLESS SUCH ADVANCE IS DEEMED AN ADVANCE UNDER THE PR
GUARANTY, BY NOTICE GIVEN TO OWNER WITHIN THIRTY (30) DAYS AFTER THE END OF SUCH
FISCAL MONTH, MANAGER MAY ELECT TO DEEM THE AMOUNT OF SUCH INSUFFICIENCY AN
ADVANCE UNDER THE GUARANTY (AND NOT AN ADVANCE TO WORKING CAPITAL).  IF MANAGER
SHALL SO MAKE SUCH ELECTION, THE AMOUNT OF SUCH INSUFFICIENCY SHALL BE
REIMBURSED TO THE GUARANTOR AS PROVIDED IN SECTION 10.1(M).  IF OWNER FAILS TO
RECEIVE ANY INSTALLMENT OF OWNER’S FIRST PRIORITY AS AND WHEN DUE, OWNER MAY
TERMINATE THIS AGREEMENT ON NOT LESS THAN THIRTY (30) DAYS’ NOTICE; PROVIDED,
HOWEVER, SUCH NOTICE SHALL BE VOID AB INITIO IF SUCH INSTALLMENT TOGETHER WITH
ANY INTEREST ACCRUED THEREON IS PAID TO OWNER PRIOR TO THE THIRTIETH (30TH) DAY
AFTER SUCH NOTICE IS GIVEN.

 

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10.4                           OWNER’S PERCENTAGE PRIORITY.  OWNER’S PERCENTAGE
PRIORITY SHALL BE CALCULATED ON A HOTEL-BY-HOTEL BASIS, AND SHALL ACCRUE AND BE
PAYABLE IN MONTHLY INSTALLMENTS TO THE EXTENT THAT GROSS REVENUES YEAR-TO-DATE
AT ANY HOTEL EXCEED GROSS REVENUES FOR SUCH HOTEL FOR THE CORRESPONDING PERIOD
IN ITS BASE YEAR.  THE INSTALLMENT OF OWNER’S PERCENTAGE PRIORITY FOR ALL OF THE
HOTELS FOR EACH FISCAL MONTH SHALL BE DUE AND PAYABLE ON THE TWENTY-FIFTH (25TH)
DAY OF THE FOLLOWING MONTH.  OWNER’S PERCENTAGE PRIORITY WITH RESPECT TO ANY
HOTEL LOCATED IN CANADA SHALL BE CALCULATED IN CANADIAN DOLLARS BUT SHALL BE
PAID TO OWNER IN UNITED STATES DOLLARS IN ACCORDANCE WITH SECTION 24.24.

 

10.5                           OWNER’S SECOND PRIORITY.  OWNER’S SECOND PRIORITY
SHALL ACCRUE IN EQUAL MONTHLY INSTALLMENTS ON THE FIRST DAY OF EACH FISCAL
MONTH, PRO-RATED FOR ANY PARTIAL MONTH, AND SHALL BE PAID AS PROVIDED IN
SECTION 10.1; PROVIDED, HOWEVER, ALL ACCRUED AND UNPAID OWNER’S SECOND PRIORITY
SHALL BE DUE AND PAYABLE UPON THE EXPIRATION OR EARLIER TERMINATION OF THE
TERM.  APPROPRIATE ADJUSTMENTS SHALL BE MADE TO REFLECT ANY CHANGE IN OWNER’S
SECOND PRIORITY ON ACCOUNT OF ADVANCES MADE BY OWNER OR PURCHASER PURSUANT TO
SECTIONS 5.2(C)(II) WHEN SUCH ADVANCES ARE MADE, PROVIDED ANY ADDITIONAL AMOUNTS
OF OWNER’S SECOND PRIORITY DUE BY REASON OF ANY SUCH ADVANCE FOR THE MONTH IN
WHICH SUCH ADVANCE IS MADE SHALL NOT BE DUE AND PAYABLE UNTIL THE FIRST BUSINESS
DAY OF THE MONTH NEXT AFTER THE DATE AS OF WHICH SUCH CHANGE OCCURS.

 

10.6                           NO INTEREST.  EXCEPT AS EXPRESSLY PROVIDED
HEREIN, NO INTEREST SHALL ACCRUE OR BE PAYABLE TO EITHER PARTY HEREUNDER ON
ACCOUNT OF ANY AMOUNT OWED TO SUCH PARTY HEREUNDER.

 

10.7                           CALCULATION OF INTERIM DISBURSEMENTS.  OTHER THAN
AS DESCRIBED IN SECTIONS 5.2 OR 10.3, THE PRIORITY ORDER FOR DISBURSEMENT OF
GROSS REVENUES SET FORTH IN SECTION 10.1 SHALL BE DETERMINED ON AN ANNUAL BASIS
IN ACCORDANCE WITH SECTION 8.1; PROVIDED, HOWEVER, THERE SHALL BE INTERIM
MONTHLY DISBURSEMENTS TO WHICH THE FOLLOWING SHALL APPLY:

 

(A)                                  EACH MONTH DURING A FISCAL YEAR, THE
DISBURSEMENTS OF GROSS REVENUES WILL BE MADE ON A CUMULATIVE, YEAR-TO-DATE BASIS
BASED ON MANAGER’S MONTHLY STATEMENTS DELIVERED PURSUANT TO SECTION 8.1(B) AS IF
THAT YEAR-TO-DATE PERIOD REPRESENTED A FULL FISCAL YEAR.

 

(B)                                 IF A STATEMENT DELIVERED PURSUANT TO
SECTION 8.1(B) REFLECTS ANY OVERPAYMENT (OTHER THAN WITH RESPECT TO OWNER’S
FIRST PRIORITY OR AMOUNTS TO BE CONTRIBUTED TO THE RESERVE

 

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ACCOUNT), THE PARTY WHICH RECEIVED SUCH OVERPAYMENT SHALL DEPOSIT THE SAME IN
THE BANK ACCOUNTS (OR REMIT THE SAME TO MANAGER FOR SUCH DEPOSIT) AND THE SAME
SHALL THEN BE DISPERSED IN THE ORDER SPECIFIED IN SECTION 10.1.

 

10.8                           AMOUNTS OUTSTANDING AT END OF TERM.  UNLESS THIS
AGREEMENT IS WRONGFULLY TERMINATED BY OWNER, THEN UPON THE EXPIRATION OR EARLIER
TERMINATION OF THIS AGREEMENT, MANAGER SHALL HAVE NO CLAIM AGAINST OWNER,
PURCHASER OR THE HOTELS FOR AMOUNTS OWED TO IT UNDER THIS AGREEMENT WHICH HAVE
NOT BEEN PAID BY REASON OF THE INADEQUACY OF GROSS REVENUES OR OPERATING
PROFITS.

 

10.9                           ALLOCATION OF OWNER’S FIXED PRIORITY.  OWNER’S
FIXED PRIORITY SHALL INITIALLY BE ALLOCATED AMONG THE HOTELS AS SET FORTH IN
EXHIBIT C.  UPON ANY INCREASE TO OWNER’S FIXED PRIORITY BY REASON OF ANY ADVANCE
MADE PURSUANT TO SECTION 5.2(C) OR SECTION 15.2, SUCH INCREASE SHALL BE
ALLOCATED TO EACH HOTEL TO THE EXTENT SUCH ADVANCE WAS MADE FOR SUCH HOTEL.  IN
THE EVENT OF AN ADJUSTMENT TO OWNER’S FIRST PRIORITY OR OWNER’S SECOND PRIORITY
PURSUANT TO SECTIONS 2.7 OR 24.17, SUCH ADJUSTMENT SHALL BE ALLOCATED AMONG THE
REMAINING HOTELS IN PROPORTION TO THEIR ALLOCATED SHARE OF OWNER’S FIRST
PRIORITY IMMEDIATELY PRIOR TO SUCH ADJUSTMENT.

 

10.10                     SURVIVAL.  THE TERMS OF THIS ARTICLE 10 SHALL SURVIVE
THE EXPIRATION OR EARLIER TERMINATION OF THE TERM.

 

ARTICLE 11

 

CERTAIN OTHER SERVICES

 

11.1                           OPTIONAL SERVICES.  OWNER ACKNOWLEDGES THAT
MANAGER AND ITS AFFILIATES SOMETIMES PROVIDE SEPARATE, OPTIONAL SERVICES WHICH
MAY RELATE TO THE HOTELS IN ADDITION TO THOSE WHICH ARE ENCOMPASSED BY THIS
AGREEMENT.  OWNER AGREES TO CONSIDER IN GOOD FAITH ANY PROPOSALS PRESENTED TO IT
BY MANAGER OR ANY OF MANAGER’S AFFILIATES FOR SUCH ADDITIONAL SERVICES RELATIVE
TO THE HOTELS; IT BEING UNDERSTOOD, HOWEVER, THAT THIS SECTION 11.1 SHALL IN NO
EVENT BE CONSTRUED TO REQUIRE OWNER TO ACCEPT ANY SUCH PROPOSALS.

 

11.2                           PURCHASING.  IN MAKING PURCHASING DECISIONS WITH
RESPECT TO PRODUCTS AND SERVICES USED IN THE OPERATION OF THE HOTELS, MANAGER
WILL EXERCISE REASONABLE BUSINESS JUDGMENT IN ACCORDANCE WITH THE OPERATING
STANDARDS.  MANAGER SHALL BE ENTITLED TO CONTRACT WITH ITS AFFILIATES, OTHERS IN
WHOM MANAGER OR ITS AFFILIATES HAVE AN OWNERSHIP INTEREST AND OTHERS WITH

 

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WHOM MANAGER OR ITS AFFILIATES HAVE CONTRACTUAL RELATIONSHIPS TO PROVIDE GOODS
AND/OR SERVICES TO THE HOTELS, PROVIDED THAT THE PRICES AND/OR TERMS FOR SUCH
GOODS AND/OR SERVICES ARE COMPETITIVE AND NO WORSE THAN THE PRICES AND/OR TERMS
THAT SUCH PROVIDER CHARGES UNRELATED THIRD PARTIES.  IN DETERMINING WHETHER SUCH
PRICES AND/OR TERMS ARE SO COMPETITIVE, THEY WILL BE COMPARED TO THE PRICES
AND/OR TERMS WHICH ARE AVAILABLE FROM COMPARABLY QUALIFIED PROVIDERS FOR GOODS
AND/OR SERVICES OF SIMILAR QUALITY GROUPED IN REASONABLE CATEGORIES, RATHER THAN
BEING COMPARED ITEM BY ITEM.  SUBJECT TO THE FOREGOING PROVISO, THE PRICES
CHARGED FOR SUCH GOODS OR SERVICES MAY INCLUDE OVERHEAD AND THE ALLOWANCE OF A
REASONABLE RETURN TO THE PROVIDER.  SUBJECT TO THE FOREGOING PROVISO, OWNER
ACKNOWLEDGES AND AGREES THAT THE PROVIDERS OF SUCH GOODS AND/OR SERVICES MAY
RETAIN FOR THEIR OWN BENEFIT ANY CREDITS, REBATES OR COMMISSIONS RECEIVED WITH
RESPECT TO SUCH PURCHASES.  NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE
CONTRARY, MANAGER WILL ACT IN A MANNER THAT ENABLES OWNER AND THE HOTELS TO GAIN
NOT LESS THAN THE SAME BENEFITS WITH RESPECT TO PURCHASING AS ARE MADE AVAILABLE
TO OTHER HOTELS OF THE SAME CATEGORY AS THE HOTELS WHICH OTHER HOTELS ARE OWNED
OR OPERATED BY MANAGER OR ITS AFFILIATES.  DISPUTES UNDER THIS SECTION 11.2
SHALL BE RESOLVED BY ARBITRATION.

 

ARTICLE 12

 

SIGNS AND SERVICE MARKS

 

12.1                           SIGNS.  TO THE EXTENT NOT IN PLACE ON THE
EFFECTIVE DATE, MANAGER AGREES TO ERECT AND INSTALL, IN ACCORDANCE WITH ALL
APPLICABLE LEGAL REQUIREMENTS, ALL NECESSARY SIGNS UNDER THE APPLICABLE BRAND
STANDARDS.

 

12.2                           SYSTEM MARKS.  IT IS UNDERSTOOD AND AGREED BY
OWNER THAT THE NAMES STAYBRIDGE SUITES, INTERCONTINENTAL, CROWNE PLAZA AND
HOLIDAY INN AND ALL SYSTEM MARKS ARE THE EXCLUSIVE PROPERTY OF MANAGER OR ITS
AFFILIATES.  OWNER AGREES AND ACKNOWLEDGES THE EXCLUSIVE RIGHT OF OWNERSHIP OF
MANAGER AND ITS AFFILIATES TO THE SYSTEM MARKS AND THE RESERVATION SYSTEMS. 
EXCEPT FOR ANY RIGHTS EXPRESSLY GRANTED TO OWNER IN THIS AGREEMENT, OWNER HEREBY
DISCLAIMS ANY RIGHT OR INTEREST THEREIN, REGARDLESS OF THE LEGAL PROTECTION
AFFORDED THERETO.  EXCEPT FOR ANY RIGHTS EXPRESSLY GRANTED TO OWNER IN THIS
AGREEMENT, IN THE EVENT OF TERMINATION OR CANCELLATION OF THIS AGREEMENT,
WHETHER AS A RESULT OF A DEFAULT BY MANAGER OR OTHERWISE, OWNER SHALL NOT HOLD
ITSELF OUT AS, OR OPERATE THE HOTELS AS, STAYBRIDGE SUITES, INTERCONTINENTAL,
CROWNE PLAZA AND HOLIDAY INN, AS APPLICABLE, HOTELS, AND WILL IMMEDIATELY CEASE
USING SUCH NAMES AND ALL

 

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OTHER SYSTEM MARKS IN CONNECTION WITH THE NAME OR OPERATION OF EACH HOTEL AS OF
THE EXPIRATION DATE.  PROMPTLY AFTER THE EXPIRATION DATE (OR SUCH LATER DATE ON
WHICH MANAGER SHALL CEASE TO OPERATE THE HOTELS) AND THE EXPIRATION OF ANY RIGHT
GRANTED TO OWNER TO USE THE SYSTEM MARKS, SUBJECT TO THE TERMS OF SECTION 17.4,
OWNER SHALL REMOVE ALL SIGNS, FURNISHINGS, PRINTED MATERIAL, EMBLEMS, SLOGANS OR
OTHER DISTINGUISHING CHARACTERISTICS WHICH ARE NOW OR HEREAFTER MAY BE CONNECTED
OR IDENTIFIED WITH AN APPLICABLE BRAND OR RESERVATION SYSTEM.  OWNER SHALL NOT
USE ANY SYSTEM MARKS OR ANY PART, COMBINATION OR VARIATION THEREOF IN THE NAME
OF ANY PARTNERSHIP, CORPORATION OR OTHER BUSINESS ENTITY, NOR ALLOW THE USE
THEREOF BY OTHERS.

 

12.3                           SYSTEM MARK LITIGATION.

 

(A)                                  MANAGER, IHG AND EACH OTHER GUARANTOR SHALL
HOLD OWNER AND ITS AFFILIATES HARMLESS FROM AND INDEMNIFY AND DEFEND OWNER AND
ITS AFFILIATES AGAINST ANY AND ALL COSTS AND EXPENSES INCURRED BY OWNER OR ITS
AFFILIATES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES REASONABLY INCURRED),
ARISING OUT OF THE USE OF SYSTEM MARKS AT OR IN CONNECTION WITH THE OPERATION OF
THE HOTELS BY OWNER OR ITS DESIGNEES PURSUANT TO THE TERMS OF THIS AGREEMENT OR
BY MANAGER OR ITS AFFILIATES.

 

(B)                                 IN THE EVENT A HOTEL, OWNER OR MANAGER IS
THE SUBJECT OF ANY LITIGATION OR ACTION BROUGHT BY ANY PARTY SEEKING TO CLAIM
RIGHTS IN OR TO RESTRAIN THE USE OF ANY SYSTEM MARK USED BY MANAGER IN
CONNECTION WITH THE HOTEL, THEN, PROVIDED OWNER IS A PARTY TO SUCH LITIGATION OR
ACTION AND FURTHER PROVIDED THAT MANAGER SHALL HAVE PROVIDED TO OWNER EITHER A
GUARANTY IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO OWNER WITH RESPECT TO
MANAGER’S OBLIGATIONS UNDER SECTION 12.3(A) OR COLLATERAL TO SECURE MANAGER’S
OBLIGATIONS UNDER SECTION 12.3(A) REASONABLY SATISFACTORY TO OWNER, THE CONDUCT
OF ANY SUIT WHETHER BROUGHT BY MANAGER OR INSTITUTED AGAINST OWNER AND/OR
MANAGER SHALL BE UNDER THE ABSOLUTE CONTROL OF COUNSEL NOMINATED AND RETAINED BY
MANAGER NOTWITHSTANDING THAT MANAGER MAY NOT BE A PARTY TO SUCH SUIT.

 

(C)                                  THE OWNER SHALL NOT BRING SUIT AGAINST ANY
USER OF ANY SYSTEM MARK ALLEGING OR ASSERTING ANY CLAIM BASED ON OWNER’S RIGHT,
TITLE OR INTEREST AS OF THE EFFECTIVE DATE IN ANY SYSTEM MARK.

 

(D)                                 THE TERMS OF THIS SECTION 12.3 SHALL SURVIVE
THE EXPIRATION OR EARLIER TERMINATION OF THIS AGREEMENT.

 

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12.4                           OTHER INTELLECTUAL PROPERTY PROVISIONS.

 

(A)                                  OWNER ACKNOWLEDGES THAT MANAGER OR
MANAGER’S AFFILIATES ARE OR MAY BECOME THE OWNER OR LICENSEE OF CERTAIN
INTELLECTUAL PROPERTY INCLUDING: (A) SOFTWARE FOR USE AT ONE OR MORE FACILITIES
MANAGED BY MANAGER OR MANAGER’S AFFILIATES AND ALL SOURCE AND OBJECT CODE
VERSIONS THEREOF AND ALL RELATED DOCUMENTATION, FLOW CHARTS, USER MANUALS,
LISTING AND SERVICE/OPERATOR MANUALS AND ANY ENHANCEMENTS, MODIFICATIONS OR
SUBSTITUTIONS THEREOF; AND (B) OPERATING METHODS, PROCEDURES AND POLICIES AND
(C) UPGRADES AND IMPROVEMENTS TO THE FOREGOING (AS THE SAME MAY BE UPGRADED OR
IMPROVED, COLLECTIVELY, “INTELLECTUAL PROPERTY”).  MANAGER SHALL UTILIZE THE
INTELLECTUAL PROPERTY TO THE EXTENT NECESSARY OR APPROPRIATE IN CONNECTION WITH
THE OPERATION OF THE HOTELS FOR THE PURPOSE OF CARRYING OUT ITS OBLIGATIONS
HEREUNDER.  SUBJECT TO THE TERMS OF SECTIONS 6.1 AND 24.1, SUCH USE SHALL BE
STRICTLY ON A NON-EXCLUSIVE BASIS AND NEITHER SUCH USE NOR ANYTHING CONTAINED IN
THIS AGREEMENT SHALL CONFER ANY PROPRIETARY OR OTHER RIGHTS IN THE INTELLECTUAL
PROPERTY ON OWNER OR ANY THIRD PARTIES.

 

(B)                                 TO THE EXTENT THAT OWNER HAS LEASED (OR ANY
AFFILIATE OF OWNER HAS ACQUIRED) CERTAIN INTELLECTUAL PROPERTY RIGHTS TO USE
(I) TRADE NAMES ASSOCIATED WITH THE BALTIMORE HOTEL AND ITS RELATED RESTAURANTS
AND LOUNGES, OR (II) SOFTWARE AND OTHER INTELLECTUAL PROPERTY ASSOCIATED WITH
THE BALTIMORE HOTEL, OWNER AGREES TO ALLOW (AND CAUSE ANY AFFILIATES OF OWNER TO
ALLOW) MANAGER TO USE THE SAME IN ITS MANAGEMENT OF THE BALTIMORE HOTEL WITHOUT
CHARGE.

 

ARTICLE 13

 

INSURANCE

 

13.1                           INSURANCE COVERAGE.  UNLESS OWNER ELECTS TO
PROCURE AND MAINTAIN THE INSURANCE REQUIRED HEREUNDER, AS AN OPERATING COST,
WHICH ELECTION MAY BE MADE FROM TIME TO TIME AND WITHDRAWN FROM TIME TO TIME ON
NOT LESS THAN THIRTY (30) DAYS’ NOTICE, THEN, TO THE EXTENT COMMERCIALLY
AVAILABLE (REGARDLESS OF WHETHER IT IS AVAILABLE ON REASONABLE TERMS), MANAGER
SHALL PROCURE AND MAINTAIN AS AN OPERATING COST, AT ALL TIMES DURING THE TERM OR
WHILE IT IS IN POSSESSION OF ANY OF THE HOTELS, REASONABLE AND ADEQUATE AMOUNTS
OF CASUALTY, LIABILITY AND OTHER USUAL AND CUSTOMARY TYPES OF INSURANCE FOR THE
HOTELS AND THEIR OPERATIONS.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
MANAGER SHALL OBTAIN AND MAINTAIN, WITH INSURANCE COMPANIES OF RECOGNIZED
RESPONSIBILITY, A MINIMUM OF THE FOLLOWING INSURANCE TO THE EXTENT COMMERCIALLY
AVAILABLE (REGARDLESS OF WHETHER IT IS AVAILABLE ON REASONABLE TERMS):

 

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(A)                                  “SPECIAL FORM” PROPERTY INSURANCE,
INCLUDING INSURANCE AGAINST LOSS OR DAMAGE BY FIRE, VANDALISM AND MALICIOUS
MISCHIEF, TERRORISM (IF AVAILABLE ON COMMERCIALLY REASONABLE TERMS), EARTHQUAKE,
EXPLOSION OF STEAM BOILERS, PRESSURE VESSELS OR OTHER SIMILAR APPARATUS, NOW OR
HEREAFTER INSTALLED IN THE HOTELS, WITH EQUIVALENT COVERAGE AS THAT PROVIDED BY
THE USUAL EXTENDED COVERAGE ENDORSEMENTS, IN AN AMOUNT EQUAL TO ONE HUNDRED
PERCENT (100%) OF THE THEN FULL REPLACEMENT COST OF THE PROPERTY REQUIRING
REPLACEMENT (EXCLUDING FOUNDATIONS) FROM TIME TO TIME, INCLUDING AN INCREASED
COST OF CONSTRUCTION ENDORSEMENT;

 

(B)                                 BUSINESS INTERRUPTION AND BLANKET EARNINGS
PLUS EXTRA EXPENSE UNDER A RENTAL VALUE INSURANCE POLICY OR ENDORSEMENT COVERING
RISK OF LOSS DURING THE LESSER OF THE FIRST TWELVE (12) MONTHS OF RECONSTRUCTION
OR THE ACTUAL RECONSTRUCTION PERIOD NECESSITATED BY THE OCCURRENCE OF ANY OF THE
HAZARDS DESCRIBED IN SUBPARAGRAPH (A) ABOVE, IN SUCH AMOUNTS AS MAY BE CUSTOMARY
FOR COMPARABLE PROPERTIES MANAGED OR LEASED BY MANAGER OR ITS AFFILIATES IN THE
SURROUNDING AREA AND IN AN AMOUNT SUFFICIENT TO PREVENT OWNER OR PURCHASER FROM
BECOMING A CO-INSURER;

 

(C)                                  COMMERCIAL GENERAL LIABILITY INSURANCE,
INCLUDING BODILY INJURY AND PROPERTY DAMAGE (ON AN OCCURRENCE BASIS AND ON A
1993 ISO CGL FORM OR ON A FORM CUSTOMARILY MAINTAINED BY SIMILARLY SITUATED
HOTELS, INCLUDING, WITHOUT LIMITATION, BROAD FORM CONTRACTUAL LIABILITY,
INDEPENDENT CONTRACTOR’S HAZARD AND COMPLETED OPERATIONS COVERAGE, AGGREGATE
LIMIT AS APPLICABLE) IN AN AMOUNT NOT LESS THAN TWO MILLION DOLLARS ($2,000,000)
PER OCCURRENCE AND UMBRELLA COVERAGE OF ALL SUCH CLAIMS IN AN AMOUNT NOT LESS
THAN FIFTY MILLION DOLLARS ($50,000,000) PER OCCURRENCE;

 

(D)                                 FLOOD (IF A HOTEL IS LOCATED IN WHOLE OR IN
PART WITHIN AN AREA IDENTIFIED AS AN AREA HAVING SPECIAL FLOOD HAZARDS AND IN
WHICH FLOOD INSURANCE HAS BEEN MADE AVAILABLE UNDER THE NATIONAL FLOOD INSURANCE
ACT OF 1968, AS AMENDED, OR THE FLOOD DISASTER PROTECTION ACT OF 1973, AS
AMENDED, OR ANY SUCCESSOR ACTS THERETO) AND INSURANCE AGAINST SUCH OTHER HAZARDS
AND IN SUCH AMOUNTS AS MAY BE AVAILABLE UNDER THE NATIONAL FLOOD INSURANCE
PROGRAM AND CUSTOMARY FOR COMPARABLE PROPERTIES IN THE AREA;

 

(E)                                  WORKER’S COMPENSATION INSURANCE COVERAGE
FOR ALL PERSONS EMPLOYED BY MANAGER AT THE HOTELS WITH STATUTORY LIMITS AND
OTHERWISE WITH LIMITS OF AND PROVISIONS IN ACCORDANCE WITH LEGAL REQUIREMENTS
AND EMPLOYER’S LIABILITY INSURANCE AS IS CUSTOMARILY CARRIED BY SIMILAR
EMPLOYERS WHICH COVERAGE SHALL BE

 

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WRITTEN BY AN INSURANCE COMPANY OF RECOGNIZED RESPONSIBILITY, AS A QUALIFIED
SELF-INSURER SUBJECT TO APPLICABLE STATE REQUIREMENTS AND APPROVALS, OR SPECIFIC
TO THE STATE OF TEXAS, AS A NONSUBSCRIBER;

 

(F)                                    EMPLOYMENT PRACTICES LIABILITY INSURANCE
WITH LIMITS OF TWENTY FIVE MILLION DOLLARS ($25,000,000); AND

 

(G)                                 SUCH ADDITIONAL INSURANCE AS MAY BE
REQUIRED, FROM TIME TO TIME BY (I) THE BALTIMORE DECLARATION (WITH RESPECT TO
THE BALTIMORE HOTEL ONLY), (II) ANY LEGAL REQUIREMENT, (III) ANY HOLDER OF AN
AUTHORIZED MORTGAGE OR (IV) WHICH IS OTHERWISE REASONABLY REQUIRED UPON ADVANCE
NOTICE GIVEN TO MANAGER IN ACCORDANCE WITH THE TERMS HEREOF.

 

13.2                           INSURANCE POLICIES.

 

(A)                                  ALL INSURANCE PROVIDED FOR UNDER THIS
ARTICLE 13 MUST BE EFFECTED BY POLICIES ISSUED BY INSURANCE COMPANIES OF GOOD
REPUTATION AND OF SOUND FINANCIAL RESPONSIBILITY AND WILL BE SUBJECT TO OWNER’S
REASONABLE APPROVAL.

 

(B)                                 ALL INSURANCE POLICIES (OTHER THAN WORKERS’
COMPENSATION POLICIES) SHALL BE ISSUED IN THE NAME OF PURCHASER WITH MANAGER AND
OWNER AND ANY HOLDER OF AN AUTHORIZED MORTGAGE BEING NAMED AS ADDITIONAL
INSUREDS; PROVIDED, HOWEVER, SUBJECT TO OWNER’S OBLIGATIONS UNDER ARTICLE 15,
MANAGER SHALL NOT BE NAMED AS AN ADDITIONAL INSURED ON, AND SHALL NOT HAVE ANY
INTEREST IN THE PROCEEDS OF, ANY PROPERTY INSURANCE.  PURCHASER OR THE HOLDER OF
AN AUTHORIZED MORTGAGE SHALL BE NAMED LOSS PAYEE(S) ON ANY PROPERTY INSURANCE.

 

(C)                                  THE INSURANCE HEREIN REQUIRED MAY BE
BROUGHT WITHIN THE COVERAGE OF A SO-CALLED BLANKET POLICY OR POLICIES OF
INSURANCE CARRIED AND MAINTAINED BY OWNER OR MANAGER, PROVIDED THAT SUCH BLANKET
POLICIES FULFILL THE REQUIREMENTS CONTAINED HEREIN.

 

(D)                                 IN THE EVENT OWNER OR MANAGER BELIEVES THAT
THE THEN FULL REPLACEMENT COST OF A HOTEL HAS INCREASED OR DECREASED AT ANY TIME
DURING THE TERM, SUCH PARTY, AT ITS OWN COST, SHALL HAVE THE RIGHT TO HAVE SUCH
FULL REPLACEMENT COST REDETERMINED BY AN INDEPENDENT ACCREDITED APPRAISER
APPROVED BY THE OTHER, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD OR
DELAYED.  THE PARTY DESIRING TO HAVE THE FULL REPLACEMENT COST SO REDETERMINED
SHALL FORTHWITH, ON RECEIPT OF SUCH DETERMINATION BY SUCH APPRAISER, GIVE
WRITTEN NOTICE THEREOF TO THE OTHER PARTIES.  THE DETERMINATION OF SUCH
APPRAISER SHALL BE FINAL AND

 

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BINDING ON THE PARTIES HERETO UNTIL ANY SUBSEQUENT DETERMINATION UNDER THIS
SECTION 13.2(D), AND THE PARTY OBLIGATED TO MAINTAIN INSURANCE HEREUNDER SHALL
FORTHWITH CONFORM THE AMOUNT OF THE INSURANCE CARRIED TO THE AMOUNT SO
DETERMINED BY THE APPRAISER.  SUCH REPLACEMENT VALUE DETERMINATION WILL NOT BE
NECESSARY SO LONG AS A HOTEL IS INSURED THROUGH A BLANKET REPLACEMENT VALUE
POLICY.

 

(E)                                  ALL INSURANCE POLICIES AND ENDORSEMENTS
REQUIRED PURSUANT TO THIS ARTICLE 13 SHALL BE FULLY PAID FOR, NONASSESSABLE AND,
EXCEPT FOR UMBRELLA, WORKER’S COMPENSATION, FLOOD AND EARTHQUAKE COVERAGE, SHALL
BE ISSUED BY INSURANCE CARRIERS AUTHORIZED TO DO BUSINESS IN THE STATE/PROVINCE
WHERE EACH HOTEL IS LOCATED, HAVING A GENERAL POLICY HOLDER’S RATING OF NO LESS
THAN B++ IN BEST’S LATEST RATING GUIDE.

 

(F)                                    ALL SUCH POLICIES SHALL PROVIDE OWNER,
MANAGER AND ANY HOLDER OF AN AUTHORIZED MORTGAGE IF REQUIRED BY THE SAME, THIRTY
(30) DAYS’ PRIOR WRITTEN NOTICE OF ANY MATERIAL CHANGE OR CANCELLATION OF SUCH
POLICY AND THE PROPERTY INSURANCE POLICIES SHALL PROVIDE FOR A WAIVER OF
SUBROGATION, TO THE EXTENT AVAILABLE.

 

13.3                           INSURANCE CERTIFICATES.  MANAGER SHALL DELIVER TO
OWNER, PURCHASER AND ANY HOLDER OF AN AUTHORIZED MORTGAGE, CERTIFICATES OF
INSURANCE WITH RESPECT TO ALL POLICIES SO PROCURED BY IT AND, IN THE CASE OF
INSURANCE POLICIES ABOUT TO EXPIRE, SHALL DELIVER CERTIFICATES WITH RESPECT TO
THE RENEWAL THEREOF.  IN THE EVENT MANAGER SHALL FAIL TO EFFECT SUCH INSURANCE
AS HEREIN REQUIRED, TO PAY THE PREMIUMS THEREFOR, OR TO DELIVER, WITHIN FIFTEEN
(15) DAYS OF A REQUEST THEREFOR, SUCH CERTIFICATES, OWNER SHALL HAVE THE RIGHT,
BUT NOT THE OBLIGATION, TO ACQUIRE SUCH INSURANCE AND PAY THE PREMIUMS THEREFOR,
WHICH AMOUNTS SHALL BE PAYABLE TO OWNER, UPON DEMAND, AS AN OPERATING COST,
TOGETHER WITH INTEREST ACCRUED THEREON AT THE INTEREST RATE (WHICH INTEREST
SHALL NOT BE AN OPERATING COST, BUT SHALL BE PAID BY MANAGER) FROM THE DATE SUCH
PAYMENT IS MADE UNTIL (BUT EXCLUDING) THE DATE REPAID.

 

13.4                           INSURANCE PROCEEDS.  ALL PROCEEDS PAYABLE BY
REASON OF ANY LOSS OR DAMAGE TO A HOTEL, OR ANY PORTION THEREOF (OTHER THAN THE
PROCEEDS OF ANY BUSINESS INTERRUPTION INSURANCE), SHALL BE PAID DIRECTLY TO
PURCHASER AS ITS INTEREST MAY APPEAR AND ALL LOSS ADJUSTMENTS WITH RESPECT TO
LOSSES PAYABLE TO MANAGER SHALL REQUIRE THE PRIOR WRITTEN CONSENT OF PURCHASER.

 

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13.5                           MANAGER’S INSURANCE PROGRAM.

 

(A)                                  MANAGER WILL OBTAIN QUOTATIONS FOR
INSURANCE ON AN ANNUAL BASIS AND PROVIDE, WHEN AVAILABLE, SUCH QUOTATIONS TO
OWNER FOR ITS APPROVAL OR REJECTION.  IF OWNER REJECTS SUCH QUOTATIONS, IT MAY
OBTAIN SUCH INSURANCE AND THEREAFTER OWNER SHALL MAINTAIN, AS AN OPERATING COST,
THE INSURANCE, THE QUOTATION FOR WHICH OWNER REJECTED.

 

(B)                                 OWNER ACKNOWLEDGES THAT IN THE EVENT THE
INSURANCE REQUIRED HEREUNDER IS PROVIDED THROUGH MANAGER’S INSURANCE PROGRAM, TO
THE EXTENT AVAILABLE, THE COSTS AND CHARGES THEREFOR WILL BE PAID AS AN
OPERATING COST WITHOUT REGARD TO WHETHER SUCH PAYMENT IS TO AN AFFILIATE OF
MANAGER AND WHETHER THAT AFFILIATE RECEIVES A PROFIT AS A RESULT THEREOF.

 

ARTICLE 14

 

INDEMNIFICATION AND WAIVER OF SUBROGATION

 

14.1                           INDEMNIFICATION.  EACH OF THE PARTIES HERETO
SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS THE OTHER FOR, FROM AND AGAINST ANY
COST, LOSS, DAMAGE OR EXPENSE (INCLUDING, BUT NOT LIMITED TO, REASONABLE
ATTORNEYS’ FEES AND ALL COURT COSTS AND OTHER EXPENSES OF LITIGATION, WHETHER OR
NOT TAXABLE UNDER LOCAL LAW) TO THE EXTENT CAUSED BY OR ARISING FROM: THE
FAILURE OF THE INDEMNIFYING PARTY TO DULY AND PUNCTUALLY PERFORM ANY OF ITS
OBLIGATIONS OWED TO THE OTHER; OR ANY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
THE INDEMNIFYING PARTY.

 

14.2                           WAIVER OF SUBROGATION.  TO THE FULLEST EXTENT
PERMITTED BY LAW, EACH OF OWNER AND MANAGER HEREBY WAIVES ANY AND ALL RIGHTS OF
SUBROGATION AND RIGHT OF RECOVERY OR CAUSE OF ACTION, AND AGREES TO RELEASE THE
OTHER AND PURCHASER FROM LIABILITY FOR LOSS OR DAMAGE TO PROPERTY TO THE EXTENT
SUCH LOSS OR DAMAGE IS COVERED BY VALID AND COLLECTIBLE INSURANCE IN EFFECT AT
THE TIME OF SUCH LOSS OR DAMAGE OR WHICH WOULD HAVE BEEN COVERED IF THE
INSURANCE REQUIRED BY THIS AGREEMENT WERE BEING CARRIED (UNLESS THE SAME IS NOT
CARRIED DUE TO THE FAULT OF OWNER); PROVIDED, HOWEVER, THAT SUCH WAIVER SHALL BE
OF NO FORCE OR EFFECT IF THE PARTY BENEFITING THEREFROM FAILS TO OBTAIN AND
MAINTAIN THE INSURANCE REQUIRED TO BE OBTAINED AND MAINTAINED BY IT.  SUCH
WAIVERS ARE IN ADDITION TO, AND NOT IN LIMITATION OR DEROGATION OF, ANY OTHER
WAIVER OR RELEASE CONTAINED IN THIS AGREEMENT.  WRITTEN NOTICE OF THE TERMS OF
THE ABOVE WAIVERS SHALL BE GIVEN TO THE INSURANCE CARRIERS OF OWNER AND MANAGER,
AND THE INSURANCE POLICIES SHALL BE PROPERLY ENDORSED, IF NECESSARY, TO PREVENT
THE INVALIDATION OF SAID POLICIES BY REASON OF SUCH WAIVERS.

 

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14.3                           SURVIVAL.  THE TERMS OF THIS ARTICLE 14 SHALL
SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS AGREEMENT.

 

ARTICLE 15

 

DAMAGE TO AND DESTRUCTION OF THE HOTEL

 

15.1                           TERMINATION.

 

(A)                                  IF DURING THE TERM ANY HOTEL SHALL BE
TOTALLY OR PARTIALLY DESTROYED AND THE HOTEL IS THEREBY RENDERED UNSUITABLE FOR
ITS PERMITTED USE, (I) MANAGER MAY TERMINATE THIS AGREEMENT WITH RESPECT TO SUCH
HOTEL ON SIXTY (60) DAYS’ WRITTEN NOTICE TO OWNER, OR (II) OWNER MAY TERMINATE
THIS AGREEMENT WITH RESPECT TO SUCH HOTEL ON NOT LESS THAN SIXTY (60) DAYS’
WRITTEN NOTICE TO MANAGER, WHEREUPON, THIS AGREEMENT, WITH RESPECT TO SUCH
HOTEL, SHALL TERMINATE AND OWNER OR PURCHASER SHALL BE ENTITLED TO RETAIN THE
INSURANCE PROCEEDS PAYABLE ON ACCOUNT OF SUCH DAMAGE.

 

(B)                                 NOTWITHSTANDING ANY PROVISIONS OF
SECTION 15.2 BELOW TO THE CONTRARY, IF DAMAGE TO OR DESTRUCTION OF ANY HOTEL
OCCURS DURING THE LAST TWENTY-FOUR (24) MONTHS OF THE THEN TERM (AFTER GIVING
EFFECT TO ANY EXERCISED OPTIONS TO EXTEND THE SAME) AND IF SUCH DAMAGE OR
DESTRUCTION CANNOT REASONABLY BE EXPECTED TO BE FULLY REPAIRED AND RESTORED
PRIOR TO THE DATE THAT IS TWELVE (12) MONTHS PRIOR TO THE END OF SUCH TERM, THEN
EITHER OWNER OR MANAGER MAY TERMINATE THIS AGREEMENT WITH RESPECT TO SUCH HOTEL
ON NOT LESS THAN THIRTY (30) DAYS’ ADVANCE NOTICE.

 

(C)                                  UPON ANY TERMINATION UNDER THIS ARTICLE 15
OR ARTICLE 16, OWNER’S FIRST PRIORITY AND OWNER’S SECOND PRIORITY SHALL BE
REDUCED AS FOLLOWS:

 

(I)  SUCH REDUCTION TO OWNER’S FIRST PRIORITY SHALL BE IN AN AMOUNT SUCH THAT
AFTER GIVING EFFECT TO SUCH REDUCTION THE RATIO OF OWNER’S FIRST PRIORITY TO THE
NOI OF THE HOTELS (OTHER THAN THE HOTEL WITH RESPECT TO WHICH THIS AGREEMENT HAS
BEEN SO TERMINATED) FOR THE MOST RECENTLY ENDED FULL TWELVE (12) CALENDAR MONTHS
PRIOR TO THE DATE OF THE CASUALTY OR CONDEMNATION SHALL EQUAL THE RATIO OF
OWNER’S FIRST PRIORITY BEFORE SUCH REDUCTION TO THE NOI OF ALL THE HOTELS
(INCLUDING, THE HOTEL WITH RESPECT TO WHICH THIS AGREEMENT HAS BEEN TERMINATED)
FOR SUCH 12-MONTH PERIOD; AND

 

(II)  SUCH REDUCTION TO OWNER’S SECOND PRIORITY SHALL BE IN AN AMOUNT SUCH THAT
AFTER GIVING EFFECT TO SUCH

 

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REDUCTION THE RATIO OF OWNER’S SECOND PRIORITY TO THE NOI OF THE HOTELS (OTHER
THAN THE HOTEL WITH RESPECT TO WHICH THIS AGREEMENT HAS BEEN SO TERMINATED) FOR
THE MOST RECENTLY ENDED FULL TWELVE (12) CALENDAR MONTHS PRIOR TO THE DATE OF
THE CASUALTY OR CONDEMNATION SHALL EQUAL THE RATIO OF OWNER’S SECOND PRIORITY
BEFORE SUCH REDUCTION TO THE NOI OF ALL THE HOTELS (INCLUDING, THE HOTEL WITH
RESPECT TO WHICH THIS AGREEMENT HAS BEEN TERMINATED) FOR SUCH 12-MONTH PERIOD.

 

(D)                                 MANAGER HEREBY WAIVES ANY STATUTORY RIGHTS
OF TERMINATION WHICH MAY ARISE BY REASON OF ANY DAMAGE TO OR DESTRUCTION OF ANY
HOTEL.

 

15.2                           RESTORATION.

 

(A)                                  IF DURING THE TERM ANY HOTEL IS DAMAGED OR
DESTROYED BY FIRE, CASUALTY OR OTHER CAUSE BUT IS NOT RENDERED UNSUITABLE FOR
ITS PERMITTED USE OR IF NEITHER OWNER NOR MANAGER TERMINATES THIS AGREEMENT
PURSUANT TO SECTION 15.1, OWNER SHALL MAKE THE NET PROCEEDS OF INSURANCE
RECEIVED IN CONNECTION WITH SUCH CASUALTY (EXCLUDING THE PROCEEDS OF BUSINESS
INTERRUPTION OR SIMILAR INSURANCE WHICH ARE A PORTION OF GROSS REVENUES) AND ANY
OTHER AMOUNT OWNER ELECTS TO CONTRIBUTE TOWARD RESTORATION AVAILABLE TO MANAGER
FOR RESTORATION OF SUCH HOTEL SUBJECT TO CUSTOMARY TERMS APPLICABLE TO ADVANCES
AND CONSTRUCTION LOANS (TO THE EXTENT APPLICABLE) AND THE TERMS OF THE LEASE AND
ANY AUTHORIZED MORTGAGE, AND OWNER SHALL MAKE, OR SHALL CAUSE THERE TO BE MADE,
ALL REPAIRS NECESSARY TO RESTORE SUCH HOTEL TO SUBSTANTIALLY THE SAME CONDITION
AS EXISTED PRIOR TO SUCH CASUALTY.  IF OWNER ELECTS TO RETAIN MANAGER’S SERVICES
IN CONNECTION WITH SUCH REPAIRS, THE TERMS OF SECTION 11.1 SHALL APPLY.

 

(B)                                 IF DURING THE TERM WITH RESPECT TO THE
BALTIMORE HOTEL, THE BALTIMORE PARKING GARAGE IS OWNED BY AN AFFILIATE OF OWNER
AND IS DAMAGED OR DESTROYED BY FIRE, CASUALTY OR OTHER CAUSE BUT THE BALTIMORE
HOTEL IS NOT RENDERED UNSUITABLE FOR ITS PERMITTED USE OR IF NEITHER OWNER NOR
MANAGER TERMINATES THIS AGREEMENT PURSUANT TO SECTION 15.1, OWNER SHALL CAUSE
SUCH AFFILIATE TO APPLY THE NET PROCEEDS OF RECEIVED IN CONNECTION WITH SUCH
CASUALTY (EXCLUDING THE PROCEEDS OF BUSINESS INTERRUPTION OR SIMILAR INSURANCE)
TOWARD RESTORATION OF THE BALTIMORE PARKING GARAGE.

 

(C)                                  ANY CASUALTY WHICH DOES NOT RESULT IN A
TERMINATION OF THIS AGREEMENT WITH RESPECT TO THE APPLICABLE HOTEL SHALL NOT

 

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excuse the payment of sums due to Owner hereunder with respect to such Hotel.

 

(D)                                 IF THE NET PROCEEDS OF THE INSURANCE
RECEIVED IN CONNECTION WITH A CASUALTY OR AN AWARD RECEIVED IN CONNECTION WITH A
CONDEMNATION ARE INSUFFICIENT TO COMPLETE THE REQUIRED REPAIRS, OWNER SHALL HAVE
THE RIGHT (BUT NOT THE OBLIGATION) TO CONTRIBUTE (OR CAUSE PURCHASER TO
CONTRIBUTE) THE AMOUNT OF SUCH INSUFFICIENCY.  IF OWNER ELECTS NOT TO CONTRIBUTE
SUCH INSUFFICIENCY BY NOTICE GIVEN TO MANAGER WITHIN TEN (10) BUSINESS DAYS
AFTER A NOTICE GIVEN BY MANAGER TO OWNER REASONABLY DETAILING THE EXISTENCE OF
SUCH INSUFFICIENCY, MANAGER SHALL HAVE THE RIGHT TO CONTRIBUTE SUCH
INSUFFICIENCY.  IF MANAGER FAILS TO CONTRIBUTE SUCH INSUFFICIENCY TO AN ACCOUNT
OF OWNER TO BE USED IN COMPLETING SUCH REPAIRS WITHIN TEN (10) BUSINESS DAYS
AFTER OWNER’S ELECTION, THE HOTEL SUBJECT TO SUCH CASUALTY OR CONDEMNATION SHALL
BE DEEMED UNSUITABLE FOR ITS PERMITTED USE AND THE TERMS OF SECTION 15.1 OR
16.1, AS APPLICABLE, SHALL APPLY.  SUBJECT TO THE TERMS OF SECTION 10.1, MANAGER
SHALL BE ENTITLED TO THE RETURN OF AMOUNTS FUNDED BY IT UNDER THIS
SECTION 15.2(D) IN EQUAL MONTHLY INSTALLMENTS BASED UPON THE NUMBER OF MONTHS
REMAINING IN THE TERM AFTER THE MONTH IN WHICH SUCH ADVANCE IS MADE (AFTER
GIVING EFFECT TO ANY THEN EXERCISED OR DEEMED EXERCISED OPTIONS TO EXTEND).

 

ARTICLE 16

 

CONDEMNATION

 

16.1                           TOTAL CONDEMNATION.

 

(A)                                  IF EITHER (X) THE WHOLE OF A HOTEL SHALL BE
TAKEN BY CONDEMNATION, OR (Y) A CONDEMNATION OF LESS THAN THE WHOLE OF A HOTEL
RENDERS SUCH HOTEL UNSUITABLE FOR ITS PERMITTED USE, THIS AGREEMENT SHALL
TERMINATE WITH RESPECT TO SUCH HOTEL AND OWNER AND PURCHASER SHALL SEEK THE
AWARD FOR THEIR INTERESTS IN SUCH HOTEL AS PROVIDED IN THE LEASE, WHICH AWARD
SHALL BELONG SOLELY TO THEM.  IN ADDITION, MANAGER SHALL HAVE THE RIGHT TO
INITIATE OR PARTICIPATE IN SUCH PROCEEDINGS AS IT DEEMS ADVISABLE TO RECOVER ANY
DAMAGES TO WHICH MANAGER MAY BE ENTITLED; PROVIDED, HOWEVER, THAT MANAGER SHALL
BE ENTITLED TO RETAIN THE AWARD OR COMPENSATION IT MAY OBTAIN THROUGH SUCH
PROCEEDINGS WHICH ARE CONDUCTED SEPARATELY FROM THOSE OF OWNER AND PURCHASER
ONLY IF SUCH AWARD OR COMPENSATION DOES NOT REDUCE THE AWARD OR COMPENSATION
OTHERWISE AVAILABLE TO OWNER AND PURCHASER.  IF THIS AGREEMENT IS SO TERMINATED
WITH RESPECT TO A HOTEL, OWNER AND PURCHASER SHALL MAKE REASONABLE EFFORTS TO
USE THE AWARD TO

 

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acquire a Replacement Property proposed by Manager to which this Agreement shall
be extended; provided, however:

 

(B)                                 PURCHASER AND OWNER SHALL NOT BE OBLIGATED
TO EXPEND IN THE AGGREGATE MORE THAN THE AWARD IN CONNECTION WITH
(I) INVESTIGATING AND NEGOTIATING TO PURCHASE ALL PROPERTIES PROPOSED BY MANAGER
TO BE THE REPLACEMENT PROPERTY (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ AND
CONSULTANTS’ FEES AND TITLE SEARCH AND SURVEY COSTS) AND (II) ACQUIRING A
REPLACEMENT PROPERTY (INCLUDING, WITHOUT LIMITATION, THE PURCHASE PRICE
THEREFOR, TITLE INSURANCE PREMIUMS, BROKER’S COMMISSIONS AND TRANSFER TAXES);

 

(C)                                  PURCHASER AND OWNER SHALL HAVE NO
OBLIGATION TO ACQUIRE ANY PROPOSED REPLACEMENT PROPERTY UNLESS THE PROJECTED NOI
THEREOF AND EACH OF EVERY OTHER ASPECT OF THE PROPOSED REPLACEMENT PROPERTY
WHICH PURCHASER REASONABLY CONSIDERS RELEVANT IS COMPARABLE IN PURCHASER’S SOLE
JUDGMENT IN ALL RESPECTS TO THE HOTEL WHICH IS BEING REPLACED;

 

(D)                                 PURCHASER AND OWNER SHALL NOT BE OBLIGATED
TO INVESTIGATE MORE THAN THREE (3) PROPOSED PROPERTIES;

 

(E)                                  OWNER’S FIXED PRIORITY WILL BE INCREASED BY
AN AMOUNT EQUAL TO THE REDUCTION THEREIN RESULTING FROM THE TERMINATION OF THIS
AGREEMENT WITH RESPECT TO THE HOTEL WHICH IS BEING REPLACED; AND

 

(F)                                    PURCHASER SHALL NOT BE OBLIGATED TO
ACQUIRE ANY PROPOSED REPLACEMENT PROPERTY, IF MANAGER AND OWNER DO NOT
REASONABLY AGREE UPON AN APPROPRIATE AMENDMENT HERETO PURSUANT TO WHICH THIS
AGREEMENT WILL BE EXTENDED TO SUCH PROPERTY.

 

If Purchaser decides to acquire a proposed Replacement Property, then
simultaneously with such acquisition the Lease and this Agreement shall be
appropriately amended so as to cover such Replacement Property.

 

16.2                           PARTIAL CONDEMNATION.  IN THE EVENT OF A
CONDEMNATION OF LESS THAN THE WHOLE OF A HOTEL SUCH THAT SUCH HOTEL IS NOT
RENDERED UNSUITABLE FOR ITS PERMITTED USE, OWNER SHALL, TO THE EXTENT OF THE
AWARD AND ANY ADDITIONAL AMOUNTS DISBURSED BY OWNER OR PURCHASER, COMMENCE
PROMPTLY AND CONTINUE DILIGENTLY TO RESTORE THE UNTAKEN PORTION OF SUCH HOTEL SO
THAT SUCH HOTEL SHALL CONSTITUTE A COMPLETE ARCHITECTURAL UNIT OF THE SAME
GENERAL CHARACTER AND CONDITION (AS NEARLY AS MAY BE POSSIBLE UNDER THE
CIRCUMSTANCES) AS EXISTED IMMEDIATELY PRIOR TO SUCH CONDEMNATION, IN FULL
COMPLIANCE WITH ALL LEGAL REQUIREMENTS,

 

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using the Award made available therefor and any other funds Owner elects to
contribute subject to customary terms applicable to advances of construction
loans (to the extent applicable).  If Owner elects to retain Manager’s services
in connection therewith, the terms of Section 11.1 shall apply.

 

16.3                           TEMPORARY CONDEMNATION.  IN THE EVENT OF ANY
TEMPORARY CONDEMNATION OF A HOTEL OR OWNER’S INTEREST THEREIN, THIS AGREEMENT
SHALL CONTINUE IN FULL FORCE AND EFFECT.  THE ENTIRE AMOUNT OF ANY AWARD MADE
FOR SUCH TEMPORARY CONDEMNATION ALLOCABLE TO THE TERM, WHETHER PAID BY WAY OF
DAMAGES, RENT OR OTHERWISE, SHALL CONSTITUTE GROSS REVENUES.  FOR PURPOSES OF
THIS AGREEMENT, A CONDEMNATION SHALL BE DEEMED TO BE TEMPORARY IF THE PERIOD OF
SUCH CONDEMNATION IS NOT EXPECTED TO, AND DOES NOT, EXCEED TWELVE (12) MONTHS.

 

16.4                           ANAHEIM TAKING.  NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY, THE TERMS OF SECTIONS 15.2(D) AND 16.3 SHALL
NOT APPLY TO ANY ANAHEIM CONDEMNATION.  RATHER, IF AN ANAHEIM CONDEMNATION
OCCURS AND THIS AGREEMENT IS NOT TERMINATED WITH RESPECT TO THE AFFECTED
HOTEL(S), SUBJECT TO THE REQUIREMENTS OF SECTION 7.7, MANAGER, IN CONFORMITY
WITH LEGAL REQUIREMENTS, THE OPERATING STANDARDS AND INSURANCE REQUIREMENTS,
PROMPTLY SHALL COMMENCE AND CONTINUE DILIGENTLY TO RESTORE THE UNTAKEN PORTION
OF SUCH HOTEL(S) SO THAT ANY SUCH HOTEL SHALL CONSTITUTE A COMPLETE
ARCHITECTURAL UNIT OF THE SAME GENERAL CHARACTER AND CONDITION (AS NEARLY AS MAY
BE POSSIBLE UNDER THE CIRCUMSTANCES) AS EXISTED IMMEDIATELY PRIOR TO SUCH
CONDEMNATION (INCLUDING ADEQUATE PARKING FACILITIES) IN ALL MATERIAL RESPECTS
PURSUANT TO A PLAN FOR SUCH EVENTUALITY APPROVED IN ADVANCE AND IN WRITING BY
OWNER, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD.  OWNER SHALL MAKE THE
AWARD FOR SUCH ANAHEIM CONDEMNATION AVAILABLE TO MANAGER TO PAY THE COST OF SUCH
RESTORATION SUBJECT TO CUSTOMARY TERMS APPLICABLE TO ADVANCES OF CONSTRUCTION
LOANS (TO THE EXTENT APPLICABLE).  IN THE EVENT THAT THE AWARD IS INSUFFICIENT
TO COVER THE FULL COST OF THE RESTORATION, MANAGER SHALL BE ENTITLED TO APPLY
FUNDS FROM THE RESERVE ACCOUNT TO PAY SUCH COSTS.

 

16.5                           BALTIMORE TAKING.  FOR SO LONG AS THE BALTIMORE
PARKING GARAGE IS OWNED BY AN AFFILIATE OF OWNER, IN THE EVENT OF A CONDEMNATION
OF ALL OR ANY PORTION OF THE BALTIMORE PARKING GARAGE SUCH THAT THE BALTIMORE
HOTEL IS NOT RENDERED UNSUITABLE FOR ITS PERMITTED USE, OWNER SHALL CAUSE SUCH
AFFILIATE OF OWNER, TO THE EXTENT OF THE AWARD, TO COMMENCE PROMPTLY AND
CONTINUE DILIGENTLY TO RESTORE THE UNTAKEN PORTION OF THE BALTIMORE PARKING
GARAGE SO THAT THE BALTIMORE PARKING GARAGE SHALL CONSTITUTE A COMPLETE
ARCHITECTURAL UNIT OF THE SAME

 

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general character and condition (as nearly as may be possible under the
circumstances) as existed immediately prior to such Condemnation, in full
compliance with all Legal Requirements, using the Award made available
therefor.  Furthermore, if any portion of such Award remains unused following
any restoration of the Baltimore Parking Garage as hereinabove required and
there are fewer parking spaces available within the Baltimore Parking Garage
following such Condemnation as a result of such Condemnation, then the number of
occasions on which the Baltimore General Parking License may be used shall be
reduced by a number equal to product of (i) the number of occasions on which the
Baltimore General Parking License may be used prior to such Condemnation,
multiplied by (ii) the fraction obtained by dividing the number of spaces so
lost by the number of spaces available prior to such Condemnation, and Owner
shall use (or cause any Affiliate of Owner that owns the Baltimore Parking
Garage to use) commercially reasonable efforts to secure alternative parking
areas within the vicinity of the Baltimore Hotel using the balance of the Award
upon terms and conditions reasonably acceptable to Owner and Manager. 
Notwithstanding the foregoing, in the event that any such Condemnation shall
occur in order to preserve the public safety as a result of any Affiliate of
Owner’s failure to maintain the Baltimore Parking Garage in a clean and safe
condition, then Owner shall cause such Affiliate of Owner to repair and restore
the Baltimore Parking Garage without regard to the amount of the Award.

 

16.6                           EFFECT OF CONDEMNATION.  ANY CONDEMNATION WHICH
DOES NOT RESULT IN A TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS
WITH RESPECT TO THE APPLICABLE HOTEL SHALL NOT EXCUSE THE PAYMENT OF SUMS DUE TO
OWNER HEREUNDER WITH RESPECT TO SUCH HOTEL AND THIS AGREEMENT SHALL REMAIN IN
FULL FORCE AND EFFECT AS TO SUCH HOTEL.

 

ARTICLE 17

 

DEFAULT AND TERMINATION

 

17.1                           MANAGER EVENTS OF DEFAULT.  EACH OF THE FOLLOWING
SHALL CONSTITUTE A “MANAGER EVENT OF DEFAULT”:

 

(A)                                  THE FILING BY MANAGER, THE CANADIAN
MANAGER, PR TENANT OR THE GUARANTOR OF A VOLUNTARY PETITION IN BANKRUPTCY OR
INSOLVENCY OR A PETITION FOR REORGANIZATION UNDER ANY BANKRUPTCY LAW, OR THE
ADMISSION BY MANAGER, THE CANADIAN MANAGER, PR TENANT OR THE GUARANTOR THAT IT
IS UNABLE TO PAY ITS DEBTS AS THEY BECOME DUE, OR THE INSTITUTION OF ANY
PROCEEDING BY

 

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Manager, the Canadian Manager, PR Tenant or the Guarantor for its dissolution or
earlier termination.

 

(B)                                 THE CONSENT BY MANAGER, THE CANADIAN
MANAGER, PR TENANT OR THE GUARANTOR TO AN INVOLUNTARY PETITION IN BANKRUPTCY OR
THE FAILURE TO VACATE, WITHIN NINETY (90) DAYS FROM THE DATE OF ENTRY THEREOF,
ANY ORDER APPROVING AN INVOLUNTARY PETITION WITH RESPECT TO MANAGER, THE
CANADIAN MANAGER, PR TENANT OR THE GUARANTOR.

 

(C)                                  THE ENTERING OF AN ORDER, JUDGMENT OR
DECREE BY ANY COURT OF COMPETENT JURISDICTION, ON THE APPLICATION OF A CREDITOR,
ADJUDICATING MANAGER, THE CANADIAN MANAGER, PR TENANT OR THE GUARANTOR AS
BANKRUPT OR INSOLVENT OR APPROVING A PETITION SEEKING REORGANIZATION OR
APPOINTING A RECEIVER, TRUSTEE, OR LIQUIDATOR OF ALL OR A SUBSTANTIAL PART OF
MANAGER’S, THE CANADIAN MANAGER’S, PR TENANT’S OR THE GUARANTOR’S ASSETS, AND
SUCH ORDER, JUDGMENT OR DECREE’S CONTINUING UNSTAYED AND IN EFFECT FOR AN
AGGREGATE OF SIXTY (60) DAYS (WHETHER OR NOT CONSECUTIVE).

 

(D)                                 THE FAILURE OF MANAGER, THE GUARANTOR, PR
TENANT, THE GUARANTOR UNDER THE PR GUARANTY OR ANY AFFILIATE OF ANY OF THEM TO
MAKE ANY PAYMENT REQUIRED TO BE MADE IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT WHICH FAILURE CONTINUES BEYOND ANY
APPLICABLE NOTICE AND GRACE PERIOD.

 

(E)                                  THE FAILURE OF MANAGER, ITS ULTIMATE
PARENT, THE COLLATERAL AGENT, THE GUARANTOR, PR TENANT, THE GUARANTOR UNDER THE
PR GUARANTY OR ANY AFFILIATE OF ANY OF THEM TO PERFORM, KEEP OR FULFILL ANY OF
THE OTHER COVENANTS, UNDERTAKINGS, OBLIGATIONS OR CONDITIONS SET FORTH IN THIS
AGREEMENT OR ANY OTHER PRINCIPAL DOCUMENT ON OR BEFORE THE DATE REQUIRED FOR THE
SAME, WHICH FAILURE CONTINUES FOR A PERIOD OF THIRTY (30) DAYS AFTER RECEIPT OF
WRITTEN NOTICE DEMANDING SUCH CURE; PROVIDED, HOWEVER, IF SUCH FAILURE IS
SUSCEPTIBLE OF CURE, BUT SUCH CURE CANNOT BE ACCOMPLISHED WITHIN SAID THIRTY
(30) DAY PERIOD, SAID THIRTY (30) DAYS SHALL BE EXTENDED FOR SO LONG AS IS
REASONABLY NECESSARY TO EFFECT SUCH CURE PROVIDED THAT SUCH CURE IS COMMENCED
WITHIN THIRTY (30) DAYS AFTER SUCH NOTICE IS GIVEN AND IS THEREAFTER DILIGENTLY
PURSUED TO COMPLETION.

 

(F)                                    THE MATERIAL FAILURE OF MANAGER, THE
SELLERS UNDER THE PURCHASE AGREEMENT OR THE PR STOCK AGREEMENT, IHG OR ANY
AFFILIATE OF ANY OF THEM TO PERFORM, KEEP OR FULFILL ANY OF THE OTHER COVENANTS,
UNDERTAKINGS, OBLIGATIONS OR CONDITIONS SET FORTH IN ANY OF THE OTHER DOCUMENTS
ON OR BEFORE THE DATE REQUIRED FOR THE SAME, WHICH FAILURE CONTINUES FOR A
PERIOD OF

 

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thirty (30) days after receipt of written notice demanding such cure; provided,
however, if such failure is susceptible of cure, but such cure cannot be
accomplished within said thirty (30) day period, said thirty (30) days shall be
extended for so long as is reasonably necessary to effect such cure provided
that such cure is commenced within thirty (30) days after such notice is given
and is thereafter diligently pursued to completion.

 

(G)                                 THE FAILURE OF MANAGER TO MAINTAIN INSURANCE
COVERAGES REQUIRED TO BE MAINTAINED BY MANAGER UNDER THIS AGREEMENT.

 

(H)                                 THE FAILURE BY MANAGER, PR TENANT, THEIR
ULTIMATE PARENT(S) OR THE GUARANTOR TO DELIVER TO OWNER ANY FINANCIAL STATEMENT
AS AND WHEN REQUIRED BY THE PRINCIPAL DOCUMENTS, WHICH FAILURE CONTINUES FOR A
PERIOD OF TEN (10) BUSINESS DAYS AFTER WRITTEN NOTICE FROM OWNER.

 

(I)                                     ANY REPRESENTATION OR WARRANTY MADE BY
MANAGER OR ANY OF ITS AFFILIATES IN THIS AGREEMENT OR ANY TRANSACTION DOCUMENT
PROVES TO HAVE BEEN FALSE IN ANY MATERIAL RESPECT ON THE DATE WHEN MADE OR
DEEMED MADE; PROVIDED, HOWEVER, IF MANAGER DID NOT KNOW OF SUCH FALSENESS AT THE
TIME SUCH REPRESENTATION OR WARRANTY WAS MADE, AND THE FACTS OR CIRCUMSTANCES
GIVING RISE TO SUCH FALSENESS ARE SUSCEPTIBLE OF CURE, MANAGER SHALL HAVE UP TO
THIRTY (30) DAYS AFTER NOTICE FROM OWNER TO EFFECTUATE SUCH CURE.

 

(J)                                     THE FAILURE OF (I) ANY ULTIMATE PARENT
OF MANAGER OR (II) THE GUARANTOR TO TIMELY AND FULLY KEEP AND OBSERVE ANY
OBLIGATIONS UNDER THE TRANSACTION DOCUMENTS OR ANY OTHER DOCUMENT OR INSTRUMENT
EXECUTED AND DELIVERED IN CONNECTION HEREWITH TO MAINTAIN ANY NET WORTH OR
UNENCUMBERED ASSETS OR TO DELIVER ANY COLLATERAL, IN ALL CASES AS REQUIRED UNDER
THE TRANSACTION DOCUMENTS, WHICH IS NOT CURED WITHIN TEN (10) DAYS AFTER NOTICE
FROM OWNER TO MANAGER.

 

(K)                                  THE OCCURRENCE OF AN EVENT OF DEFAULT UNDER
THE PR LEASE.

 

(L)                                     THE FAILURE OF THE CANADIAN MANAGER TO
BE AN AFFILIATE OF MANAGER.

 

17.2                           REMEDIES FOR MANAGER DEFAULTS.  SO LONG AS A
MANAGER EVENT OF DEFAULT SHALL BE OUTSTANDING, OWNER SHALL HAVE (IN ADDITION TO
ITS OTHER RIGHTS AND REMEDIES AT LAW, IN EQUITY OR OTHERWISE) THE RIGHT TO
TERMINATE THIS AGREEMENT.  UPON SUCH TERMINATION, OR IF THIS AGREEMENT IS
TERMINATED PURSUANT TO SECTIONS 5.1 OR 10.3, OWNER SHALL BE ENTITLED TO
LIQUIDATED

 

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DAMAGES.  OWNER’S RIGHT TO RECEIVE LIQUIDATED DAMAGES HAS BEEN AGREED TO DUE TO
THE UNCERTAINTY, DIFFICULTY AND/OR IMPOSSIBILITY OF ASCERTAINING THE ACTUAL
DAMAGES SUFFERED BY OWNER.  FURTHER, IF NOT FOR OWNER’S RIGHT TO RECEIVE SUCH
LIQUIDATED DAMAGES, PURCHASER WOULD NOT HAVE ENTERED INTO THE PURCHASE
AGREEMENT, PURCHASER WOULD NOT HAVE ACQUIRED THE HOTELS AND OWNER WOULD NOT HAVE
ENTERED INTO THE LEASE.  MANAGER HEREBY ACKNOWLEDGES AND AGREES THAT SUCH
LIQUIDATED DAMAGES ARE NOT A PENALTY, BUT ARE TO COMPENSATE OWNER AND ITS
AFFILIATES FOR THE EXPENSE AND LOST EARNINGS WHICH MAY RESULT FROM ARRANGING
SUBSTITUTE MANAGEMENT FOR THE HOTELS AS WELL AS TO COMPENSATE FOR THE RENT OWNER
MUST PAY UNDER THE LEASE AND THE PRICE PAID FOR THE HOTELS BY OWNER’S
AFFILIATE.  SUCH LIQUIDATED DAMAGES SHALL BE EQUAL TO ALL ACCRUED BUT UNPAID
AMOUNTS DUE TO OWNER HEREUNDER UP UNTIL THE DATE OF TERMINATION, PLUS THE
OUTSTANDING BALANCE, AS DEFINED IN THE GUARANTY, PLUS THE OUTSTANDING BALANCE OF
THE DEPOSIT.  OWNER SHALL BE ENTITLED TO INTEREST, AT THE INTEREST RATE, ON SUCH
LIQUIDATED DAMAGES FROM THE DATE OF SUCH TERMINATION UNTIL THE DATE OF PAYMENT
OF SUCH DAMAGES AND INTEREST.  EXCEPT WITH RESPECT TO OWNER’S RIGHTS AND
REMEDIES FOR ANY BREACH OR VIOLATIONS BY MANAGER OF THE TERMS OF SECTION 17.4,
OWNER SHALL LOOK SOLELY TO ANY COLLATERAL HEREAFTER PLEDGED SECURING MANAGER’S
OBLIGATIONS HEREUNDER FOR SATISFACTION OF ANY CLAIM OF OWNER AGAINST MANAGER
HEREUNDER; PROVIDED, HOWEVER, NOTHING CONTAINED HEREIN IS INTENDED TO, NOR SHALL
IT, LIMIT OR REDUCE THE OBLIGATIONS OF THE GUARANTOR UNDER THE GUARANTY OR THE
GUARANTOR UNDER THE PR GUARANTY OR LIMIT OWNER’S RIGHTS WITH RESPECT TO EITHER
OF THEM.

 

17.3                           OWNER EVENTS OF DEFAULT AND REMEDIES FOR OWNER
DEFAULTS.  IN THE EVENT ANY REPRESENTATION OR WARRANTY MADE BY OWNER IN THIS
AGREEMENT PROVES TO BE UNTRUE WHEN MADE IN ANY MATERIAL RESPECT OR OWNER FAILS
TO PERFORM ANY OF ITS OBLIGATIONS HEREUNDER, THEN MANAGER SHALL HAVE THE RIGHT
TO INSTITUTE FORTHWITH ANY AND ALL PROCEEDINGS PERMITTED BY LAW OR EQUITY
(PROVIDED THEY ARE NOT SPECIFICALLY BARRED UNDER THE TERMS OF THIS AGREEMENT),
INCLUDING, WITHOUT LIMITATION, ACTIONS FOR SPECIFIC PERFORMANCE AND/OR DAMAGES;
PROVIDED, HOWEVER, EXCEPT AS MAY BE EXPRESSLY PROVIDED IN THIS AGREEMENT,
MANAGER SHALL HAVE NO RIGHT TO TERMINATE THIS AGREEMENT BY REASON OF SUCH A
FAILURE BY OWNER OR OTHERWISE.  MANAGER SHALL BE ENTITLED TO TERMINATE THIS
AGREEMENT IN THE EVENT OF A VIOLATION OF THE TERMS OF SECTION 4.7 BY PURCHASER
OR OWNER.  EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, MANAGER
HEREBY WAIVES ALL RIGHTS ARISING FROM ANY OCCURRENCE WHATSOEVER, WHICH MAY NOW
OR HEREAFTER BE CONFERRED UPON IT BY LAW, (A) TO MODIFY WITHOUT THE AGREEMENT OF
OWNER, SURRENDER OR TERMINATE THIS AGREEMENT OR

 

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QUIT OR SURRENDER ANY HOTEL OR ANY PORTION THEREOF, OR (B) TO OBTAIN (I) ANY
ABATEMENT, REDUCTION, SUSPENSION OR DEFERMENT OF THE SUMS ALLOCABLE OR OTHERWISE
PAYABLE TO OWNER OR OTHER OBLIGATIONS TO BE PERFORMED BY MANAGER HEREUNDER OR
(II) ANY INCREASE IN ANY AMOUNTS PAYABLE TO MANAGER HEREUNDER.  IN THE EVENT
OWNER WRONGFULLY TERMINATES THIS AGREEMENT OR MANAGER TERMINATES THIS AGREEMENT
PURSUANT TO A RIGHT TO DO SO AS A RESULT OF OWNER’S BREACH, THEN, SUBJECT TO
MANAGER’S MITIGATION OBLIGATIONS AND ANY OTHER LIMITATION ON REMEDIES SET FORTH
HEREIN, MANAGER SHALL BE ENTITLED TO RECOVER AS PART OF ITS DAMAGES FOR SUCH
WRONGFUL TERMINATION AN AMOUNT EQUAL TO THE DAMAGES SUFFERED BY MANAGER ON
ACCOUNT OF TERMINATING THE EMPLOYMENT OF ON-SITE EMPLOYEES OF THE HOTELS AS A
RESULT OF SUCH WRONGFUL TERMINATION.

 

17.4                           POST TERMINATION OBLIGATIONS.  UPON EXPIRATION OR
EARLIER TERMINATION OF THIS AGREEMENT FOR ANY REASON, OWNER AND MANAGER SHALL
PROCEED AS FOLLOWS:

 

(A)                                  WITHIN SIXTY (60) DAYS FOLLOWING THE
EFFECTIVE DATE OF SUCH EXPIRATION OR EARLIER TERMINATION, MANAGER WILL SUBMIT TO
OWNER AN AUDITED FINAL ACCOUNTING OF THE RESULTS OF THE POOLED FF&E HOTELS’
OPERATIONS AND ALL ACCOUNTS BETWEEN OWNER AND MANAGER THROUGH THE EFFECTIVE DATE
OF SUCH EXPIRATION OR EARLIER TERMINATION, THE COST OF WHICH AUDIT SHALL BE
SHARED EQUALLY BY MANAGER AND OWNER AND SHALL NOT BE AN OPERATING COST AND SHALL
BE PERFORMED BY ERNST & YOUNG OR ANOTHER ACCOUNTING FIRM SELECTED BY MANAGER AND
APPROVED BY OWNER.  SAID FINAL ACCOUNTING SHALL BE ACCOMPANIED BY AN OFFICER’S
CERTIFICATE AND SHALL PROMPTLY BE SUBMITTED BY MANAGER TO OWNER FOR ITS
APPROVAL.  OWNER SHALL NOT UNREASONABLY WITHHOLD OR DELAY ITS APPROVAL OF THE
FINAL ACCOUNTING AND ANY SUCH DISAPPROVAL SHALL CONTAIN REASONABLY DETAILED
EXPLANATION FOR DISAPPROVAL.  WITHIN THIRTY (30) DAYS AFTER DELIVERY OF SUCH
FINAL ACCOUNTING, THE PARTIES WILL MAKE APPROPRIATE ADJUSTMENTS TO ANY AMOUNTS
PREVIOUSLY PAID OR DUE UNDER THIS AGREEMENT.

 

(B)                                 ON THE EFFECTIVE DATE OF SUCH EXPIRATION OR
EARLIER TERMINATION, MANAGER WILL DELIVER TO OWNER ALL BOOKS AND RECORDS OF THE
HOTELS, PROVIDED THAT MANAGER MAY RETAIN COPIES OF ANY OF THE SAME FOR MANAGER’S
RECORDS.  NOTWITHSTANDING THE FOREGOING, MANAGER WILL NOT BE REQUIRED TO DELIVER
TO OWNER ANY INFORMATION OR MATERIALS (INCLUDING, WITHOUT LIMITATION, SOFTWARE,
DATABASE, MANUALS AND TECHNICAL INFORMATION) WHICH ARE PROPRIETARY PROPERTY OF
MANAGER.

 

(C)                                  ON THE EFFECTIVE DATE OF SUCH EXPIRATION OR
EARLIER TERMINATION, MANAGER WILL DELIVER POSSESSION OF THE HOTELS,

 

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TOGETHER WITH ANY AND ALL KEYS OR OTHER ACCESS DEVICES, TO OWNER.

 

(D)                                 ON THE EFFECTIVE DATE OF SUCH EXPIRATION OR
EARLIER TERMINATION, MANAGER WILL ASSIGN TO OWNER OR ITS DESIGNEE, AND OWNER OR
SUCH DESIGNEE WILL ASSUME, ALL BOOKING, RESERVATION, SERVICE AND OPERATING
CONTRACTS RELATING EXCLUSIVELY TO THE OCCUPANCY OR OPERATION OF THE HOTELS AND
ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS BY MANAGER IN ACCORDANCE WITH
THIS AGREEMENT.  OWNER AGREES TO INDEMNIFY AND HOLD MANAGER HARMLESS FROM
LIABILITY OR OTHER OBLIGATIONS UNDER ANY SUCH AGREEMENTS RELATING TO ACTS OR
OCCURRENCES, INCLUDING OWNER’S OR SUCH DESIGNEE’S FAILURE TO PERFORM, ON OR
AFTER THE EFFECTIVE DATE OF SUCH ASSIGNMENT.

 

(E)                                  MANAGER WILL ASSIGN TO OWNER OR ITS
DESIGNEE ANY ASSIGNABLE LICENSES AND PERMITS PERTAINING TO THE HOTELS AND WILL
OTHERWISE REASONABLY COOPERATE WITH OWNER AS MAY BE NECESSARY FOR THE TRANSFER
OF ANY AND ALL HOTEL LICENSES AND PERMITS TO OWNER OR OWNER’S DESIGNEE.

 

(F)                                    MANAGER SHALL RELEASE AND TRANSFER TO
OWNER OR PURCHASER, AS APPLICABLE, ANY FUNDS OF OWNER OR PURCHASER WHICH ARE
HELD OR CONTROLLED BY MANAGER.

 

(G)                                 MANAGER SHALL HAVE THE OPTION, TO BE
EXERCISED WITHIN THIRTY (30) DAYS AFTER TERMINATION OR EXPIRATION, TO PURCHASE,
AT THEIR THEN BOOK VALUE, ANY FF&E, OPERATING EQUIPMENT OR OTHER PERSONAL
PROPERTY AS MAY BE MARKED WITH ANY SYSTEM MARK AT THE HOTELS.  IN THE EVENT
MANAGER DOES NOT EXERCISE SUCH OPTION, OWNER AGREES THAT IT WILL USE ANY SUCH
ITEMS NOT SO PURCHASED EXCLUSIVELY IN CONNECTION WITH THE HOTELS UNTIL THEY ARE
CONSUMED; PROVIDED, HOWEVER, MANAGER SHALL NOT BE ENTITLED TO PURCHASE FF&E,
OPERATING EQUIPMENT OR OTHER PERSONAL PROPERTY LOCATED AT A HOTEL WHICH IS TO BE
OPERATED UNDER THE BRAND NAME OR BY MANAGER, UNTIL SUCH HOTEL SHALL NO LONGER BE
SO OPERATED.

 

(H)                                 OWNER SHALL HAVE THE RIGHT TO OPERATE THE
IMPROVEMENTS ON THE APPLICABLE SITES WITHOUT MODIFYING THE STRUCTURAL DESIGN OF
SAME AND WITHOUT MAKING ANY MATERIAL REPAIR, NOTWITHSTANDING THE FACT THAT SUCH
DESIGN OR CERTAIN FEATURES THEREOF MAY BE PROPRIETARY TO MANAGER OR ITS
AFFILIATES AND/OR PROTECTED BY TRADEMARKS OR SERVICE MARKS HELD BY MANAGER OR AN
AFFILIATE, PROVIDED THAT SUCH USE SHALL BE CONFINED TO THE APPLICABLE SITES. 
FURTHER, PROVIDED THAT THE APPLICABLE HOTELS THEN SATISFY THE APPLICABLE BRAND
STANDARDS (UNLESS THE HOTELS FAIL TO SATISFY SUCH BRAND STANDARDS DUE TO A
BREACH HEREOF BY MANAGER), OWNER SHALL BE ENTITLED (BUT NOT OBLIGATED) TO
OPERATE

 

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SUCH OF THE HOTELS AS OWNER DESIGNATES UNDER THE APPLICABLE BRAND NAME FOR A
PERIOD OF ONE (1) YEAR FOLLOWING SUCH EXPIRATION OR EARLIER TERMINATION IN
CONSIDERATION FOR WHICH OWNER SHALL PAY THE THEN STANDARD FRANCHISE AND SYSTEM
FEES FOR SUCH BRAND AND COMPLY WITH THE OTHER APPLICABLE TERMS AND CONDITIONS OF
THE FORM OF FRANCHISE AGREEMENT THEN BEING ENTERED INTO WITH RESPECT TO SUCH
BRAND.

 

(I)                                     MANAGER SHALL TRANSFER TO OWNER THE
TELEPHONE NUMBERS USED IN CONNECTION WITH THE OPERATION OF THE HOTELS (BUT NOT
ANY BRAND GENERALLY).

 

(J)                                     MANAGER SHALL COOPERATE WITH OWNER’S OR
ITS DESIGNEES’ EFFORTS TO ENGAGE EMPLOYEES OF THE HOTELS.

 

(K)                                  IF REQUESTED BY OWNER PRIOR TO SUCH
EXPIRATION OR EARLIER TERMINATION OF THIS AGREEMENT IN WHOLE OR IN PART, MANAGER
SHALL CONTINUE TO MANAGE UNDER THE APPLICABLE BRAND ANY AFFECTED HOTELS
DESIGNATED BY OWNER AFTER SUCH EXPIRATION OR EARLIER TERMINATION FOR UP TO ONE
(1) YEAR, ON SUCH REASONABLE TERMS (WHICH SHALL INCLUDE AN AGREEMENT TO
REIMBURSE MANAGER FOR ITS REASONABLE OUT-OF-POCKET COSTS AND EXPENSES, AND
REASONABLE ADMINISTRATIVE COSTS AND A MANAGEMENT FEE OF SEVEN AND ONE-HALF
PERCENT (7.5%) OF GROSS REVENUES WITH RESPECT TO THE STAYBRIDGE HOTELS AND THE
HOLIDAY INN HOTELS AND A MANAGEMENT FEE OF THREE PERCENT (3%) OF GROSS REVENUES
WITH RESPECT TO THE INTERCONTINENTAL HOTELS AND THE CROWNE PLAZA HOTELS) AS
OWNER AND MANAGER SHALL REASONABLY AGREE.

 

The provisions of this Section 17.4 shall survive the expiration or earlier
termination of this Agreement.

 

ARTICLE 18

 

NOTICES

 

18.1                           PROCEDURE.

 

(A)                                  ANY AND ALL NOTICES, DEMANDS, CONSENTS,
APPROVALS, OFFERS, ELECTIONS AND OTHER COMMUNICATIONS REQUIRED OR PERMITTED
UNDER THIS AGREEMENT SHALL BE DEEMED ADEQUATELY GIVEN IF IN WRITING AND THE SAME
SHALL BE DELIVERED EITHER BY HAND, BY TELECOPIER WITH WRITTEN ACKNOWLEDGMENT OF
RECEIPT (PROVIDED IF NOTICE IS GIVEN BY TELECOPIER, A COPY SHALL ALSO BE SENT ON
THE FOLLOWING BUSINESS DAY BY FEDERAL EXPRESS OR SIMILAR EXPEDITED COMMERCIAL
CARRIER), OR BY FEDERAL EXPRESS OR SIMILAR EXPEDITED COMMERCIAL CARRIER,
ADDRESSED TO THE RECIPIENT OF THE NOTICE,

 

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WITH ALL FREIGHT CHARGES PREPAID (IF BY FEDERAL EXPRESS OR SIMILAR CARRIER).

 

(B)                                 ALL NOTICES REQUIRED OR PERMITTED TO BE SENT
HEREUNDER SHALL BE DEEMED TO HAVE BEEN GIVEN FOR ALL PURPOSES OF THIS AGREEMENT
UPON THE DATE OF ACKNOWLEDGED RECEIPT, IN THE CASE OF A NOTICE BY TELECOPIER,
AND, IN ALL OTHER CASES, UPON THE DATE OF RECEIPT OR REFUSAL, EXCEPT THAT
WHENEVER UNDER THIS AGREEMENT A NOTICE IS EITHER RECEIVED ON A DAY WHICH IS NOT
A BUSINESS DAY OR IS REQUIRED TO BE DELIVERED ON OR BEFORE A SPECIFIC DAY WHICH
IS NOT A BUSINESS DAY, THE DAY OF RECEIPT OR REQUIRED DELIVERY SHALL
AUTOMATICALLY BE EXTENDED TO THE NEXT BUSINESS DAY.

 

(C)                                  ALL SUCH NOTICES SHALL BE ADDRESSED AS
FOLLOWS:

 

If to Owner:

 

HPT TRS IHG-2, INC.

 

 

c/o Hospitality Properties Trust

 

 

400 Centre Street

 

 

Newton, Massachusetts 02458

 

 

Attn: President

 

 

Facsimile: 617-969-5730

 

 

 

with a copy to:

 

Sullivan & Worcester LLP

 

 

One Post Office Square

 

 

Boston, Massachusetts 02109

 

 

Attn: Warren M. Heilbronner, Esq.

 

 

Facsimile: 617-338-2880

 

 

 

If to Manager:

 

IHG Management (Maryland) LLC

 

 

c/o Intercontinental Hotels Group

 

 

 

Resources, Inc.

 

 

8844 Columbia 100 Parkway

 

 

Columbia, Maryland 21045

 

 

Attn: Vice President of Operations

 

 

Facsimile: 410-964-9249

 

 

 

with a copy to:

 

InterContinental Hotels Group

 

 

Resources, Inc.

 

 

c/o Six Continents Hotels, Inc.

 

 

Three Ravinia Drive, Suite 100

 

 

Atlanta, Georgia 30346

 

 

Attn: Operations Attorney

 

 

Facsimile: 770-604-2378

 

 

 

with a copy to:

 

Alston & Bird LLP

 

 

One Atlantic Center

 

 

1201 West Peachtree Street

 

 

Atlanta, Georgia 30309

 

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Attn: Timothy Pakenham, Esq.

 

 

Facsimile: 404-253-8885

 

(D)                                 BY NOTICE GIVEN AS HEREIN PROVIDED, THE
PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS SHALL HAVE THE RIGHT
FROM TIME TO TIME AND AT ANY TIME DURING THE TERM OF THIS AGREEMENT TO CHANGE
THEIR RESPECTIVE ADDRESSES EFFECTIVE UPON RECEIPT BY THE OTHER PARTIES OF SUCH
NOTICE AND EACH SHALL HAVE THE RIGHT TO SPECIFY AS ITS ADDRESS ANY OTHER ADDRESS
WITHIN THE UNITED STATES OF AMERICA.

 

ARTICLE 19

 

RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS

 

19.1                           RELATIONSHIP.  MANAGER SHALL BE THE AGENT OF
OWNER WITH A LIMITED AGENCY, COUPLED WITH AN INTEREST, SOLELY FOR THE PURPOSE OF
OPERATING THE HOTELS AND CARRYING OUT ORDINARY AND CUSTOMARY TRANSACTIONS FOR
THAT PURPOSE.  OWNER AND MANAGER SHALL NOT BE CONSTRUED AS JOINT VENTURERS OR
PARTNERS OF EACH OTHER, AND NEITHER SHALL HAVE THE POWER TO BIND OR OBLIGATE THE
OTHER EXCEPT AS SET FORTH IN THIS AGREEMENT.  MANAGER SHALL NOT CONSTITUTE A
TENANT OR SUBTENANT OF OWNER AND THIS AGREEMENT SHALL NOT CONSTITUTE OWNER A
FRANCHISEE OF MANAGER OR OF ANY OF MANAGER’S AFFILIATES.  MANAGER SHALL NOT
EXERCISE ANY RIGHT OF OWNER OR OWNER’S AFFILIATE UNDER THE BALTIMORE DECLARATION
WITHOUT THE PRIOR WRITTEN CONSENT OF OWNER, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD OR DELAYED.  THIS AGREEMENT SHALL NOT CREATE A FRANCHISE
OR A FRANCHISOR/FRANCHISEE RELATIONSHIP WITHIN THE MEANING OF THE FEDERAL TRADE
COMMISSION ACT OR ANY OTHER LEGAL REQUIREMENT.

 

19.2                           FURTHER ACTIONS.  EACH OF THE PARTIES AGREES TO
EXECUTE ALL CONTRACTS, AGREEMENTS AND DOCUMENTS AND TAKE ALL ACTIONS NECESSARY
TO COMPLY WITH THE PROVISIONS OF THIS AGREEMENT AND THE INTENT HEREOF.

 

ARTICLE 20

 

APPLICABLE LAW

 

This Agreement shall be interpreted, construed, applied and enforced in
accordance with the laws of the State of Maryland applicable to contracts
between residents of Maryland which are to be performed entirely within
Maryland, regardless of (a) where this Agreement is executed or delivered,
(b) where any payment or other performance required by this Agreement is made or
required to be made, (c) where any breach of any provision of

 

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this Agreement occurs, or any cause of action otherwise accrues, (d) where any
action or other proceeding is instituted or pending, (e) the nationality,
citizenship, domicile, principal place of business, or jurisdiction of
organization or domestication of any party, (f) whether the laws of the forum
jurisdiction otherwise would apply the laws of a jurisdiction other than
Maryland, (g) the location of the Hotels or any applicable Hotel, or (h) any
combination of the foregoing.

 

ARTICLE 21

 

SUCCESSORS AND ASSIGNS

 

21.1                           ASSIGNMENT.

 

(A)                                  EXCEPT AS EXPRESSLY PROVIDED BELOW, MANAGER
SHALL NOT ASSIGN, MORTGAGE, PLEDGE, HYPOTHECATE OR OTHERWISE TRANSFER ITS
INTEREST IN ALL OR ANY PORTION OF THIS AGREEMENT OR ANY RIGHTS ARISING UNDER
THIS AGREEMENT OR SUFFER OR PERMIT SUCH INTERESTS OR RIGHTS TO BE ASSIGNED,
TRANSFERRED, MORTGAGED, PLEDGED, HYPOTHECATED OR ENCUMBERED, IN WHOLE OR IN
PART, WHETHER VOLUNTARILY, INVOLUNTARILY OR BY OPERATION OF LAW, OR PERMIT THE
MANAGEMENT OF THE HOTELS BY ANYONE OTHER THAN MANAGER OR OWNER.  FOR PURPOSES OF
THIS SECTION 21.1, AN ASSIGNMENT OF THIS AGREEMENT SHALL BE DEEMED TO INCLUDE
ANY TRANSACTION WHICH RESULTS IN MANAGER NO LONGER BEING AN AFFILIATE OF
GUARANTOR OR PURSUANT TO WHICH ALL OR SUBSTANTIALLY ALL OF MANAGER’S ASSETS ARE
TRANSFERRED TO ANY PERSON WHO IS NOT AN AFFILIATE OF GUARANTOR.

 

(B)                                 MANAGER SHALL HAVE THE RIGHT, WITHOUT
OWNER’S CONSENT, BUT SUBJECT TO THE APPLICABLE ASSIGNEE OR AFFILIATE SATISFYING
THE REQUIREMENTS OF SECTION 24.15, TO (I) ASSIGN MANAGER’S INTEREST IN THIS
AGREEMENT (A) TO IHG OR ANY AFFILIATE OF IHG, (B) IN CONNECTION WITH A MERGER,
CORPORATE RESTRUCTURING OR CONSOLIDATION OF IHG OR A SALE OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF IHG AND (C) IN CONNECTION WITH A SALE OF ALL
OR SUBSTANTIALLY ALL OF THE ASSETS (INCLUDING ASSOCIATED MANAGEMENT AGREEMENTS)
OWNED BY IHG AND ITS AFFILIATES RELATING TO THE BRANDS AND (II) ENGAGE ITS
AFFILIATES AS SUB-MANAGERS WITH RESPECT TO THE SEPARATE BRANDS OF HOTELS.  AT
OWNER’S ELECTION, MANAGER SHALL ASSIGN THIS AGREEMENT TO ANY PERSON WHO IS NOT
AN AFFILIATE OF IHG THAT ACQUIRES ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF IHG
RELATING TO THE BRANDS AND SHALL CAUSE SUCH PERSON TO ASSUME ALL OF MANAGER’S
OBLIGATIONS THEREAFTER ACCRUING HEREUNDER.  NOTWITHSTANDING ANYTHING HEREIN TO
THE CONTRARY, MANAGER SHALL NEITHER, DIRECTLY OR INDIRECTLY, ASSIGN THIS

 

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AGREEMENT TO ANY PERSON, NOR ENGAGE ANY SUB-MANAGER, WHO IS OR IS AN AFFILIATE
OF A SPECIALLY DESIGNATED OR BLOCKED PERSON.

 

Manager also shall have the right, without Owner’s consent, but subject to the
applicable Affiliate satisfying the requirements of Section 24.15, to assign to
a Canadian Affiliate (the “Canadian Manager”) under an Assignment and Assumption
of Management Agreement in the form attached hereto as Exhibit E, the rights and
obligations of the Manager under this Agreement that relate to services to be
performed by the Manager in respect of all (but not less than all) of the
Canadian Hotels excluding those services which are performed centrally outside
of Canada such as those performed pursuant to Section 7.5 and those services for
which the System Fees or other fees referred to in Section 9.2 are to be paid
(excluding such excluded services, the “Canadian Services”), provided that the
Canadian Manager agrees to assume and be bound by the obligations of Manager
hereunder as they relate to the Canadian Services.  As a result of any such
assignment:

 

(I)  THE CANADIAN MANAGER SHALL PROVIDE THE CANADIAN SERVICES TO THE OWNER IN
ACCORDANCE WITH THIS AGREEMENT;

 

(II)  THERE SHALL BE PAYABLE TO THE CANADIAN MANAGER AS CONSIDERATION FOR THE
CANADIAN SERVICES, A PORTION OF THE AMOUNTS OTHERWISE PAYABLE OR REIMBURSABLE TO
MANAGER UNDER THIS AGREEMENT, AS FOLLOWS:

 

(A)                              THE PORTION OF THE OPERATING COSTS INCURRED BY
THE CANADIAN MANAGER IN PROVIDING THE CANADIAN SERVICES;

 

(B)                                THE PORTION OF THE BASE MANAGEMENT FEE FOR
EACH PERIOD EQUAL TO THE FRACTION THAT THE GROSS REVENUES OF THE CANADIAN HOTELS
FOR SUCH PERIOD IS OF THE GROSS REVENUES OF THE HOTELS FOR SUCH PERIOD, WHICH
FEE SHALL BE PAYABLE TO THE CANADIAN MANAGER CONCURRENTLY WITH THE REMAINING
PORTION OF THE BASE MANAGEMENT FEE PAYABLE TO THE MANAGER;

 

(C)                                THE PORTION OF THE INCENTIVE MANAGEMENT FEE
FOR EACH PERIOD EQUAL TO THE FRACTION THAT THE NOI OF THE CANADIAN HOTELS FOR
SUCH PERIOD IS OF THE NOI OF THE HOTELS FOR SUCH PERIOD, WHICH FEE SHALL BE PAID
TO THE CANADIAN MANAGER CONCURRENTLY WITH THE REMAINING PORTION OF THE INCENTIVE
MANAGEMENT FEE PAYABLE TO THE MANAGER;

 

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provided, however, notwithstanding anything contained in this
Section 21.1(b)(ii) to the contrary, Owner shall not be obligated to make any of
the foregoing calculations or to cause any such amounts to be paid directly to
the Canadian Manager, it being acknowledged and agreed that Manager shall be
responsible for performing all such calculations and remitting all such
applicable amounts to the Canadian Manager and Manager shall provide Owner with
the details of such calculations and remittances if Owner so requests;

 

(III)  NO PORTION OF THE SYSTEM FEES OR OTHER FEES REFERRED TO IN SECTION 9.2
SHALL BE PAYABLE IN RESPECT OF CANADIAN SERVICES; AND

 

(IV)  MANAGER SHALL NOT BE RELEASED FROM ANY OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND SHALL AT ALL TIMES REMAIN LIABLE FOR THE PERFORMANCE OF THE
CANADIAN SERVICES AND ALL OTHER OBLIGATIONS OF MANAGER HEREUNDER.

 

The Canadian Manager shall at all times be an Affiliate of Manager.

 

The parties hereto acknowledge and agree that this Agreement is intended to
constitute, and shall constitute, a single transaction notwithstanding any such
assignment to the Canadian Manager.

 

The parties hereto further acknowledge and agree that IHG Maryland was the only
“Manager” under the Original Management Agreement when it was first executed and
that IHG Maryland subsequently exercised its rights to assign the rights and
obligations of Manager relating to services to be performed by Manager in
respect of all of the Canadian Hotels to IHG Canada as Canadian Manager, all
intended to be in accordance with this Section 21.1(b).  The execution of this
Agreement and the inclusion of IHG Canada as a “Manager” hereunder shall not
operate to modify, diminish or otherwise impair the rights, obligations or
liabilities of IHG Maryland as the initial “Manager” under the Original
Management Agreement.

 

(C)                                  OWNER SHALL NOT ASSIGN, MORTGAGE, PLEDGE,
HYPOTHECATE OR OTHERWISE TRANSFER ITS INTEREST IN ALL OR ANY PORTION OF THIS
AGREEMENT OR ANY RIGHTS ARISING UNDER THIS AGREEMENT WITHOUT THE PRIOR WRITTEN
CONSENT OF MANAGER EXCEPT (I) IN CONNECTION WITH A SALE OF A HOTEL IN ACCORDANCE
WITH THE TERMS OF SECTIONS 4.4 OR 4.5, (II) TO PURCHASER OR AN AFFILIATE OF
PURCHASER, (III) TO

 

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MANAGER OR AN AFFILIATE OF MANAGER, (IV) TO AN AFFILIATE OF OWNER IN A MERGER,
CORPORATE RESTRUCTURING OR CONSOLIDATION OF PURCHASER OR ANY OF ITS
AFFILIATES,(V) IN CONNECTION WITH THE GRANTING OF AN AUTHORIZED MORTGAGE OR
(VI) TO A SUBSTITUTE TENANT AS PROVIDED IN SECTION 4.2; PROVIDED, HOWEVER, IN
EACH INSTANCE (OTHER THAN IN CONNECTION WITH A COLLATERAL ASSIGNMENT) THAT THE
ASSIGNEE HEREOF ASSUMES ALL OF OWNER’S OBLIGATION HEREUNDER AND UNDER THE OTHER
TRANSACTION DOCUMENTS THEREAFTER ACCRUING.

 

(D)                                 IN THE EVENT EITHER PARTY CONSENTS TO AN
ASSIGNMENT OF THIS AGREEMENT BY THE OTHER, NO FURTHER ASSIGNMENT SHALL BE MADE
WITHOUT THE EXPRESS CONSENT IN WRITING OF SUCH PARTY, UNLESS SUCH ASSIGNMENT MAY
OTHERWISE BE MADE WITHOUT SUCH CONSENT PURSUANT TO THE TERMS OF THIS AGREEMENT. 
AN ASSIGNMENT BY OWNER OF ITS INTEREST IN THIS AGREEMENT APPROVED OR PERMITTED
PURSUANT TO THE TERMS HEREOF SHALL RELIEVE OWNER OF ITS OBLIGATIONS UNDER THIS
AGREEMENT THEREAFTER ACCRUING.

 

(E)                                  IN THE EVENT FIFTY PERCENT (50%) OR MORE OF
THE HOTELS COMPRISING A BRAND CEASE TO BE STAYBRIDGE SUITES, INTERCONTINENTAL,
CROWNE PLAZA OR HOLIDAY INN, AS APPLICABLE, HOTELS AND ARE CONVERTED TO ANOTHER
BRAND IN A SINGLE TRANSACTION OR A SERIES OF RELATED TRANSACTIONS, OWNER MAY
ELECT TO REQUIRE MANAGER TO PROMPTLY CONVERT AT ITS OWN COST AND EXPENSE (AND
NOT AS AN OPERATING COST AND WITHOUT REIMBURSEMENT FROM THE RESERVE ACCOUNT) THE
APPLICABLE HOTELS TO THE BRAND OF HOTELS TO WHICH SUCH OTHER HOTELS ARE
CONVERTED.  IN SUCH EVENT, ALL REFERENCES HEREIN TO “STAYBRIDGE SUITES”,
“INTERCONTINENTAL”, “CROWNE PLAZA” OR “HOLIDAY INN”, AS APPLICABLE, SHALL BE
DEEMED TO REFER TO THE TRADE NAME OF THE SYSTEM OF HOTELS TO WHICH THE HOTELS
ARE TO BE SO CONVERTED.

 

21.2                           BINDING EFFECT.  THE TERMS, PROVISIONS,
COVENANTS, UNDERTAKINGS, AGREEMENTS, OBLIGATIONS AND CONDITIONS OF THIS
AGREEMENT SHALL BE BINDING UPON AND SHALL INURE TO THE BENEFIT OF THE SUCCESSORS
IN INTEREST AND THE ASSIGNS OF THE PARTIES HERETO WITH THE SAME EFFECT AS IF
MENTIONED IN EACH INSTANCE WHERE THE PARTY HERETO IS NAMED OR REFERRED TO,
EXCEPT THAT NO ASSIGNMENT, TRANSFER, SALE, PLEDGE, ENCUMBRANCE, MORTGAGE, LEASE
OR SUBLEASE BY OR THROUGH OWNER, AS THE CASE MAY BE, IN VIOLATION OF THE
PROVISIONS OF THIS AGREEMENT SHALL VEST ANY RIGHTS IN THE ASSIGNEE, TRANSFEREE,
PURCHASER, SECURED PARTY, MORTGAGEE, PLEDGEE, LESSEE, SUBLESSEE OR OCCUPANT.

 

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ARTICLE 22

 

RECORDING

 

22.1                           MEMORANDUM OF AGREEMENT.  AS OF THE EFFECTIVE
DATE, AT THE OPTION OF MANAGER, OWNER AND MANAGER AGREE TO EXECUTE, ACKNOWLEDGE
AND RECORD A MEMORANDUM OF THIS AGREEMENT IN THE LAND RECORDS OF THE STATES AND
COUNTIES WHERE THE HOTELS ARE LOCATED, IN A FORM REASONABLY SATISFACTORY TO
MANAGER.

 

ARTICLE 23

 

FORCE MAJEURE

 

23.1                           OPERATION OF HOTEL.  IF AT ANY TIME DURING THE
TERM IT BECOMES NECESSARY IN MANAGER’S REASONABLE OPINION TO CEASE OR ALTER
OPERATIONS AT ANY HOTEL IN ORDER TO PROTECT THE HEALTH, SAFETY AND WELFARE OF
THE GUESTS AND/OR EMPLOYEES OF SUCH HOTEL, OR SUCH HOTEL ITSELF, FOR REASONS OF
FORCE MAJEURE BEYOND THE CONTROL OF MANAGER SUCH AS, BUT NOT LIMITED TO, ACTS OF
WAR, INSURRECTION, CIVIL STRIFE AND COMMOTION, LABOR UNREST OR ACTS OF GOD, THEN
IN SUCH EVENT MANAGER MAY CLOSE AND CEASE OR ALTER OPERATION OF ALL OR PART OF
SUCH HOTEL, REOPENING AND COMMENCING OR RESUMING OPERATION WHEN MANAGER DEEMS
THAT SUCH MAY BE DONE WITHOUT JEOPARDY TO SUCH HOTEL, ITS GUESTS AND EMPLOYEES.

 

23.2                           EXTENSION OF TIME.  OWNER AND MANAGER AGREE THAT,
WITH RESPECT TO ANY OBLIGATION, OTHER THAN THE PAYMENT OF MONEY, TO BE PERFORMED
BY A PARTY DURING THE TERM, NEITHER PARTY WILL BE LIABLE FOR FAILURE SO TO
PERFORM WHEN PREVENTED BY ANY OCCURRENCE BEYOND THE REASONABLE CONTROL OF SUCH
PARTY, HEREIN REFERRED TO AS A “FORCE MAJEURE” INCLUDING, WITHOUT LIMITATION,
OCCURRENCES SUCH AS STRIKE, LOCKOUT, BREAKDOWN, ACCIDENT, ORDER OR REGULATION OF
OR BY ANY GOVERNMENT AGENCY, FAILURE OF SUPPLY OR INABILITY, BY THE EXERCISE OF
REASONABLE DILIGENCE, TO OBTAIN SUPPLIES, PARTS OR EMPLOYEES NECESSARY TO
PERFORM SUCH OBLIGATION, OR WAR OR OTHER EMERGENCY.  THE TIME WITHIN WHICH SUCH
OBLIGATION MUST BE PERFORMED WILL BE EXTENDED FOR A PERIOD OF TIME EQUIVALENT TO
THE NUMBER OF DAYS OF DELAY FROM SUCH CAUSE.

 

ARTICLE 24

 

GENERAL PROVISIONS

 

24.1                           TRADE AREA RESTRICTION.

 

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(A)                                  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, NEITHER MANAGER NOR ANY AFFILIATE SHALL ACQUIRE, OWN, MANAGE,
OPERATE OR OPEN ANY HOTEL AS A “STAYBRIDGE SUITES” OR “HOLIDAY INN” HOTEL NOR
SHALL MANAGER OR ANY AFFILIATE AUTHORIZE A THIRD PARTY TO OPERATE OR OPEN ANY
HOTEL AS A “STAYBRIDGE SUITES” OR “HOLIDAY INN” HOTEL THAT IS WITHIN THE
RESTRICTED AREA OF ANY HOTEL OPERATED UNDER THE SAME NAME DURING ITS RESTRICTED
PERIOD, UNLESS SUCH HOTEL (I) IS OWNED OR LEASED BY OWNER OR ITS AFFILIATE;
(II) IS OWNED, OPERATED, MANAGED, FRANCHISED OR UNDER DEVELOPMENT ON THE
EFFECTIVE DATE AND HAS BEEN SPECIFICALLY IDENTIFIED IN WRITING AT OR PRIOR TO
THE TIME OF THE EXECUTION OF THE PURCHASE AGREEMENT OR REPLACES ANY SUCH HOTEL,
PROVIDED SUCH REPLACEMENT HOTEL DOES NOT HAVE MORE THAN TEN PERCENT (10%) MORE
GUEST ROOMS THAN THE ORIGINAL HOTEL WHICH IT REPLACES; OR (III) IS PART OF AN
ACQUISITION BY IHG OR ITS AFFILIATES OF AN INTEREST (INCLUDING AN INTEREST AS A
FRANCHISOR) IN A CHAIN OR GROUP OF NOT LESS THAN TEN (10) COMPARABLE HOTELS
(SUCH ACQUISITION TO OCCUR IN A SINGLE TRANSACTION OR A SERIES OF RELATED
TRANSACTIONS).  THE TERMS OF THIS SECTION 24.1(A) SHALL APPLY ONLY TO
“STAYBRIDGE SUITES” AND “HOLIDAY INN” HOTELS AND SHALL NOT IN ANY WAY RESTRICT
THE OWNERSHIP, MANAGEMENT, FRANCHISING OR OPERATION OF OTHER BRANDS OR FLAGS OF
ANY HOTELS OWNED OR OPERATED BY MANAGER OR ITS AFFILIATES WITHIN THE RESTRICTED
AREA.  FOR THE AVOIDANCE OF DOUBT, THE RESTRICTION SET FORTH IN THIS
SECTION 24.1(A) ONLY APPLIES TO TWO OR MORE HOTELS OF THE SAME BRAND, I.E., TWO
OR MORE STAYBRIDGE SUITES HOTELS OR TWO OR MORE HOLIDAY INN HOTELS.  A HOLIDAY
INN HOTEL AND A STAYBRIDGE SUITES HOTEL WITHIN A RESTRICTED AREA SHALL NOT BE
DEEMED A VIOLATION OF THIS SECTION.

 

(B)                                 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, NEITHER MANAGER NOR ANY AFFILIATE SHALL ACQUIRE, OWN, MANAGE,
OPERATE OR OPEN ANY HOTEL AS AN “INTERCONTINENTAL” OR “CROWNE PLAZA” HOTEL NOR
SHALL MANAGER OR ANY AFFILIATE AUTHORIZE A THIRD PARTY TO OPERATE OR OPEN ANY
HOTEL AS AN “INTERCONTINENTAL” OR “CROWNE PLAZA” HOTEL THAT IS WITHIN THE
RESTRICTED AREA OF ANY HOTEL OPERATED UNDER THE SAME NAME DURING ITS RESTRICTED
PERIOD, UNLESS SUCH HOTEL (I) IS OWNED OR LEASED BY OWNER OR ITS AFFILIATE;
(II) IS OWNED, OPERATED, MANAGED, FRANCHISED OR UNDER DEVELOPMENT ON THE
EFFECTIVE DATE AND HAS BEEN SPECIFICALLY APPROVED BY OWNER IN WRITING AT OR
PRIOR TO THE TIME OF THE EXECUTION OF THE PURCHASE AGREEMENT OR REPLACES ANY
SUCH HOTEL, PROVIDED SUCH REPLACEMENT HOTEL IS NOT FIRST OPENED AFTER SUCH TIME
AND DOES NOT HAVE MORE THAN TEN PERCENT (10%) MORE GUEST ROOMS THAN THE ORIGINAL
HOTEL WHICH IT REPLACES; OR (III) IS PART OF AN ACQUISITION BY IHG OR ITS
AFFILIATES OF AN INTEREST (INCLUDING AN INTEREST AS A

 

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FRANCHISOR) IN A CHAIN OR GROUP OF NOT LESS THAN FIVE (5) COMPARABLE FULL
SERVICE HOTELS (SUCH ACQUISITION TO OCCUR IN A SINGLE TRANSACTION OR A SERIES OF
RELATED TRANSACTIONS).  THE TERMS OF THIS SECTION 24.1(B) SHALL APPLY ONLY TO
“INTERCONTINENTAL” AND “CROWNE PLAZA” HOTELS AND SHALL NOT IN ANY WAY RESTRICT
THE OWNERSHIP, MANAGEMENT, FRANCHISING OR OPERATION OF OTHER BRANDS OR FLAGS OF
ANY HOTELS OWNED OR OPERATED BY MANAGER OR ITS AFFILIATES WITHIN THE RESTRICTED
AREA.  FOR THE AVOIDANCE OF DOUBT, THE RESTRICTION SET FORTH IN THIS
SECTION 24.1(B) ONLY APPLIES TO TWO OR MORE HOTELS OF THE SAME BRAND, I.E., TWO
OR MORE CROWNE PLAZA HOTELS OR TWO OR MORE INTERCONTINENTAL HOTELS.  A CROWNE
PLAZA HOTEL AND AN INTERCONTINENTAL HOTEL WITHIN A RESTRICTED AREA SHALL NOT BE
DEEMED A VIOLATION OF THIS SECTION.

 

24.2                           ENVIRONMENTAL MATTERS.

 

(A)                                  MANAGER SHALL NOT STORE, RELEASE,
DISCHARGE, SPILL UPON, DISPOSE OF OR TRANSFER TO OR FROM ANY HOTEL ANY HAZARDOUS
SUBSTANCE, EXCEPT FOR THOSE WHICH ARE CUSTOMARILY USED AT OTHER HOTELS LIKE THE
HOTELS AND ARE IN COMPLIANCE WITH ALL LEGAL REQUIREMENTS.  MANAGER SHALL
MAINTAIN THE HOTELS AT ALL TIMES FREE OF ANY HAZARDOUS SUBSTANCE (EXCEPT FOR
THOSE WHICH ARE CUSTOMARILY USED AT OTHER HOTELS LIKE THE HOTELS AND ARE IN
COMPLIANCE WITH ALL LEGAL REQUIREMENTS).  MANAGER (I) UPON RECEIPT OF NOTICE OR
KNOWLEDGE THEREOF SHALL PROMPTLY NOTIFY PURCHASER AND OWNER IN WRITING OF ANY
MATERIAL CHANGE IN THE NATURE OR EXTENT OF HAZARDOUS SUBSTANCES AT ANY HOTEL,
(II) SHALL FILE AND TRANSMIT TO PURCHASER AND OWNER A COPY OF ANY COMMUNITY
RIGHT TO KNOW OR SIMILAR REPORT WHICH IS REQUIRED TO BE FILED WITH RESPECT TO
ANY HOTEL PURSUANT TO THE EMERGENCY PLANNING AND COMMUNITY RIGHT TO KNOW ACT, 42
U.S.C. SECTION 11001 ET SEQ. OR ANY OTHER LEGAL REQUIREMENTS, (III) SHALL
TRANSMIT TO PURCHASER AND OWNER COPIES OF ANY CITATIONS, ORDERS, NOTICES OR
OTHER GOVERNMENTAL COMMUNICATIONS RECEIVED BY MANAGER WITH RESPECT TO HAZARDOUS
SUBSTANCES OR ALLEGED VIOLATIONS OF LEGAL REQUIREMENTS RELATING TO THE
PROTECTION OF THE ENVIRONMENT OR HUMAN HEALTH OR SAFETY (COLLECTIVELY,
“ENVIRONMENTAL NOTICE”), WHICH ENVIRONMENTAL NOTICE REQUIRES A WRITTEN RESPONSE
OR ANY ACTION TO BE TAKEN AND/OR IF SUCH ENVIRONMENTAL NOTICE GIVES NOTICE OF
AND/OR PRESENTS A MATERIAL RISK OF ANY MATERIAL VIOLATION OF ANY LEGAL
REQUIREMENT AND/OR PRESENTS A MATERIAL RISK OF ANY MATERIAL COST, EXPENSE, LOSS
OR DAMAGE, (IV) SHALL OBSERVE AND COMPLY WITH ALL LEGAL REQUIREMENTS RELATING TO
THE USE, STORAGE, MAINTENANCE AND DISPOSAL OF HAZARDOUS SUBSTANCES AND ALL
ORDERS OR DIRECTIVES FROM ANY OFFICIAL, COURT OR AGENCY OF COMPETENT
JURISDICTION

 

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RELATING TO THE USE, STORAGE OR MAINTENANCE OR REQUIRING THE REMOVAL, TREATMENT,
CONTAINMENT OR OTHER DISPOSITION OF HAZARDOUS SUBSTANCES, AND (V) SHALL PAY OR
OTHERWISE DISPOSE OF ANY FINE, CHARGE OR IMPOSITION RELATED TO ANY OF THE
FOREGOING.

 

(B)                                 IN THE EVENT OF THE DISCOVERY OF HAZARDOUS
SUBSTANCES OTHER THAN THOSE MAINTAINED IN ACCORDANCE WITH THIS AGREEMENT ON ANY
PORTION OF ANY SITE OR IN ANY HOTEL DURING THE TERM, MANAGER SHALL USE
REASONABLE EFFORTS TO PROMPTLY (I) CLEAN UP AND REMOVE FROM AND ABOUT SUCH HOTEL
ALL HAZARDOUS SUBSTANCES THEREON, IF APPROPRIATE, (II) CONTAIN AND PREVENT ANY
FURTHER RELEASE OR THREAT OF RELEASE OF HAZARDOUS SUBSTANCES ON OR ABOUT SUCH
HOTEL, AND (III) USE GOOD FAITH EFFORTS TO ELIMINATE ANY FURTHER RELEASE OR
THREAT OF RELEASE OF HAZARDOUS SUBSTANCES ON OR ABOUT SUCH HOTEL, AND
(IV) OTHERWISE EFFECT A REMEDIATION OF THE PROBLEM IN ACCORDANCE WITH (A) THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT, 42 U.S.C.
SECTION 9601 ET SEQ., AS AMENDED; (B) THE REGULATIONS PROMULGATED THEREUNDER,
FROM TIME TO TIME; AND (C) ALL LEGAL REQUIREMENTS (NOW OR HEREAFTER IN EFFECT)
DEALING WITH THE USE, GENERATION, TREATMENT, RELEASE, DISCHARGE, STORAGE,
DISPOSAL, CLEAN UP, REMEDIATION OR ABATEMENT OF HAZARDOUS SUBSTANCES.

 

(C)                                  TO THE EXTENT ANY SERVICE REQUIRED TO BE
PERFORMED UNDER THIS SECTION 24.2 OR COST INCURRED UNDER THIS SECTION 24.2 IS
NOT DUE TO THE FAULT OF MANAGER OR IS NOT PERFORMED OR INCURRED IN THE
OPERATIONS OF THE HOTELS IN THE ORDINARY COURSE, THE SAME SHALL BE GOVERNED BY
SECTION 11.1; PROVIDED, HOWEVER, TO THE EXTENT THAT SECTION 11.1 SHALL APPLY TO
SUCH SERVICES OR COSTS, OWNER SHALL BE ENTITLED TO ENGAGE A THIRD PARTY TO
PERFORM SUCH SERVICES.

 

(D)                                 NOTWITHSTANDING ANYTHING CONTAINED IN THIS
SECTION 24.2 TO THE CONTRARY, WITH RESPECT TO THE BALTIMORE HOTEL ONLY, IF
EITHER PARTY FIRST DISCOVERS ANY HAZARDOUS SUBSTANCES ON OR ABOUT THE BALTIMORE
SITE OR THE BALTIMORE HOTEL FROM AND AFTER THE EFFECTIVE DATE, OTHER THAN THOSE
MAINTAINED IN ACCORDANCE WITH THIS AGREEMENT, AND IT IS FURTHER REASONABLY
DETERMINED THAT SUCH HAZARDOUS SUBSTANCES WERE PRESENT ON OR ABOUT THE BALTIMORE
SITE OR THE BALTIMORE HOTEL PRIOR TO THE EFFECTIVE DATE WITH RESPECT TO THE
BALTIMORE HOTEL, THEN OWNER AND/OR OWNER’S AFFILIATE WHO OWNS THE BALTIMORE
HOTEL SHALL BE RESPONSIBLE FOR ANY COSTS REASONABLY INCURRED BY MANAGER IN
CONNECTION WITH ANY REMEDIATION OR OTHER ACTION REQUIRED UNDER THIS AGREEMENT ON
ACCOUNT OF SUCH HAZARDOUS SUBSTANCES.  MANAGER ACKNOWLEDGES THAT IT HAD A FULL
OPPORTUNITY TO PERFORM ENVIRONMENTAL DUE DILIGENCE ON THE BALTIMORE HOTEL AND
THE BALTIMORE SITE PRIOR TO THE EFFECTIVE DATE FOR THE BALTIMORE

 

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HOTEL, INCLUDING, WITHOUT LIMITATION, A REVIEW OF ENVIRONMENTAL REPORTS. 
MANAGER ACKNOWLEDGES THAT IT IS SATISFIED WITH THE RESULTS OF SUCH DILIGENCE AND
IT HAS NO REASON TO BELIEVE THAT THERE ARE CURRENTLY ANY HAZARDOUS SUBSTANCES ON
OR ABOUT THE BALTIMORE SITE OR THE BALTIMORE HOTEL IN VIOLATION OF THIS
AGREEMENT WHICH REQUIRE ANY FURTHER ACTION.

 

24.3                           AUTHORIZATION.  OWNER REPRESENTS THAT IT HAS FULL
POWER AND AUTHORITY TO EXECUTE THIS AGREEMENT AND TO BE BOUND BY AND PERFORM THE
TERMS HEREOF.  MANAGER REPRESENTS IT HAS FULL POWER AND AUTHORITY TO EXECUTE
THIS AGREEMENT AND TO BE BOUND BY AND PERFORM THE TERMS HEREOF.  ON REQUEST,
EACH SUCH PARTY WILL FURNISH TO THE OTHER EVIDENCE OF SUCH AUTHORITY.

 

24.4                           SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT
SHALL BE HELD OR DEEMED TO BE, OR SHALL IN FACT BE, INVALID, INOPERATIVE OR
UNENFORCEABLE AS APPLIED TO ANY PARTICULAR CASE IN ANY JURISDICTION OR
JURISDICTIONS, OR IN ALL JURISDICTIONS OR IN ALL CASES, BECAUSE OF THE CONFLICT
OF ANY PROVISION WITH ANY CONSTITUTION OR STATUTE OR RULE OF PUBLIC POLICY OR
FOR ANY OTHER REASON, SUCH CIRCUMSTANCE SHALL NOT HAVE THE EFFECT OF RENDERING
THE PROVISION OR PROVISIONS IN QUESTION INVALID, INOPERATIVE OR UNENFORCEABLE IN
ANY OTHER JURISDICTION OR IN ANY OTHER CASE OR CIRCUMSTANCE OR OF RENDERING ANY
OTHER PROVISION OR PROVISIONS HEREIN CONTAINED INVALID, INOPERATIVE OR
UNENFORCEABLE TO THE EXTENT THAT SUCH OTHER PROVISIONS ARE NOT THEMSELVES
ACTUALLY IN CONFLICT WITH SUCH CONSTITUTION, STATUTE OR RULE OF PUBLIC POLICY,
BUT THIS AGREEMENT SHALL BE REFORMED AND CONSTRUED IN ANY SUCH JURISDICTION OR
CASE AS IF SUCH INVALID, INOPERATIVE OR UNENFORCEABLE PROVISION HAD NEVER BEEN
CONTAINED HEREIN AND SUCH PROVISION REFORMED SO THAT IT WOULD BE VALID,
OPERATIVE AND ENFORCEABLE TO THE MAXIMUM EXTENT PERMITTED IN SUCH JURISDICTION
OR IN SUCH CASE.

 

24.5                           MERGER.  THIS AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT OF THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
SHALL SUPERSEDE AND TAKE THE PLACE OF ANY OTHER INSTRUMENTS PURPORTING TO BE AN
AGREEMENT OF THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF.

 

24.6                           FORMALITIES.  ANY AMENDMENT OR MODIFICATION OF
THIS AGREEMENT MUST BE IN WRITING SIGNED BY ALL PARTIES HERETO.  THIS AGREEMENT
MAY BE EXECUTED IN ONE OR MORE COUNTERPARTS, EACH OF WHICH WILL BE DEEMED AN
ORIGINAL.

 

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24.7                           CONSENT TO JURISDICTION; NO JURY TRIAL.

 

(A)                                  EXCEPT AS PROVIDED IN SECTION 24.20, ALL
ACTIONS AND PROCEEDINGS ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT
SHALL BE BROUGHT, HEARD, AND DETERMINED EXCLUSIVELY IN AN OTHERWISE APPROPRIATE
FEDERAL OR STATE COURT LOCATED WITHIN THE STATE OF MARYLAND.  EXCEPT AS PROVIDED
IN SECTION 24.20, THE PARTIES HEREBY (A) SUBMIT TO THE EXCLUSIVE JURISDICTION OF
ANY MARYLAND FEDERAL OR STATE COURT OF OTHERWISE COMPETENT JURISDICTION FOR THE
PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND (B) VOLUNTARILY AND IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT BY WAY OF
MOTION, DEFENSE, OR OTHERWISE IN ANY SUCH ACTION OR PROCEEDING, ANY CLAIM OR
DEFENSE THAT THEY ARE NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH A
COURT, THAT SUCH A COURT LACKS PERSONAL JURISDICTION OVER ANY PARTY OR THE
MATTER, THAT THE ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT OR
IMPROPER FORUM, THAT THE VENUE OF THE ACTION OR PROCEEDING IS IMPROPER, OR THAT
THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH A COURT.  TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, EACH PARTY CONSENTS TO SERVICE OF PROCESS BY
REGISTERED MAIL, RETURN RECEIPT REQUESTED, OR BY ANY OTHER MANNER PROVIDED BY
LAW.

 

(B)                                 TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO WAIVES ITS RIGHTS TO TRIAL BY JURY
WITH RESPECT TO THIS AGREEMENT OR MATTER ARISING IN CONNECTION HEREWITH.

 

24.8                           PERFORMANCE ON BUSINESS DAYS.  IN THE EVENT THE
DATE ON WHICH PERFORMANCE OR PAYMENT OF ANY OBLIGATION OF A PARTY REQUIRED
HEREUNDER IS OTHER THAN A BUSINESS DAY, THE TIME FOR PAYMENT OR PERFORMANCE
SHALL AUTOMATICALLY BE EXTENDED TO THE FIRST BUSINESS DAY FOLLOWING SUCH DATE.

 

24.9                           ATTORNEYS’ FEES.  IF ANY LAWSUIT OR ARBITRATION
OR OTHER LEGAL PROCEEDING ARISES IN CONNECTION WITH THE INTERPRETATION OR
ENFORCEMENT OF THIS AGREEMENT, THE PREVAILING PARTY THEREIN SHALL BE ENTITLED TO
RECEIVE FROM THE OTHER PARTY THE PREVAILING PARTY’S COSTS AND EXPENSES,
INCLUDING REASONABLE ATTORNEYS’ FEES INCURRED IN CONNECTION THEREWITH, IN
PREPARATION THEREFOR AND ON APPEAL THEREFROM, WHICH AMOUNTS SHALL BE INCLUDED IN
ANY JUDGMENT THEREIN.

 

24.10                     SECTION AND OTHER HEADINGS.  THE HEADINGS CONTAINED IN
THIS AGREEMENT ARE FOR REFERENCE PURPOSES ONLY AND SHALL NOT IN ANY WAY AFFECT
THE MEANING OR INTERPRETATION OF THIS AGREEMENT.

 

24.11                     DOCUMENTS.  THROUGHOUT THE TERM, OWNER AGREES TO
FURNISH MANAGER COPIES OF ALL NOTICES RELATING TO REAL AND

 

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PERSONAL PROPERTY TAXES AND INSURANCE STATEMENTS, ALL FINANCING DOCUMENTS
(INCLUDING NOTES AND MORTGAGES) RELATING TO THE HOTELS AND SUCH OTHER DOCUMENTS
PERTAINING TO THE HOTELS AS MANAGER MAY REQUEST.

 

24.12                     NO CONSEQUENTIAL DAMAGES.  EXCEPT AS MAY BE EXPRESSLY
PROVIDED HEREIN, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL,
EXEMPLARY OR PUNITIVE DAMAGES SUFFERED BY THE OTHER AS THE RESULT OF A BREACH OF
THIS AGREEMENT.  TIME IS OF THE ESSENCE WITH RESPECT TO THIS AGREEMENT.

 

24.13                     NO POLITICAL CONTRIBUTIONS.  NOTWITHSTANDING ANYTHING
CONTAINED IN THIS AGREEMENT TO THE CONTRARY, NO MONEY OR PROPERTY OF THE HOTELS
SHALL BE PAID OR USED OR OFFERED, NOR SHALL OWNER OR MANAGER DIRECTLY OR
INDIRECTLY USE OR OFFER, CONSENT OR AGREE TO USE OR OFFER, ANY MONEY OR PROPERTY
OF THE HOTELS (I) IN AID OF ANY POLITICAL PARTY, COMMITTEE OR ORGANIZATION,
(II) IN AID OF ANY CORPORATION, JOINT STOCK OR OTHER ASSOCIATION ORGANIZED OR
MAINTAINED FOR POLITICAL PURPOSES, (III) IN AID OF ANY CANDIDATE FOR POLITICAL
OFFICE OR NOMINATION FOR SUCH OFFICE, (IV) IN CONNECTION WITH ANY ELECTION,
(V) FOR ANY POLITICAL PURPOSE WHATEVER, OR (VI) FOR THE REIMBURSEMENT OR
INDEMNIFICATION OF ANY PERSON FOR ANY MONEY OR PROPERTY SO USED.

 

24.14                     REIT QUALIFICATION.

 

(A)                                  MANAGER SHALL TAKE ALL COMMERCIALLY
REASONABLE ACTIONS REASONABLY REQUESTED BY OWNER OR PURCHASER FOR THE PURPOSE OF
QUALIFYING PURCHASER’S RENTAL INCOME FROM OWNER UNDER THE LEASE AS “RENTS FROM
REAL PROPERTY” PURSUANT TO SECTIONS 856(D)(2), 856(D)(8)(B) AND 856(D)(9) OF THE
CODE.  MANAGER SHALL NOT BE LIABLE IF SUCH REASONABLY REQUESTED ACTIONS, ONCE
IMPLEMENTED, FAIL TO HAVE THE DESIRED RESULT OF QUALIFYING PURCHASER’S RENTAL
INCOME FROM OWNER UNDER THE LEASE AS “RENTS FROM REAL PROPERTY” PURSUANT TO
SECTIONS 856(D)(2), 856(D)(8)(B) AND 856(D)(9) OF THE CODE.  THIS SECTION 24.14
SHALL NOT APPLY IN SITUATIONS WHERE AN ADVERSE REGULATORY EVENT HAS OCCURRED;
INSTEAD, SECTION 24.16 SHALL APPLY IN SUCH AN INSTANCE.

 

(B)                                 IN THE EVENT OWNER OR PURCHASER WISH TO
INVOKE THE TERMS OF SECTION 24.14(A), OWNER OR PURCHASER (AS APPROPRIATE) SHALL
CONTACT MANAGER AND THE PARTIES SHALL MEET WITH EACH OTHER TO DISCUSS THE
RELEVANT ISSUES AND TO DEVELOP A PLAN FOR IMPLEMENTING SUCH REASONABLY REQUESTED
ACTIONS.

 

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(C)                                  ANY ADDITIONAL OUT-OF-POCKET COSTS OR
EXPENSES INCURRED BY MANAGER IN COMPLYING WITH SUCH A REQUEST SHALL BE BORNE BY
OWNER (AND SHALL NOT BE AN OPERATING COST).  OWNER SHALL REIMBURSE MANAGER FOR
SUCH EXPENSE OR COST PROMPTLY, BUT NOT LATER THAN FIVE (5) BUSINESS DAYS AFTER
SUCH EXPENSE OR COST IS INCURRED.

 

24.15                     FURTHER COMPLIANCE WITH SECTION 856(D) OF THE CODE. 
COMMENCING WITH THE EFFECTIVE DATE AND CONTINUING THROUGHOUT THE TERM, THE
MANAGER SHALL QUALIFY AS AN “ELIGIBLE INDEPENDENT CONTRACTOR” AS DEFINED IN
SECTION 856(D)(9)(A) OF THE CODE.  TO THAT END:

 

(A)                                  MANAGER SHALL NOT PERMIT WAGERING
ACTIVITIES TO BE CONDUCTED AT OR IN CONNECTION WITH ANY HOTEL BY ANY PERSON WHO
IS ENGAGED IN THE BUSINESS OF ACCEPTING WAGERS AND WHO IS LEGALLY AUTHORIZED TO
ENGAGE IN SUCH BUSINESS AT OR IN CONNECTION WITH SUCH HOTEL;

 

(B)                                 MANAGER SHALL USE REASONABLE EFFORTS TO
CAUSE EACH HOTEL TO QUALIFY AS A “QUALIFIED LODGING FACILITY” UNDER
SECTION 856(D)(9)(D) OF THE CODE;

 

(C)                                  MANAGER SHALL NOT OWN, DIRECTLY OR
INDIRECTLY OR CONSTRUCTIVELY (WITHIN THE MEANING OF SECTION 856(D)(5) OF THE
CODE), MORE THAN THIRTY-FIVE PERCENT (35%) OF THE SHARES OF HPT (WHETHER BY
VOTE, VALUE OR NUMBER OF SHARES), AND MANAGER SHALL OTHERWISE COMPLY WITH ANY
REGULATIONS OR OTHER ADMINISTRATIVE OR JUDICIAL GUIDANCE NOW OR HEREAFTER
EXISTING UNDER SAID SECTION 856(D)(5) OF THE CODE WITH RESPECT TO SUCH OWNERSHIP
LIMITS; AND

 

(D)                                 MANAGER SHALL BE ACTIVELY ENGAGED (OR SHALL,
WITHIN THE MEANING OF SECTION 856(D)(9)(F) OF THE CODE, BE RELATED TO A PERSON
THAT IS SO ACTIVELY ENGAGED) IN THE TRADE OR BUSINESS OF OPERATING “QUALIFIED
LODGING FACILITIES” (DEFINED BELOW) FOR A PERSON WHO IS NOT A “RELATED PERSON”
WITHIN THE MEANING OF SECTION 856(D)(9)(F) OF THE CODE WITH RESPECT TO HPT OR
OWNER (“UNRELATED PERSONS”).  IN ORDER TO MEET THIS REQUIREMENT, THE MANAGER
AGREES THAT IT (OR ANY “RELATED PERSON” WITH RESPECT TO MANAGER WITHIN THE
MEANING OF SECTION 856(D)(9)(F) OF THE CODE) (I) SHALL DERIVE AT LEAST TEN
PERCENT (10%) OF BOTH ITS REVENUE AND PROFIT FROM OPERATING “QUALIFIED LODGING
FACILITIES” FOR UNRELATED PERSONS AND (II) SHALL COMPLY WITH ANY REGULATIONS OR
OTHER ADMINISTRATIVE OR JUDICIAL GUIDANCE UNDER SECTION 856(D)(9) OF THE CODE
WITH RESPECT TO THE AMOUNT OF HOTEL MANAGEMENT BUSINESS WITH UNRELATED PERSONS
THAT IS NECESSARY TO QUALIFY AS AN “ELIGIBLE INDEPENDENT CONTRACTOR” WITHIN THE
MEANING OF SUCH CODE SECTION.

 

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A “qualified lodging facility” is defined in Section 856(d)(9)(D) of the Code
and means a “lodging facility” (defined below), unless wagering activities are
conducted at or in connection with such facility by any person who is engaged in
the business of accepting wagers and who is legally authorized to engage in such
business at or in connection with such facility.  A “lodging facility” is a
hotel, motel or other establishment more than one-half of the dwelling units in
which are used on a transient basis, and includes customary amenities and
facilities operated as part of, or associated with, the lodging facility so long
as such amenities and facilities are customary for other properties of a
comparable size and class owned by other owners unrelated to HPT.

 

(E)                                  MANAGER, WITHOUT THE PRIOR CONSENT OF
OWNER, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD, SHALL NOT PERMIT OR
SUFFER:

 

(I)  THE MANAGER TO FAIL TO BE A LIMITED LIABILITY COMPANY UNDER STATE LAW
TAXABLE UNDER THE CODE AS A DISREGARDED ENTITY OF INTERCONTINENTAL HOTELS GROUP
RESOURCES, INC.;

 

(II)  INTERCONTINENTAL HOTELS GROUP RESOURCES, INC. TO FAIL TO BE A CORPORATION
UNDER STATE LAW AND TAXABLE UNDER THE CODE AS AN ASSOCIATION; OR

 

(III)  A DIRECT OR INDIRECT SUBSIDIARY OF INTERCONTINENTAL HOTELS GROUP
RESOURCES, INC. TO BECOME A LESSEE OF PROPERTY OWNED BY PURCHASER OR ANY OF ITS
AFFILIATES.

 

(F)                                    WITHOUT THE PRIOR CONSENT OF OWNER, WHICH
CONSENT SHALL NOT BE UNREASONABLY WITHHELD, THE CANADIAN MANAGER AND MANAGER
SHALL NOT PERMIT:

 

(I)  THE CANADIAN MANAGER TO FAIL TO BE A CORPORATION UNDER CANADIAN PROVINCIAL
LAW TAXABLE UNDER THE CODE AS AN ASSOCIATION;

 

(II)  A DIRECT OR INDIRECT SUBSIDIARY OF THE CANADIAN MANAGER TO BECOME A LESSEE
OF PROPERTY OWNED BY PURCHASER OR ANY OF ITS AFFILIATES; OR

 

(III)  THE CANADIAN MANAGER OR MANAGER, FOR SO LONG AS PURCHASER OR OWNER OR ANY
AFFILIATE AS TO PURCHASER OR OWNER SHALL SEEK TO QUALIFY AS A “REAL ESTATE
INVESTMENT TRUST” UNDER THE CODE, TO BE REORGANIZED, RESTRUCTURED,

 

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COMBINED, MERGED OR AMALGAMATED WITH ANY AFFILIATE (AS TO MANAGER OR THE
CANADIAN MANAGER) IN SUCH MANNER THAT ANY SUCH AFFILIATE WOULD, OR IN
PURCHASER’S OR OWNER’S REASONABLE JUDGMENT COULD, BE EXPECTED TO ADVERSELY
AFFECT (INCLUDING, E.G., BY APPLICATION OF ANY PERSON’S ACTUAL “DISREGARDED
ENTITY” STATUS UNDER THE CODE) THE STATUS THAT BOTH MANAGER AND THE CANADIAN
MANAGER HAVE AS A CODE SECTION 856(D)(9)(A) ”ELIGIBLE INDEPENDENT CONTRACTOR” AT
A CODE SECTION 856(D)(9)(D) ”QUALIFIED LODGING FACILITY” OWNED OR LEASED BY
PURCHASER OR OWNER.

 

24.16                     ADVERSE REGULATORY EVENT.

 

(A)                                  IN THE EVENT OF AN ADVERSE REGULATORY EVENT
ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT, OWNER AND MANAGER SHALL WORK
TOGETHER IN GOOD FAITH TO AMEND THIS AGREEMENT TO ELIMINATE THE IMPACT OF SUCH
ADVERSE REGULATORY EVENT; PROVIDED, HOWEVER, MANAGER SHALL HAVE NO OBLIGATION TO
MATERIALLY REDUCE ITS RIGHTS OR MATERIALLY INCREASE ITS OBLIGATION UNDER THIS
AGREEMENT, ALL TAKEN AS A WHOLE, OR TO BEAR ANY OUT-OF-POCKET COSTS OR EXPENSES
UNDER THIS SECTION 24.16.  MANAGER SHALL NOT BE LIABLE IF ANY SUCH AMENDMENT,
ONCE OPERATIVE, FAILS TO HAVE THE DESIRED RESULT OF ELIMINATING THE IMPACT OF AN
ADVERSE REGULATORY EVENT.

 

(B)                                 FOR PURPOSES OF THIS AGREEMENT, THE TERM
“ADVERSE REGULATORY EVENT” MEANS ANY TIME THAT A NEW LAW, STATUTE, ORDINANCE,
CODE, RULE OR REGULATION (BUT NOT AN ADMINISTRATIVE OR JUDICIAL RULING) IMPOSES,
OR COULD IMPOSE IN OWNER’S OR PURCHASER’S REASONABLE OPINION, ANY MATERIAL
THREAT TO HPT’S STATUS AS A “REAL ESTATE INVESTMENT TRUST” UNDER THE CODE OR TO
THE TREATMENT OF AMOUNTS PAID TO PURCHASER UNDER THE LEASE AS “RENTS FROM REAL
PROPERTY” UNDER SECTION 856(D) OF THE CODE.

 

(C)                                  OWNER OR PURCHASER SHALL PROMPTLY INFORM
MANAGER OF ANY ADVERSE REGULATORY EVENT OF WHICH IT IS AWARE AND WHICH IT
BELIEVES LIKELY TO IMPAIR COMPLIANCE OF ANY OF THE HOTELS WITH RESPECT TO THE
AFOREMENTIONED SECTIONS OF THE CODE.

 

24.17                     ADVERSE CANADIAN EVENT.  IF, AS A RESULT OF THE
ADOPTION OF, MAKING OF OR CHANGE TO ANY TAX LAW, TAX REGULATION, TAX TREATY OR
OFFICIAL DIRECTIVE OR THE INTERPRETATION OR APPLICATION THEREOF BY ANY COURT OR
BY ANY GOVERNMENT AGENCY CHARGED WITH THE ADMINISTRATION THEREOF OR THE
COMPLIANCE WITH ANY GUIDELINE OR REQUEST OF ANY GOVERNMENT AGENCY (WHETHER OR
NOT HAVING THE FORCE OF LAW) OWNER AND PURCHASER DETERMINE IN GOOD FAITH THAT IT
IS NO LONGER CONSISTENT WITH THEIR BUSINESS GOALS TO CONTINUE TO OWN THE
CANADIAN HOTELS, THEN, SUBJECT TO

 

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THE TERMS AND CONDITIONS OF SECTION 4.7, OWNER AND PURCHASER MAY SELL ALL OF
THEIR INTEREST IN THE CANADIAN HOTELS (EITHER ON A POOLED BASIS OR
INDIVIDUALLY).  THE FOLLOWING SHALL APPLY EACH TIME OWNER AND PURCHASER DESIRE
TO SELL A CANADIAN HOTEL UNDER THIS SECTION 24.17:

 

(A)                                  OWNER AND PURCHASER SHALL FIRST OFFER TO
SELL SUCH CANADIAN HOTEL(S) TO MANAGER, WITHOUT REPRESENTATION OR WARRANTY, FOR
SUCH PURCHASE PRICE AS OWNER AND PURCHASER SHALL SPECIFY IN A WRITTEN NOTICE
GIVEN TO MANAGER.  IN THE EVENT THAT MANAGER SHALL FAIL TO ACCEPT OR REJECT SUCH
OFFER WITHIN TEN (10) BUSINESS DAYS AFTER RECEIPT OF SUCH NOTICE, SUCH OFFER
SHALL BE DEEMED TO BE REJECTED BY MANAGER.

 

(B)                                 IF MANAGER ACCEPTS AN OFFER MADE WITH
RESPECT TO ANY CANADIAN HOTEL PURSUANT TO THIS SECTION 24.17, THEN EFFECTIVE AS
OF THE DATE OF SUCH SALE, THE FOLLOWING SHALL APPLY: (I) PURCHASER SHALL DELIVER
TO MANAGER WITH RESPECT TO SUCH TRANSFERRED HOTEL(S) A DEED WITH COVENANTS
AGAINST GRANTOR’S ACTS; (II) MANAGER SHALL DELIVER TO PURCHASER THE PURCHASE
PRICE SPECIFIED IN THE OFFER; (III) THE TERM SHALL TERMINATE WITH RESPECT TO
SUCH TRANSFERRED HOTEL(S); (IV) NO FURTHER OWNER’S PERCENTAGE PRIORITY SHALL
ACCRUE WITH RESPECT TO THE GROSS REVENUES OF SUCH TRANSFERRED HOTEL(S) WHICH
ACCRUE AFTER SUCH TERMINATION; (V) THE OWNER’S FIRST PRIORITY SHALL BE REDUCED
BY AN AMOUNT EQUAL TO EIGHT AND ONE-HALF PERCENT (8.5%) OF THE NET (AFTER TAKING
INTO ACCOUNT ANY COSTS PAID BY MANAGER) PROCEEDS OF SALE RECEIVED BY OWNER OR
PURCHASER; AND (VI) THE OWNER’S SECOND PRIORITY SHALL BE REDUCED BY ONE PERCENT
(1.0%) OF SUCH NET PROCEEDS.

 

(C)                                  IF MANAGER REJECTS OR IS DEEMED TO HAVE
REJECTED ANY OFFER MADE WITH RESPECT TO ANY CANADIAN HOTEL(S) PURSUANT TO THIS
SECTION 24.17, THEN OWNER AND PURCHASER SHALL HAVE THE RIGHT, FOR A PERIOD OF
ONE (1) YEAR FROM THE DATE ON WHICH SUCH OFFER IS REJECTED OR DEEMED REJECTED,
TO SELL SUCH CANADIAN HOTEL(S) TO ANY THIRD PARTY PURCHASER ON SUCH TERMS AND
CONDITIONS AS OWNER AND PURCHASER SHALL DETERMINE IN THEIR SOLE DISCRETION;
PROVIDED, HOWEVER, IN NO EVENT SHALL THE PURCHASE PRICE WITH RESPECT TO SUCH
CANADIAN HOTEL(S) BE LESS THAN NINETY-FIVE PERCENT (95%) OF THE PURCHASE PRICE
OFFERED TO MANAGER UNDER THIS SECTION 24.17.  IF OWNER AND PURCHASER FAIL TO
CONSUMMATE THE SALE OF SUCH CANADIAN HOTEL(S) WITHIN ONE (1) YEAR FROM THE DATE
ON WHICH THEIR OFFER IS REJECTED OR DEEMED REJECTED, THEN OWNER AND PURCHASER
SHALL BE OBLIGATED AGAIN TO FIRST OFFER SUCH CANADIAN HOTEL(S) TO MANAGER IN
ACCORDANCE WITH THIS SECTION 24.17 PRIOR TO SELLING IT TO ANY THIRD PARTY.  IF
OWNER AND PURCHASER SELL SUCH CANADIAN HOTEL(S) TO ANY THIRD

 

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PARTY IN ACCORDANCE WITH THIS SECTION 24.17, THEN THE FOLLOWING SHALL APPLY:

 

(I)  SUBJECT TO THE EXECUTION OR DELIVERY OF A NEW MANAGEMENT AGREEMENT AS
PROVIDED BELOW, THIS AGREEMENT WITH RESPECT TO SUCH TRANSFERRED HOTEL(S) SHALL
BE TERMINATED EFFECTIVE AS OF THE DATE TITLE IS TRANSFERRED TO SUCH TRANSFERRED
HOTEL.

 

(II)  SIMULTANEOUSLY WITH SUCH TERMINATION, MANAGER AND THE TRANSFEREE OF SUCH
TRANSFERRED HOTEL(S) OR ANY TENANT UNDER A NEW LEASE WITH RESPECT TO SUCH
TRANSFERRED HOTEL(S) (WHICH NEW LEASE SHALL HAVE A TERM EQUAL TO THE THEN
UNEXPIRED TERM OF THE LEASE AND SHALL IMPOSE NO GREATER LIABILITY,
RESPONSIBILITY, OR OBLIGATION ON MANAGER THAN THE LEASE) SHALL ENTER INTO A NEW
MANAGEMENT AGREEMENT (A “NEW MANAGEMENT AGREEMENT”) WITH MANAGER ON
SUBSTANTIALLY THE SAME TERMS AS THIS AGREEMENT EXCEPT AS OTHERWISE PROVIDED
HEREIN FOR A TERM EQUAL TO THE UNEXPIRED PORTION OF THE TERM OF THIS AGREEMENT.

 

(III)  MANAGER, OWNER, PURCHASER AND THE TRANSFEREE (OR ITS TENANT), ACTING
REASONABLY, SHALL ALLOCATE AMOUNTS IN THE RESERVE ACCOUNT AND THE WORKING
CAPITAL BETWEEN SUCH TRANSFERRED HOTEL(S) AND THE OTHER HOTELS.  THE PARTIES
SHALL ALSO MAKE REASONABLE ALLOCATIONS WITH RESPECT TO OWNER’S FIXED PRIORITY,
AND ANY OUTSTANDING ADVANCES MADE BY OWNER, MANAGER OR THEIR RESPECTIVE
AFFILIATES.  ONLY FOR PURPOSES OF ALLOCATING OWNER’S FIXED PRIORITY BETWEEN THE
TRANSFERRED HOTEL(S) AND THE OTHER HOTELS, THE ALLOCATION OF OWNER’S FIRST
PRIORITY AND OWNER’S SECOND PRIORITY FOR EACH HOTEL SHALL BE PROPORTIONAL TO THE
NOI OF SUCH HOTEL(S) FOR THE THEN MOST RECENTLY ENDED THIRTY-SIX (36) MONTHS
RELATIVE TO THE NOI OF ALL THE OTHER HOTELS FOR SUCH PERIOD.  AMOUNTS WHICH ARE
ALLOCATED TO THE TRANSFERRED HOTEL(S) SHALL BE TRANSFERRED TO THE TRANSFEREE
THEREOF TO BE HELD BY MANAGER OR SUCH TRANSFEREE (OR ITS TENANT) PURSUANT TO THE
NEW MANAGEMENT AGREEMENT.

 

(IV)  FOLLOWING SUCH SALE OR TRANSFER, OWNER, ITS AFFILIATES AND THE HOTELS
WHICH ARE NOT TRANSFERRED HOTEL(S) SHALL HAVE NO RESPONSIBILITIES WITH RESPECT
TO AMOUNTS THAT ARE SO TRANSFERRED AND THE TRANSFEREE, ITS TENANT AND THEIR
AFFILIATES AND THE TRANSFERRED HOTEL(S) SHALL HAVE NO RESPONSIBILITY WITH
RESPECT TO AMOUNTS WHICH ARE NOT SO TRANSFERRED.

 

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(V)  FROM AND AFTER THE CONSUMMATION OF SUCH SALE OR OTHER TRANSFER AND
COMPLIANCE WITH THE TERMS HEREOF, THE TERM “HOTELS” AS USED HEREIN SHALL NOT
INCLUDE THE TRANSFERRED HOTEL(S).

 

(VI)  OWNER SHALL BE RESPONSIBLE TO CAUSE ITS AFFILIATES, ANY NEW TENANT AND THE
TRANSFEREE TO EXECUTE AND DELIVER THE DOCUMENTS CONTEMPLATED BY THIS
SECTION 24.17 TO BE EXECUTED AND DELIVERED BY THEM.

 

24.18                     COMMERCIAL LEASES.  MANAGER SHALL NOT ENTER INTO ANY
SUBLEASE WITH RESPECT TO ANY HOTEL (OR ANY PART THEREOF) UNLESS THE SAME HAS
BEEN APPROVED BY PURCHASER IN ITS SOLE AND ABSOLUTE DISCRETION; PROVIDED,
HOWEVER, MANAGER MAY SUBLEASE OR GRANT CONCESSIONS OR LICENSES TO SHOPS OR ANY
OTHER SPACE AT A HOTEL SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
(A) SUBLEASES AND CONCESSIONS ARE FOR NEWSSTAND, GIFT SHOP, PARKING GARAGE,
HEATH CLUB, RESTAURANT, BAR OR COMMISSARY PURPOSES OR SIMILAR CONCESSIONS;
(B) SUCH SUBLEASES AND CONCESSIONS DO NOT HAVE A TERM IN EXCESS OF THE LESSER OF
FIVE (5) YEARS OR THE REMAINING TERM UNDER THIS AGREEMENT; (C) SUCH SUBLEASES
AND CONCESSIONS DO NOT DEMISE, (I) IN THE AGGREGATE, IN EXCESS OF FIVE THOUSAND
(5,000) SQUARE FEET OF ANY HOTEL, OR (II) FOR ANY SINGLE SUBLEASE, IN EXCESS OF
ONE THOUSAND (1,000) SQUARE FEET OF ANY HOTEL; (D) ANY SUCH SUBLEASE, LICENSE OR
CONCESSION TO AN AFFILIATE OF A MANAGER SHALL BE ON TERMS CONSISTENT WITH THOSE
THAT WOULD BE REACHED THROUGH ARMS-LENGTH NEGOTIATION; (E) FOR SO LONG AS
PURCHASER OR ANY AFFILIATE OF PURCHASER SHALL SEEK TO QUALIFY AS A REAL ESTATE
INVESTMENT TRUST UNDER THE CODE, ANYTHING CONTAINED IN THIS AGREEMENT TO THE
CONTRARY NOTWITHSTANDING, MANAGER SHALL NOT SUBLET OR OTHERWISE ENTER INTO ANY
AGREEMENT WITH RESPECT TO A HOTEL ON ANY BASIS SUCH THAT IN THE OPINION OF THE
OWNER THE RENTAL OR OTHER FEES TO BE PAID BY ANY SUBLESSEE THEREUNDER WOULD BE
BASED, IN WHOLE OR IN PART, ON EITHER (I) THE INCOME OR PROFITS DERIVED BY THE
BUSINESS ACTIVITIES OF SUCH SUBLESSEE, OR (II) ANY OTHER FORMULA SUCH THAT ANY
PORTION OF SUCH SUBLEASE RENTAL WOULD FAIL TO QUALIFY AS “RENTS FROM REAL
PROPERTY” WITHIN THE MEANING OF SECTION 865(D) OF THE CODE OR ANY SIMILAR OR
SUCCESSOR PROVISION THERETO; (F) SUCH LEASE OR CONCESSION WILL NOT VIOLATE OR
AFFECT ANY LEGAL REQUIREMENT OR INSURANCE REQUIREMENT; (G) MANAGER SHALL OBTAIN
OR CAUSE THE SUBTENANT TO OBTAIN SUCH ADDITIONAL INSURANCE COVERAGE APPLICABLE
TO THE ACTIVITIES TO BE CONDUCTED IN SUCH SUBLEASED SPACE AS OWNER AND ANY
MORTGAGEE UNDER AN AUTHORIZED MORTGAGE MAY REASONABLY REQUIRE; AND (H) NOT LESS
THAN TWENTY (20) DAYS PRIOR TO THE DATE ON WHICH MANAGER

 

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PROPOSES TO ENTER INTO ANY SUBLEASE OR CONCESSION, MANAGER SHALL PROVIDE A COPY
THEREOF TO OWNER.

 

24.19                     NONLIABILITY OF TRUSTEES.  THE DECLARATION OF TRUST
ESTABLISHING HPT IHG-2 PROPERTIES TRUST, A COPY OF WHICH, TOGETHER WITH ALL
AMENDMENTS THERETO (COLLECTIVELY, THE “DECLARATION”), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT,
AND MANAGER HEREBY AGREES THAT, THE NAME “HPT IHG-2 PROPERTIES TRUST” REFERS TO
THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR THE
PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION OF, OR CLAIM AGAINST,
SUCH ENTITY.  ALL PERSONS DEALING WITH SUCH ENTITY, IN ANY WAY, SHALL LOOK ONLY
TO THE ASSETS OF SUCH ENTITY FOR THE SATISFACTION OF ANY OBLIGATION.

 

24.20                     ARBITRATION.

 

(A)                                  WHENEVER IN THIS AGREEMENT IT IS PROVIDED
THAT A DISPUTE IS TO BE RESOLVED BY AN ARBITRATION, SUCH DISPUTE SHALL BE
FINALLY RESOLVED PURSUANT TO AN ARBITRATION BEFORE A PANEL OF THREE
(3) ARBITRATORS WHO WILL CONDUCT THE ARBITRATION PROCEEDING IN ACCORDANCE WITH
THE PROVISIONS OF THIS AGREEMENT AND THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION.  UNLESS OTHERWISE MUTUALLY AGREED BY OWNER AND MANAGER, THE
ARBITRATION PROCEEDINGS WILL BE CONDUCTED IN NEW YORK, NEW YORK.  ALL
ARBITRATORS APPOINTED BY OR ON BEHALF OF EITHER PARTY SHALL BE INDEPENDENT
PERSONS WITH RECOGNIZED EXPERTISE IN THE OPERATION OF HOTELS OF SIMILAR SIZE AND
CLASS AS THE HOTELS WITH NOT LESS THAN FIVE (5) YEARS’ EXPERIENCE IN THE HOTEL
INDUSTRY.  THE PARTY DESIRING ARBITRATION WILL GIVE WRITTEN NOTICE TO THAT
EFFECT TO THE OTHER PARTY, SPECIFYING IN SUCH NOTICE THE NAME, ADDRESS AND
PROFESSIONAL QUALIFICATIONS OF THE PERSON DESIGNATED AS ARBITRATOR ON ITS
BEHALF.  WITHIN FIFTEEN (15) DAYS AFTER SERVICE OF SUCH NOTICE, THE OTHER PARTY
WILL GIVE WRITTEN NOTICE TO THE PARTY DESIRING SUCH ARBITRATION SPECIFYING THE
NAME, ADDRESS AND PROFESSIONAL QUALIFICATIONS OF THE PERSON DESIGNATED TO ACT AS
ARBITRATOR ON ITS BEHALF.  THE TWO ARBITRATORS WILL, WITHIN FIFTEEN (15) DAYS
THEREAFTER, SELECT A THIRD, NEUTRAL ARBITRATOR.  AS SOON AS POSSIBLE AFTER THE
SELECTION OF THE THIRD ARBITRATOR, AND NO LATER THAN FIFTEEN (15) DAYS
THEREAFTER, THE PARTIES WILL SUBMIT THEIR POSITIONS ON EACH DISPUTED ITEM IN
WRITING TO THE THREE ARBITRATORS.  THE DECISION OF THE ARBITRATORS SO CHOSEN
SHALL BE GIVEN WITHIN A PERIOD OF TWENTY (20) DAYS AFTER THE APPOINTMENT OF SUCH
THIRD ARBITRATOR.  THE ARBITRATORS MUST, BY MAJORITY VOTE, AGREE UPON AND
APPROVE

 

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THE SUBSTANTIVE POSITION OF EITHER OWNER OR MANAGER WITH RESPECT TO EACH
DISPUTED ITEM, AND ARE NOT AUTHORIZED TO AGREE UPON OR IMPOSE ANY OTHER
SUBSTANTIVE POSITION WHICH HAS NOT BEEN PRESENTED TO THE ARBITRATORS BY MANAGER
OR OWNER.  IT IS THE INTENTION OF THE PARTIES THAT THE ARBITRATORS RULE ONLY ON
THE SUBSTANTIVE POSITIONS SUBMITTED TO THEM BY THE PARTIES AND THE ARBITRATORS
ARE NOT AUTHORIZED TO RENDER RULINGS WHICH ARE A COMPROMISE AS TO ANY SUCH
SUBSTANTIVE POSITION.  A DECISION IN WHICH ANY TWO (2) ARBITRATORS SO APPOINTED
AND ACTING HEREUNDER CONCUR IN WRITING WITH RESPECT TO EACH DISPUTED ITEM SHALL
IN ALL CASES BE BINDING AND CONCLUSIVE UPON OWNER AND MANAGER AND A COPY OF SAID
DECISION SHALL BE FORWARDED TO THE PARTIES.  THE PARTIES WILL REQUEST THAT THE
ARBITRATORS ASSESS THE COSTS AND EXPENSES OF THE ARBITRATION AND THEIR FEES
AGAINST THE PARTIES BASED ON A FINDING AS TO WHICH PARTIES’ SUBSTANTIVE
POSITIONS WERE NOT UPHELD.  OTHERWISE THE FEES AND EXPENSES OF THE ARBITRATION
WILL BE TREATED AS AN OPERATING COST UNLESS OTHERWISE DETERMINED BY THE
ARBITRATORS.

 

(B)                                 IF THE PARTY RECEIVING A REQUEST FOR
ARBITRATION FAILS TO APPOINT ITS ARBITRATOR WITHIN THE TIME ABOVE SPECIFIED, OR
IF THE TWO ARBITRATORS SO SELECTED CANNOT AGREE ON THE SELECTION OF THE THIRD
ARBITRATOR WITHIN THE TIME ABOVE SPECIFIED, THEN EITHER PARTY, ON BEHALF OF BOTH
PARTIES, MAY REQUEST SUCH APPOINTMENT OF SUCH SECOND OR THIRD ARBITRATOR, AS THE
CASE MAY BE, BY APPLICATION TO ANY JUDGE OF ANY COURT IN NEW YORK COUNTY, NEW
YORK OF COMPETENT JURISDICTION UPON TEN (10) DAYS’ PRIOR WRITTEN NOTICE TO THE
OTHER PARTY OF SUCH INTENT.

 

(C)                                  IF THERE SHALL BE A DISPUTE WITH RESPECT TO
WHETHER A PARTY HAS UNREASONABLY WITHHELD, CONDITIONED OR DELAYED ITS CONSENT
WITH RESPECT TO A MATTER FOR WHICH SUCH PARTY HAS AGREED HEREIN NOT TO
UNREASONABLY WITHHOLD ITS CONSENT, SUCH DISPUTE SHALL BE RESOLVED BY
ARBITRATION.

 

(D)                                 ANY DISPUTES UNDER SECTIONS 2.1 OR 7.6 SHALL
BE RESOLVED BY ARBITRATION; PROVIDED, HOWEVER, NOTWITHSTANDING THE FOREGOING,
OWNER SHALL BE ENTITLED TO SEEK AND OBTAIN INJUNCTIVE AND OTHER EQUITABLE RELIEF
IF IT BELIEVES THERE HAS BEEN A BREACH OF MANAGER’S OBLIGATION UNDER EITHER OF
SAID SECTIONS.

 

24.21                     ESTOPPEL CERTIFICATES.  EACH PARTY TO THIS AGREEMENT
SHALL AT ANY TIME AND FROM TIME TO TIME, UPON NOT LESS THAN FIFTEEN (15) DAYS’
PRIOR NOTICE FROM THE OTHER PARTY, EXECUTE, ACKNOWLEDGE AND DELIVER TO SUCH
OTHER PARTY, OR TO ANY THIRD PARTY SPECIFIED BY SUCH OTHER PARTY, A STATEMENT IN
WRITING:  (A) CERTIFYING THAT THIS AGREEMENT IS UNMODIFIED AND IN FULL FORCE AND
EFFECT (OR IF THERE HAVE BEEN MODIFICATIONS,

 

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THAT THE SAME, AS MODIFIED, IS IN FULL FORCE AND EFFECT AND STATING THE
MODIFICATIONS); (B) STATING WHETHER OR NOT TO THE BEST KNOWLEDGE OF THE
CERTIFYING PARTY (I) THERE IS A CONTINUING DEFAULT BY THE NON-CERTIFYING PARTY
IN THE PERFORMANCE OR OBSERVANCE OF ANY COVENANT, AGREEMENT OR CONDITION
CONTAINED IN THIS AGREEMENT, OR (II) THERE SHALL HAVE OCCURRED ANY EVENT WHICH,
WITH THE GIVING OF NOTICE OR PASSAGE OF TIME OR BOTH, WOULD BECOME SUCH A
DEFAULT, AND, IF SO, SPECIFYING EACH SUCH DEFAULT OR OCCURRENCE OF WHICH THE
CERTIFYING PARTY MAY HAVE KNOWLEDGE; (C) STATING THE DATE TO WHICH DISTRIBUTIONS
OF OPERATING PROFITS HAVE BEEN MADE; AND (D) STATING SUCH OTHER INFORMATION AS
THE NON-CERTIFYING PARTY MAY REASONABLY REQUEST.  SUCH STATEMENT SHALL BE
BINDING UPON THE CERTIFYING PARTY AND MAY BE RELIED UPON BY THE NON-CERTIFYING
PARTY AND/OR SUCH THIRD PARTY SPECIFIED BY THE NON-CERTIFYING PARTY AS
AFORESAID, INCLUDING, WITHOUT LIMITATION, ITS AND ITS AFFILIATES’ LENDERS AND
ANY PROSPECTIVE PURCHASER OR MORTGAGEE OF ANY HOTEL.

 

24.22                     CONFIDENTIALITY.

 

(A)                                  THE PARTIES HERETO AGREE THAT THE MATTERS
SET FORTH IN THIS AGREEMENT AND THE INFORMATION PROVIDED PURSUANT TO THE TERMS
HEREOF ARE STRICTLY CONFIDENTIAL AND EACH PARTY WILL MAKE EVERY EFFORT TO ENSURE
THAT THE INFORMATION IS NOT DISCLOSED TO ANY OUTSIDE PERSON OR ENTITIES
(INCLUDING THE PRESS) WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY
EXCEPT AS MAY BE REQUIRED BY LAW AND AS MAY BE REASONABLY NECESSARY TO OBTAIN
LICENSES, PERMITS, AND OTHER PUBLIC APPROVALS NECESSARY FOR THE REFURBISHMENT OR
OPERATION OF THE HOTELS, OR IN CONNECTION WITH FINANCING, PROPOSED FINANCING,
SALE OR PROPOSED SALE OR AS MAY BE REQUIRED PURSUANT TO ANY GROUND LEASE OF THE
HOTELS.

 

(B)                                 NO REFERENCE TO MANAGER OR TO ANY OF ITS
AFFILIATES WILL BE MADE IN ANY PROSPECTUS, PRIVATE PLACEMENT MEMORANDUM,
OFFERING CIRCULAR OR OFFERING DOCUMENTATION RELATED THERETO (COLLECTIVELY
REFERRED TO AS THE “PROSPECTUS”), ISSUED BY OWNER OR ANY OF ITS AFFILIATES,
WHICH IS DESIGNATED TO INTEREST POTENTIAL INVESTORS IN A HOTEL, UNLESS MANAGER
HAS PREVIOUSLY RECEIVED A COPY OF ALL SUCH REFERENCES.  HOWEVER, REGARDLESS OF
WHETHER MANAGER DOES OR DOES NOT SO RECEIVE A COPY OF ALL SUCH REFERENCES,
NEITHER MANAGER NOR ANY OF ITS AFFILIATES WILL BE DEEMED A SPONSOR OF THE
OFFERING DESCRIBED IN THE PROSPECTUS, NOR WILL IT HAVE ANY RESPONSIBILITY FOR
THE PROSPECTUS, AND THE PROSPECTUS WILL SO STATE.  UNLESS MANAGER AGREES IN
ADVANCE, THE PROSPECTUS WILL NOT INCLUDE ANY TRADEMARK, SYMBOLS, LOGOS OR
DESIGNS OF MANAGER OR ANY OF ITS AFFILIATES.

 

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(C)                                  NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT, THE PARTIES (AND EACH EMPLOYEE, REPRESENTATIVE, OR
OTHER AGENT OF THE PARTIES) MAY DISCLOSE TO ANY AND ALL PERSONS, WITHOUT
LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF THE TRANSACTION,
AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSES) THAT
ARE PROVIDED TO THE TAXPAYER RELATING TO SUCH TAX TREATMENT AND TAX STRUCTURE;
PROVIDED, HOWEVER, THAT NEITHER PARTY (NOR ANY EMPLOYEE, REPRESENTATIVE OR OTHER
AGENT THEREOF) MAY DISCLOSE ANY INFORMATION THAT IS NOT NECESSARY TO
UNDERSTANDING THE TAX TREATMENT AND TAX STRUCTURE OF THE TRANSACTION (INCLUDING
THE IDENTITY OF THE PARTIES AND ANY INFORMATION THAT COULD LEAD ANOTHER TO
DETERMINE THE IDENTITY OF THE PARTIES), OR ANY OTHER INFORMATION TO THE EXTENT
THAT SUCH DISCLOSURE COULD RESULT IN A VIOLATION OF ANY FEDERAL OR STATE
SECURITIES LAW.

 

24.23                     HOTEL WARRANTIES.  MANAGER SHALL BE ENTITLED TO, AND
SHALL, ENFORCE IN THE NAME OF OWNER, ITS AFFILIATES OR ANY OF MANAGER’S
AFFILIATES, ANY WARRANTIES HELD BY OWNER OR SUCH AFFILIATES WITH RESPECT TO THE
HOTELS OR ANY PORTION THEREOF.

 

24.24                     CURRENCY.

 

(A)                                  EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
HEREIN, EACH REFERENCE HEREIN TO ANY DOLLAR AMOUNT IS A REFERENCE TO SUCH AMOUNT
OF UNITED STATES DOLLARS.  ALL REMITTANCES TO OWNER HEREUNDER SHALL BE IN UNITED
STATES DOLLARS.  TO THE EXTENT THAT ANY AMOUNT TO BE SO REMITTED TO OWNER OR
TRANSFERRED TO THE RESERVE ACCOUNT IS HELD BY MANAGER IN ANOTHER CURRENCY,
MANAGER SHALL EXCHANGE SUCH CURRENCY TO UNITED STATES DOLLARS, AT THE BEST RATES
THEN COMMERCIALLY REASONABLY AVAILABLE TO MANAGER AT THE TIME OF SUCH EXCHANGE
FOR SUCH PURPOSE, AND ALL COSTS OF SUCH EXCHANGE SHALL BE AN OPERATING COST. 
MANAGER SHALL BEAR NO RISK OR RESPONSIBILITY AND MAKES HEREIN NO COVENANT OF
PROTECTION TO OWNER IN RESPECT OF EXCHANGE RATE MOVEMENTS WHICH MAY WORK
ADVERSELY TO THE INTERESTS OF OWNER HEREUNDER.

 

(B)                                 ALL REVENUES AND EXPENSES OF THE HOTELS
WHICH ARE DENOMINATED IN A CURRENCY OTHER THAN UNITED STATES DOLLARS SHALL BE
RECORDED AND REPORTED BOTH IN UNITED STATES DOLLARS AND IN THE CURRENCY(IES) IN
WHICH SUCH AMOUNTS ARE EARNED OR EXPENDED.  SUCH OTHER CURRENCY(IES) SHALL BE
CONVERTED TO UNITED STATES DOLLARS USING A REASONABLE METHOD CONSISTENT WITH THE
ACCOUNTING PRINCIPLES THEN EMPLOYED BY MANAGER AND ITS AFFILIATES WHEN
ACCOUNTING FOR FOREIGN CURRENCIES.

 

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24.25                     BALTIMORE HOTEL.

 

(A)                                  THE PARTIES HERETO ACKNOWLEDGE AND AGREE
THAT THE BALTIMORE HOTEL IS PART OF A LARGER MULTI-USE DEVELOPMENT THAT INCLUDES
THE BALTIMORE PARKING GARAGE, AN OFFICE BUILDING AND RESIDENTIAL CONDOMINIUMS
AND THAT, FOR PURPOSES OF THIS AGREEMENT, THE BALTIMORE HOTEL INCLUDES ONLY
CERTAIN SPECIFIC ELEMENTS OF THAT DEVELOPMENT.  THE PARTIES HERETO ACKNOWLEDGE
AND AGREE THAT CERTAIN BUILDING SYSTEMS AND COSTS ARE SHARED AMONG THE VARIOUS
ELEMENTS OF SUCH DEVELOPMENT AND THAT OWNER’S AFFILIATE OWNS OTHER ELEMENTS IN
THE DEVELOPMENT BESIDES THE BALTIMORE HOTEL.  FURTHER, SHARED COSTS ARE
ALLOCATED AMONGST THE VARIOUS ELEMENTS OF THE DEVELOPMENT IN ACCORDANCE WITH THE
TERMS AND CONDITIONS OF THE BALTIMORE DECLARATION AND THE BALTIMORE MAINTENANCE
MEMORANDUM.  IF A DISPUTE SHOULD EVER ARISE BETWEEN OWNER AND OWNER’S AFFILIATE,
ON THE ONE HAND, AND MANAGER, ON THE OTHER HAND, WITH RESPECT TO THE ALLOCATION
OF COSTS BETWEEN THE BALTIMORE HOTEL AND THE OTHER ELEMENTS IN THE DEVELOPMENT
OR WITH RESPECT TO THE PROPER CLASSIFICATION OF ANY ELEMENT OF THE DEVELOPMENT
AS A PORTION OF THE BALTIMORE HOTEL OR ANY OF THE OTHER ELEMENTS IN THE
DEVELOPMENT, AND THE PARTIES ARE NOT ABLE TO RESOLVE SUCH DISPUTE WITHIN THIRTY
(30) CALENDAR DAYS AFTER IT ARISES, SUCH DISPUTE SHALL BE SUBJECT TO ARBITRATION
IN ACCORDANCE WITH SECTION 24.20.

 

(B)                                 TO THE EXTENT THAT MANAGER INCURS ANY
PERSONAL LIABILITY OR ANY PERSONAL OBLIGATION TO OWNER PURSUANT TO THIS
AGREEMENT WITH RESPECT TO ANY MATTER THAT IS (IN THE REASONABLE OPINION OF
OWNER) COVERED OR OFF-SET BY ANY LIABILITY, OBLIGATION, REPRESENTATION,
WARRANTY, COVENANT OR INDEMNITY FROM BALTIMORE SELLER PURSUANT TO THE BALTIMORE
PURCHASE AGREEMENT, THEN OWNER AGREES TO CAUSE OWNER’S AFFILIATE TO LOOK TO THE
REMEDIES AFFORDED TO IT PURSUANT TO THE BALTIMORE PURCHASE AGREEMENT PRIOR TO
LOOKING TO ANY REMEDIES AFFORDED TO OWNER UNDER THIS AGREEMENT.  TO THE EXTENT
THAT MANAGER REASONABLY INCURS ANY COST WHICH CONSTITUTES AN OPERATING COST WITH
RESPECT TO ANY MATTER THAT IS (IN THE REASONABLE OPINION OF OWNER) COVERED OR
OFF-SET BY ANY LIABILITY, OBLIGATION, REPRESENTATION, WARRANTY, COVENANT OR
INDEMNITY FROM THE BALTIMORE SELLERS PURSUANT TO THE BALTIMORE PURCHASE
AGREEMENT, THEN OWNER AND MANAGER AGREE TO TREAT SUCH COST AS AN OPERATING COST;
PROVIDED, HOWEVER, OWNER AGREES TO CAUSE OWNER’S AFFILIATE TO LOOK TO THE
REMEDIES AFFORDED TO IT PURSUANT TO THE BALTIMORE PURCHASE AGREEMENT AND, SHOULD
ANY AMOUNT BE RECOVERED AGAINST THE BALTIMORE SELLER PURSUANT TO THE BALTIMORE
PURCHASE AGREEMENT, THEN SUCH AMOUNT SHALL BE INCLUDED IN GROSS REVENUES IN THE
YEAR IN WHICH SUCH AMOUNT IS RECOVERED; PROVIDED, HOWEVER, ALL COSTS INCURRED BY
OWNER OR OWNER’S AFFILIATE IN PURSUING ANY ACTIONS AGAINST THE BALTIMORE SELLER
(INCLUDING, WITHOUT LIMITATION,

 

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REASONABLE ATTORNEYS’ FEES), SHALL BE TREATED AS AN OPERATING COST WITH RESPECT
TO THE BALTIMORE HOTEL.

 

(C)                                  MANAGER ACKNOWLEDGES AND AGREES THAT,
SUBJECT TO THE PROVISIONS OF SECTION 24.26(A) REGARDING THE USE OF THE BALTIMORE
VALET PARKING AREAS AND THE PROVISIONS OF SECTION 24.26 REGARDING THE BALTIMORE
GENERAL PARKING LICENSE AND THE BALTIMORE EMPLOYEE PARKING LICENSE, OWNER AND
OWNER’S AFFILIATES SHALL BE FREE TO SELL AND CONVEY SUCH OTHER PORTIONS OF THE
DEVELOPMENT IN WHICH THE BALTIMORE HOTEL IS LOCATED AS ARE NOT INCLUDED WITHIN
THE BALTIMORE HOTEL (INCLUDING, WITHOUT LIMITATION, THE BALTIMORE PARKING GARAGE
AND THE “OFFICE BUILDING” AS SUCH TERM IS DEFINED IN THE DECLARATION).

 

24.26                     PARKING AT THE BALTIMORE HOTEL.

 

(A)                                  OWNER AND MANAGER ACKNOWLEDGE AND AGREE
THAT THE BALTIMORE VALET PARKING AREAS AND THE BALTIMORE VACANT PARCELS ARE
INCLUDED AS PART OF THE BALTIMORE HOTEL AND ARE CURRENTLY USED FOR VALET PARKING
FOR THE GUESTS, PATRONS AND OTHER USERS OF THE BALTIMORE HOTEL AND ITS
RESTAURANTS AND OTHER FACILITIES.  IN CONNECTION WITH THE USE OF THE BALTIMORE
VALET PARKING AREAS, MANAGER SHALL PAY, AS OPERATING COSTS ON BEHALF OF OWNER, A
FEE OF $4,408 PER FISCAL MONTH (THE “BALTIMORE VALET LICENSE FEE”) TO THE OWNER
OF THE BALTIMORE PARKING GARAGE (WHICH MAY BE AN AFFILIATE OF OWNER) OR ITS
OPERATOR, AS SUCH PARTIES MAY DIRECT.  THE BALTIMORE PARKING FEE SHALL BE PAID
ON OR BEFORE THE FIRST DAY OF EACH FISCAL MONTH IN ADVANCE.  OWNER ACKNOWLEDGES
AND AGREES THAT MANAGER SHALL HAVE CONTINUOUS ACCESS TO THE BALTIMORE VALET
PARKING AREAS AND THE BALTIMORE VACANT PARCELS, SUBJECT TO AND IN ACCORDANCE
WITH ALL OF THE TERMS AND CONDITIONS OF THIS AGREEMENT.  IN ADDITION, OWNER
ACKNOWLEDGES AND AGREES THAT MANAGER SHALL HAVE THE AUTHORITY TO DESIGNATE ANY
SPACES WITHIN THE BALTIMORE VALET PARKING AREAS AND THE BALTIMORE VACANT PARCELS
AS RESERVED SPACES AND MANAGER SHALL HAVE THE AUTHORITY TO OPERATE THE BALTIMORE
VALET PARKING AREAS AND THE BALTIMORE VACANT PARCELS AS PART OF THE BALTIMORE
HOTEL, SUBJECT TO AND IN ACCORDANCE WITH ALL OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT.  NOTWITHSTANDING THE FACT THAT THE BALTIMORE VALET PARKING AREAS ARE
CONSIDERED A PART OF THE BALTIMORE HOTEL FOR PURPOSES OF THIS AGREEMENT, THE
OWNER OR THE OPERATOR OF THE BALTIMORE PARKING GARAGE SHALL BE RESPONSIBLE FOR
PAYMENT OF ALL COSTS, EXPENSES, TAXES, CHARGES, CAPITAL EXPENDITURES, AND OTHER
CHARGES, COSTS AND EXPENSES RELATED TO THE OWNERSHIP AND GENERAL MAINTENANCE OF
THE BALTIMORE VALET PARKING AREAS (AS OPPOSED TO THE BALTIMORE VACANT PARCELS);
PROVIDED, HOWEVER, IN ALL EVENTS MANAGER SHALL BE RESPONSIBLE FOR THE COST OF
OPERATING THE BALTIMORE VALET PARKING AREAS AND

 

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FOR PERFORMING ANY IMPROVEMENTS OR ALTERATIONS THEREON OR THEREIN IN ACCORDANCE
WITH THE TERMS OF THIS AGREEMENT.

 

(B)                                 OWNER AND MANAGER ACKNOWLEDGE AND AGREE THAT
THE PARKING SPACES LOCATED WITHIN BALTIMORE VALET PARKING AREAS AND THE
BALTIMORE VACANT PARCELS WILL NOT BE SUFFICIENT TO PROVIDE PARKING FOR ALL
GUESTS, PATRONS AND OTHER USERS OF THE BALTIMORE HOTEL AT ALL TIMES AND THAT
THERE WILL BE TIMES WHEN THE GUESTS, PATRONS AND OTHER USERS OF THE BALTIMORE
HOTEL WILL NEED TO USE PARKING SPACES WITHIN THE BALTIMORE PARKING GARAGE (IN
ADDITION TO THE BALTIMORE VALET PARKING AREAS AND THE BALTIMORE VACANT PARCELS)
FOR VEHICULAR PARKING PURPOSES SUCH AS SELF-PARKING, VALET OVERFLOW PARKING,
BANQUET/FUNCTION PARKING, RESTAURANT/LOUNGE PARKING AND VENDOR PARKING. 
ACCORDINGLY, OWNER HAS SECURED FROM OWNER’S AFFILIATE WHICH OWNS THE BALTIMORE
PARKING GARAGE, AND OWNER HEREBY IRREVOCABLY AUTHORIZES AND LICENSES MANAGER TO
USE, ON OWNER’S BEHALF, A LICENSE TO USE ONE OR MORE PARKING SPACES IN THE
BALTIMORE PARKING GARAGE ON UP TO 14,250 SEPARATE OCCASIONS IN THE AGGREGATE
OVER THE COURSE OF EACH FISCAL YEAR (THE “BALTIMORE GENERAL PARKING LICENSE”). 
EACH OCCASION OR USE OF A PARKING SPACE IN THE BALTIMORE PARKING GARAGE PURSUANT
TO THE BALTIMORE GENERAL PARKING LICENSE SHALL BE EVIDENCED AND DOCUMENTED BY A
SEPARATE PARKING “TICKET” OR OTHER DOCUMENTATION REASONABLY SATISFACTORY TO
OWNER AND THE OWNER OR OPERATOR OF THE BALTIMORE PARKING GARAGE.  FOR PURPOSES
OF CALCULATING THE NUMBER OF OCCASIONS OR USES WHICH REMAIN OUTSTANDING UNDER
THE BALTIMORE GENERAL PARKING LICENSE, OWNER AND MANAGER ACKNOWLEDGE AND AGREE
THAT OVERNIGHT HOTEL GUESTS SHALL HAVE “IN AND OUT” PRIVILEGES WITH RESPECT TO
THE BALTIMORE PARKING GARAGE AND EACH NIGHT FOR WHICH AN OVERNIGHT HOTEL GUEST
PARKS A CAR IN THE BALTIMORE PARKING GARAGE SHALL CONSTITUTE ONE SEPARATE
OCCASION OR USE UNDER THE BALTIMORE GENERAL PARKING.  THE USE OF PARKING SPACES
IN THE BALTIMORE PARKING GARAGE PURSUANT TO THE BALTIMORE GENERAL PARKING
LICENSE SHALL BE ON A FIRST-COME, FIRST-SERVED BASIS IN COMMON WITH MEMBERS OF
THE GENERAL PUBLIC.  IN CONNECTION WITH THE BALTIMORE GENERAL PARKING LICENSE,
MANAGER SHALL PAY, AS OPERATING COSTS ON BEHALF OF OWNER, A FEE FOR THE USE OF
SUCH PARKING SPACES AS SET FORTH ON EXHIBIT F ATTACHED HERETO AND MADE A PART
HEREOF, WHICH FEES SHALL BE SUBJECT TO INCREASE AS SET FORTH ON EXHIBIT F (AS
SUCH CHARGES MAY BE INCREASED FROM TIME TO TIME, THE “BALTIMORE GENERAL PARKING
LICENSE FEES”).  THE BALTIMORE GENERAL PARKING LICENSE FEES SHALL BE PAID BY
MANAGER TO THE OWNER OR OPERATOR OF THE BALTIMORE PARKING GARAGE (WHICH MAY BE
AN AFFILIATE OF OWNER) WITHIN TEN (10) BUSINESS DAYS AFTER THE END OF EACH
FISCAL MONTH.  MANAGER SHALL KEEP A SEPARATE RECORD OF THE NUMBER OF

 

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OCCURRENCES OR USES OF THE BALTIMORE GENERAL PARKING LICENSE AND SHALL PROVIDE
SUCH INFORMATION TO THE OWNER TOGETHER WITH THE OPERATING STATEMENTS TO BE
PROVIDED UNDER SECTION 8.1(B).  ONCE THE ENTIRE ALLOTMENT OF USES OR OCCASIONS
PURSUANT TO THE BALTIMORE GENERAL PARKING LICENSE IN ANY GIVEN FISCAL YEAR HAS
BEEN USED, MANAGER, ON BEHALF OF OWNER, SHALL NEGOTIATE DIRECTLY WITH THE OWNER
AND/OR OPERATOR OF THE BALTIMORE PARKING GARAGE REGARDING THE TERMS AND
CONDITIONS ON WHICH MANAGER, ON BEHALF OF OWNER, MAY USE THE BALTIMORE PARKING
GARAGE FOR THE REMAINDER OF SUCH FISCAL YEAR; PROVIDED, HOWEVER, THAT FOR THE
2006 FISCAL YEAR, OWNER SHALL CAUSE THE OWNER AND/OR OPERATOR OF THE BALTIMORE
PARKING GARAGE NOT TO CHARGE MORE THAN THE BALTIMORE GENERAL PARKING LICENSE
FEES FOR SUCH ADDITIONAL PARKING PRIVILEGES.  THE TERM OF THE BALTIMORE GENERAL
PARKING LICENSE SHALL BE COTERMINOUS WITH THE TERM OF THIS AGREEMENT WITH
RESPECT TO THE BALTIMORE HOTEL.

 

(C)                                  IN ADDITION TO THE BALTIMORE GENERAL
PARKING LICENSE, OWNER HAS SECURED FROM OWNER’S AFFILIATE WHICH OWNS THE
BALTIMORE PARKING GARAGE, AND OWNER HEREBY IRREVOCABLY AUTHORIZES AND LICENSES
MANAGER TO USE, ON OWNER’S BEHALF, A LICENSE TO USE A TOTAL OF EIGHTY-TWO (82)
PARKING SPACES (THE “BALTIMORE EMPLOYEE PARKING LICENSE”) WITHIN THE BALTIMORE
PARKING GARAGE FOR MONTHLY PARKING FOR MANAGER’S EMPLOYEES.  THE FIRST FORTY-SIX
(46) SUCH SPACES SHALL BE MADE AVAILABLE AT A RATE OF $86.00 PER MONTH AND THE
REMAINING THIRTY-SIX (36) SUCH SPACES SHALL BE MADE AVAILABLE AT A RATE OF
$46.00 PER MONTH (THE “BALTIMORE EMPLOYEE PARKING LICENSEE FEE”); PROVIDED,
HOWEVER, THAT COMMENCING ON JANUARY 1, 2007 AND ON EVERY FIFTH (5TH) ANNIVERSARY
OF SUCH DATE THEREAFTER THROUGHOUT THE TERM WITH RESPECT TO THE BALTIMORE HOTEL,
THE BALTIMORE EMPLOYEE PARKING LICENSE FEE SHALL BE ADJUSTED UPWARD BY THE
PERCENTAGE INCREASE IN THE CONSUMER PRICE INDEX MOST RECENTLY PROMULGATED AS OF
SUCH JANUARY 1ST OVER THE CONSUMER PRICE INDEX THAT HAD BEEN MOST RECENTLY
PROMULGATED FOR THE JANUARY 1ST THAT WAS FIVE (5) YEARS PRIOR THERETO.  THE
BALTIMORE EMPLOYEE PARKING LICENSE MAY NOT BE USED BY ANYONE OTHER THAN
MANAGER’S EMPLOYEES AND/OR SHORT TERM CONTRACTUAL WORKERS WHO ARE EMPLOYED AT
THE BALTIMORE HOTEL.  THE USE OF PARKING SPACES IN THE BALTIMORE PARKING GARAGE
PURSUANT TO THE BALTIMORE EMPLOYEE PARKING LICENSE SHALL BE ON A FIRST-COME,
FIRST-SERVED BASIS IN COMMON WITH MEMBERS OF THE GENERAL PUBLIC; PROVIDED,
HOWEVER, MANAGER SHALL CAUSE ITS EMPLOYEES WHO USE THE BALTIMORE EMPLOYEE
PARKING LICENSE TO PARK IN THOSE PORTIONS OF THE BALTIMORE PARKING GARAGE WHICH
ARE FARTHEST AWAY FROM THE BALTIMORE HOTEL SO THAT THE SPACES WHICH PROVIDE THE
MOST CONVENIENT ACCESS TO THE BALTIMORE HOTEL REMAIN AVAILABLE FOR USE BY THE
GENERAL PUBLIC AND THE GUESTS, PATRONS

 

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AND OTHER USERS OF THE BALTIMORE HOTEL (OTHER THAN MANAGER’S EMPLOYEES).

 

(D)                                 IF THERE SHALL BE LESS THAN AN AGGREGATE
TOTAL OF SIXTY (60) PERMANENT RESERVED AND EXCLUSIVE VALET PARKING SPACES
AVAILABLE TO THE OWNER AND MANAGER BETWEEN THE BALTIMORE VALET PARKING AREAS AND
THE BALTIMORE VACANT PARCELS, THEN MANAGER SHALL NOTIFY OWNER THEREOF.  WITHIN
THIRTY (30) DAYS AFTER SUCH NOTIFICATION, OWNER SHALL CAUSE THE OWNER OF THE
BALTIMORE PARKING GARAGE TO GRANT TO OWNER A NUMBER OF EXCLUSIVE RESERVED
PARKING SPACES IN THE BALTIMORE PARKING GARAGE, SO THAT THERE SHALL BE AN
AGGREGATE TOTAL OF SIXTY (60) RESERVED AND EXCLUSIVE VALET PARKING SPACES
AVAILABLE TO THE OWNER AND MANAGER AMONGST BALTIMORE VALET PARKING AREAS, THE
BALTIMORE VACANT PARCELS AND THE BALTIMORE PARKING GARAGE.  OWNER SHALL BE
RESPONSIBLE, AT OWNER’S SOLE COST AND EXPENSE, FOR ANY FEES OR CHARGES IMPOSED
BY THE OWNER OF THE BALTIMORE PARKING GARAGE IN CONNECTION WITH SUCH ADDITIONAL
SPACES (AND SUCH COSTS SHALL NOT BE TREATED AS OPERATING COSTS).  THE LOCATION
OF THE SUCH ADDITIONAL SPACES SHALL BE APPROVED BY MANAGER, IN ITS REASONABLE
DISCRETION, AND MANAGER SHALL HAVE THE RIGHT TO DESIGNATE SUCH SPACES AS
RESERVED.

 

(E)                                  OWNER SHALL CAUSE THE OWNER OF THE
BALTIMORE PARKING GARAGE TO ENTER INTO A PARKING MANAGEMENT AGREEMENT ON A FORM
WHICH HAS BEEN APPROVED BY MANAGER, IN ITS REASONABLE DISCRETION, FOR THE
OPERATION AND MANAGEMENT OF THE BALTIMORE PARKING GARAGE, ON OR BEFORE THE
EFFECTIVE DATE WITH RESPECT TO THE BALTIMORE HOTEL AND FROM TIME TO TIME
THEREAFTER.  ANY SUCH MANAGEMENT AGREEMENT SHALL BE TERMINABLE UPON NOT MORE
THAN THIRTY (30) DAYS’ PRIOR NOTICE.  OWNER ACKNOWLEDGES THAT PARKING IS OF
CRITICAL IMPORTANCE TO THE OPERATION AND REVENUE GENERATION OF THE BALTIMORE
HOTEL AND THAT THE BALTIMORE PARKING GARAGE SHOULD BE MANAGED AND OPERATED WITH
THE OBJECTIVES OF MAINTAINING AND OPERATING THE BALTIMORE PARKING GARAGE IN A
FIRST CLASS STANDARD, MAXIMIZING AND ENHANCING THE BALTIMORE PARKING GARAGE
GUEST EXPERIENCE AND PROVIDING ADEQUATE ACCESS TO PARKING FOR THE GUESTS AND
PATRONS OF THE BALTIMORE HOTEL.  IF OWNER AND MANAGER REASONABLY DETERMINE THAT
THE PARKING GARAGE MANAGER IS NOT COMPLYING WITH THE TERMS OF THE BALTIMORE
GENERAL PARKING LICENSE OR FULFILLING SUCH OBJECTIVES, OWNER SHALL CAUSE THE
OWNER OF THE BALTIMORE PARKING GARAGE TO TERMINATE THE PARKING MANAGEMENT
AGREEMENT AND TO HIRE A NEW OPERATOR FOR THE BALTIMORE PARKING GARAGE.  IF THERE
IS A DISAGREEMENT BETWEEN OWNER AND MANAGER REGARDING WHETHER OR NOT SUCH PARING
GARAGE OPERATOR IS COMPLYING WITH THE TERM OF THE BALTIMORE GENERAL PARKING
LICENSE OR FULFILLING ITS PRIMARY OBJECTIVE, SUCH

 

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DISPUTE SHALL BE SETTLED BY ARBITRATION IN ACCORDANCE WITH SECTION 24.20.

 

(F)                                    OWNER AND MANAGER ACKNOWLEDGE AND AGREE
THAT MANAGER SHALL MONITOR THE SECURITY CAMERAS LOCATED WITHIN THE BALTIMORE
PARKING GARAGE, BUT IN NO EVENT SHALL MANAGER HAVE ANY OTHER RESPONSIBILITY OR
LIABILITY FOR PROVIDING ANY OTHER SECURITY SERVICES TO ANY PORTION OF THE
DEVELOPMENT WITHIN WHICH THE BALTIMORE HOTEL IS LOCATED (OTHER THAN THE
BALTIMORE HOTEL).

 

24.27                     INDEPENDENT COVENANTS.  THE OBLIGATIONS OF EACH PARTY
HEREUNDER SHALL BE SEPARATE AND INDEPENDENT COVENANTS AND AGREEMENTS.

 

24.28                     AMENDMENT AND RESTATEMENT.  THIS AGREEMENT AMENDS,
RESTATES AND REPLACES THE ORIGINAL MANAGEMENT AGREEMENT IN ITS ENTIRETY;
PROVIDED, HOWEVER, THAT NOTHING CONTAINED IN THIS AGREEMENT SHALL BE DEEMED TO
MODIFY, DIMINISH, IMPAIR OR OTHERWISE AFFECT THE RIGHTS, DUTIES AND OBLIGATIONS
OF THE PARTIES UNDER THE ORIGINAL MANAGEMENT AGREEMENT FROM TIME TO TIME PRIOR
TO THE DATE OF THIS AGREEMENT.  UNLESS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT WERE TRUE AND
CORRECT AS OF EACH APPLICABLE EFFECTIVE DATE AND AS OF THE DATE HEREOF AND THE
OTHER TERMS, COVENANTS AND CONDITIONS TO BE PERFORMED BY EACH OF THE PARTIES
HERETO SHALL BE DEEMED TO HAVE COMMENCED AS OF THE APPLICABLE EFFECTIVE DATE.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement effective as of the day and year first above written.

 

 

OWNER:

 

 

 

 

HPT TRS IHG-2, INC.

 

 

 

 

 

 

 

By:

/s/ John G. Murray

 

 

 

John G. Murray

 

 

Vice President

 

 

 

 

 

 

 

MANAGER:

 

 

 

 

 

 

 

IHG MANAGEMENT (MARYLAND) LLC

 

 

 

 

By:

/s/ Robert J. Chitty

 

 

 

Robert J. Chitty

 

 

Vice President

 

 

 

 

 

 

 

INTERCONTINENTAL HOTELS GROUP
(CANADA), INC.

 

 

 

 

By:

/s/ Robert J. Chitty

 

 

 

Robert J. Chitty

 

 

Vice President

 

115

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Each of the parties comprising Purchaser in consideration of good and valuable
consideration, joins in the foregoing Agreement to evidence its agreement to be
bound by the terms of Sections 4.1 through and including 4.7 and Articles 15 and
16 thereof, in each case to the extent applicable to it, subject to the terms of
Section 24.19.

 

 

PURCHASER:

 

 

 

HPT IHG-2 PROPERTIES TRUST

 

 

 

By:

/s/ John G. Murray

 

 

 

John G. Murray

 

 

President

 

 

 

 

 

 

 

HPT IHG GA PROPERTIES LLC

 

 

 

 

By:

/s/ John G. Murray

 

 

 

John G. Murray

 

 

President

 

 

 

 

 

 

 

HPT IHG CANADA PROPERTIES TRUST

 

 

 

 

By:

/s/ John G. Murray

 

 

 

John G. Murray

 

 

President

 

 

 

 

 

 

 

HH HPTCW II PROPERTIES LLC

 

 

 

 

By:

/s/ John G. Murray

 

 

 

John G. Murray

 

 

President

 

 

 

 

 

 

 

HARBOR COURT ASSOCIATES, LLC

 

 

 

 

By:

/s/ John G. Murray

 

 

 

John G. Murray

 

 

President

 

 

 

 

Date of Execution: January 6, 2006

 

116

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THE FOLLOWING EXHIBITS HAVE BEEN OMITTED AND WILL BE SUPPLEMENTALLY FURNISHED TO
THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST:

 

Exhibit

 

Document

 

 

 

A-1 through
A-13

 

The Sites

 

 

 

B

 

Intentionally Deleted

 

 

 

C

 

Allocation Of Owner’s Fixed Priority

 

 

 

D

 

Restricted Area

 

 

 

E

 

Assignment and Assumption of Management Agreement

 

 

 

F

 

Baltimore General Parking License Fees

 

F - 1

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

ARTICLE 1

 

DEFINITIONS

 

1

1.1

 

“8.1(c) Statement”

 

1

1.2

 

“Accounting Principles”

 

1

1.3

 

“Affiliate”

 

2

1.4

 

“Agreed Upon Procedure Letter”

 

2

1.5

 

“Agreement”

 

2

1.6

 

“Anaheim Condemnation”

 

3

1.7

 

“Arbitration”

 

3

1.8

 

“Austin Hotel”

 

3

1.9

 

“Authorized Mortgage”

 

3

1.10

 

“Award”

 

3

1.11

 

“Baltimore Central Plant”

 

3

1.12

 

“Baltimore Declaration”

 

3

1.13

 

“Baltimore Employee Parking License”

 

4

1.14

 

“Baltimore Employee Parking License Fees”

 

4

1.15

 

“Baltimore General Parking License”

 

4

1.16

 

“Baltimore General Parking License Fees”

 

4

1.17

 

“Baltimore Health Club”

 

4

1.18

 

“Baltimore Hotel”

 

4

1.19

 

“Baltimore Maintenance Memorandum”

 

4

1.20

 

“Baltimore Parking Garage”

 

4

1.21

 

“Baltimore Purchase Agreement”

 

4

1.22

 

“Baltimore Rebranding Amounts”

 

4

1.23

 

“Baltimore Seller”

 

5

1.24

 

“Baltimore Site”

 

5

1.25

 

“Baltimore Vacant Parcels”

 

5

1.26

 

“Baltimore Valet License Fee”

 

5

1.27

 

“Baltimore Valet Parking Areas”

 

5

1.28

 

“Bank Accounts”

 

5

1.29

 

“Base Management Fee”

 

5

1.30

 

“Base Priority Amount”

 

5

1.31

 

“Base Year”

 

6

1.32

 

“Brand”

 

6

1.33

 

“Brand Standards”

 

6

1.34

 

“Buildings”

 

7

1.35

 

“Business Day”

 

7

1.36

 

“Canadian Consumer Price Index”

 

7

1.37

 

“Canadian Hotel”

 

7

1.38

 

“Canadian Manager”

 

7

1.39

 

“Canadian Services”

 

8

1.40

 

“Capital Replacements”

 

8

1.41

 

“Capital Replacements Budget”

 

8

1.42

 

“Closing”

 

8

1.43

 

“Code”

 

8

i

--------------------------------------------------------------------------------

 

1.44

 

“Collateral Agency Agreement”

 

8

1.45

 

“Collateral Agent”

 

8

1.46

 

“Competitor”

 

8

1.47

 

“Condemnation”

 

8

1.48

 

“Condemnor”

 

8

1.49

 

“Consolidated Financials”

 

8

1.50

 

“Consumer Price Index”

 

9

1.51

 

“Crowne Plaza Hotels”

 

9

1.52

 

“Debt Service Coverage Ratio”

 

9

1.53

 

“Deposit”

 

9

1.54

 

“Deposit Agreement”

 

9

1.55

 

“Disbursement Rate”

 

9

1.56

 

“Effective Date”

 

9

1.57

 

“Environmental Notice”

 

10

1.58

 

“Expiration Date”

 

10

1.59

 

“Fiscal Month”

 

10

1.60

 

“Fiscal Year”

 

10

1.61

 

“Furniture, Fixtures and Equipment” or “FF&E”

 

10

1.62

 

“Government Agencies”

 

10

1.63

 

“Gross Revenues”

 

11

1.64

 

“GST”

 

12

1.65

 

“Guarantor”

 

12

1.66

 

“Guaranty”

 

12

1.67

 

“Hazardous Substances”

 

12

1.68

 

“Holiday Inn Hotels”

 

13

1.69

 

“Hotel”

 

13

1.70

 

“HPT”

 

13

1.71

 

“IHG”

 

13

1.72

 

“IHG Canada”

 

13

1.73

 

“IHG Maryland”

 

13

1.74

 

“Incentive Management Fee”

 

13

1.75

 

“Initial Term”

 

13

1.76

 

“Initial Working Capital”

 

13

1.77

 

“Insurance Requirements”

 

14

1.78

 

“Intellectual Property”

 

14

1.79

 

“InterContinental Hotels”

 

14

1.80

 

“Interest Rate”

 

14

1.81

 

“Lease”

 

14

1.82

 

“Legal Requirements”

 

14

1.83

 

“Management Fees”

 

14

1.84

 

“Manager”

 

15

1.85

 

“Manager Default”

 

15

1.86

 

“Manager Event of Default”

 

15

1.87

 

“Material Repair”

 

15

1.88

 

“New Management Agreement”

 

15

1.89

 

“NOI”

 

15

1.90

 

“Non-Economic Hotel”

 

15

 

ii

--------------------------------------------------------------------------------

 

1.91

 

“Offer”

 

15

1.92

 

“Officer’s Certificate”

 

16

1.93

 

“Operating Costs”

 

16

1.94

 

“Operating Equipment”

 

18

1.95

 

“Operating Profit”

 

18

1.96

 

“Operating Standards”

 

18

1.97

 

“Operating Supplies”

 

18

1.98

 

“Original Management Agreement”

 

18

1.99

 

“Other Documents”

 

18

1.100

 

“Owner”

 

18

1.101

 

“Owner’s First Priority”

 

18

1.102

 

“Owner’s First Priority Adjustment Rate”

 

19

1.103

 

“Owner’s Fixed Priority”

 

19

1.104

 

“Owner’s Percentage Priority”

 

19

1.105

 

“Owner’s Second Priority”

 

19

1.106

 

“Parent”

 

19

1.107

 

“Person”

 

19

1.108

 

“Pledged Hotels”

 

20

1.109

 

“Pooled FF&E Hotels”

 

20

1.110

 

“PR Guaranty”

 

20

1.111

 

“PR Indemnity”

 

20

1.112

 

“PR Lease”

 

20

1.113

 

“PR Property”

 

20

1.114

 

“PR Stock Agreement”

 

20

1.115

 

“PR Tenant”

 

20

1.116

 

“Principal Documents”

 

20

1.117

 

“Priority Coverage Ratio”

 

20

1.118

 

“Purchase Agreement”

 

21

1.119

 

“Purchaser”

 

21

1.120

 

“Renewal Terms”

 

21

1.121

 

“Repairs”

 

21

1.122

 

“Replacement Property”

 

21

1.123

 

“Reservation System”

 

21

1.124

 

“Reserve Account”

 

21

1.125

 

“Reserve Effective Date”

 

22

1.126

 

“Reserve Percentage”

 

22

1.127

 

“Residual Distribution”

 

22

1.128

 

“Restricted Area”

 

22

1.129

 

“Restricted Period”

 

22

1.130

 

“Rooms Revenue”

 

22

1.131

 

“RST”

 

22

1.132

 

“Sales Tax”

 

23

1.133

 

“Secured Obligations”

 

23

1.134

 

“Severance Date”

 

23

1.135

 

“Sites”

 

23

1.136

 

“Specially Designated or Blocked Person”

 

23

1.137

 

“Staybridge Hotels”

 

23

 

iii

--------------------------------------------------------------------------------

 

1.138

 

“Subsidiary”

 

23

1.139

 

“Substitute Tenant”

 

23

1.140

 

“Successor Purchaser”

 

23

1.141

 

“System Fees”

 

23

1.142

 

“System Marks”

 

24

1.143

 

“Term”

 

24

1.144

 

“Transaction Documents”

 

24

1.145

 

“Transferred Hotel”

 

24

1.146

 

“Uniform System of Accounts”

 

24

1.147

 

“Ultimate Parent”

 

24

1.148

 

“Unsuitable for Its Permitted Use”

 

24

1.149

 

“Working Capital”

 

25

1.150

 

“Yearly Budget”

 

25

 

 

 

 

 

ARTICLE 2

 

SCOPE OF AGREEMENT

 

25

2.1

 

Engagement of Manager

 

25

2.2

 

Additional Services

 

28

2.3

 

Use of Hotels

 

28

2.4

 

Right to Inspect

 

29

2.5

 

No Right of Offset

 

29

2.6

 

Condition of the Hotels

 

29

2.7

 

Non-Economic Hotels

 

30

2.8

 

No Early Termination of Manager; Nature of Relationship etc.

 

31

 

 

 

 

 

ARTICLE 3

 

TERM AND RENEWALS

 

33

3.1

 

Term

 

33

3.2

 

Renewal Term

 

33

3.3

 

Owner’s Termination Right at End of Term

 

34

 

 

 

 

 

ARTICLE 4

 

TITLE TO HOTEL

 

34

4.1

 

Covenants of Title

 

34

4.2

 

Non-Disturbance

 

34

4.3

 

Financing

 

35

4.4

 

Sale of a Hotel to an Affiliate

 

37

4.5

 

Sale of All the Hotels

 

38

4.6

 

The Lease

 

38

4.7

 

Restricted Sale

 

38

 

 

 

 

 

ARTICLE 5

 

REQUIRED FUNDS

 

38

5.1

 

Working Capital

 

38

5.2

 

Reserve Account

 

40

5.3

 

Additional Requirements for Reserve

 

44

5.4

 

Ownership of Replacements

 

44

5.5

 

No Additional Contributions

 

44

5.6

 

Pooled Reserves

 

44

 

 

 

 

 

ARTICLE 6

 

BRAND STANDARDS AND MANAGER’S CONTROL

 

44

 

iv

--------------------------------------------------------------------------------

 

6.1

 

Brand Standards

 

44

6.2

 

Manager’s Control

 

45

6.3

 

Arbitration

 

45

 

 

 

 

 

ARTICLE 7

 

OPERATION OF THE HOTEL

 

45

7.1

 

Permits

 

45

7.2

 

Equipment and Supplies

 

46

7.3

 

Personnel

 

46

7.4

 

Sales, Marketing and Advertising

 

48

7.5

 

Reservation and Communication Services

 

49

7.6

 

Maintenance and Repairs

 

50

7.7

 

Material Repairs

 

51

7.8

 

Liens; Credit

 

52

7.9

 

Real Estate and Personal Property Taxes

 

52

7.10

 

GST and RST

 

52

7.11

 

Contest

 

53

7.12

 

Privacy

 

53

 

 

 

 

 

ARTICLE 8

 

FISCAL MATTERS

 

53

8.1

 

Accounting Matters

 

53

8.2

 

Yearly Budgets

 

56

8.3

 

Bank Accounts

 

58

8.4

 

Consolidated Financials

 

58

 

 

 

 

 

ARTICLE 9

 

FEES TO MANAGER

 

59

9.1

 

Management Fees

 

59

9.2

 

System Fees

 

59

 

 

 

 

 

ARTICLE 10

 

DISBURSEMENTS

 

61

10.1

 

Disbursement of Funds

 

61

10.2

 

Residual Distribution

 

63

10.3

 

Owner’s First Priority

 

64

10.4

 

Owner’s Percentage Priority

 

65

10.5

 

Owner’s Second Priority

 

65

10.6

 

No Interest

 

65

10.7

 

Calculation of Interim Disbursements

 

65

10.8

 

Amounts Outstanding at End of Term

 

66

10.9

 

Allocation of Owner’s Fixed Priority

 

66

10.10

 

Survival

 

66

 

 

 

 

 

ARTICLE 11

 

CERTAIN OTHER SERVICES

 

66

11.1

 

Optional Services

 

66

11.2

 

Purchasing

 

66

 

 

 

 

 

ARTICLE 12

 

SIGNS AND SERVICE MARKS

 

67

12.1

 

Signs

 

67

12.2

 

System Marks

 

67

12.3

 

System Mark Litigation

 

68

 

v

--------------------------------------------------------------------------------

 

12.4

 

Other Intellectual Property Provisions

 

69

 

 

 

 

 

ARTICLE 13

 

INSURANCE

 

69

13.1

 

Insurance Coverage

 

69

13.2

 

Insurance Policies

 

71

13.3

 

Insurance Certificates

 

72

13.4

 

Insurance Proceeds

 

72

13.5

 

Manager’s Insurance Program

 

72

 

 

 

 

 

ARTICLE 14

 

INDEMNIFICATION AND WAIVER OF SUBROGATION

 

73

14.1

 

Indemnification

 

73

14.2

 

Waiver of Subrogation

 

73

14.3

 

Survival

 

74

 

 

 

 

 

ARTICLE 15

 

DAMAGE TO AND DESTRUCTION OF THE HOTEL

 

74

15.1

 

Termination

 

74

15.2

 

Restoration

 

75

 

 

 

 

 

ARTICLE 16

 

CONDEMNATION

 

76

16.1

 

Total Condemnation

 

76

16.2

 

Partial Condemnation

 

77

16.3

 

Temporary Condemnation

 

78

16.4

 

Anaheim Taking

 

78

16.5

 

Baltimore Taking

 

78

16.6

 

Effect of Condemnation

 

79

 

 

 

 

 

ARTICLE 17

 

DEFAULT AND TERMINATION

 

79

17.1

 

Manager Events of Default

 

79

17.2

 

Remedies for Manager Defaults

 

81

17.3

 

Owner Events of Default and Remedies for Owner Defaults

 

82

17.4

 

Post Termination Obligations

 

83

 

 

 

 

 

ARTICLE 18

 

NOTICES

 

85

18.1

 

Procedure

 

85

 

 

 

 

 

ARTICLE 19

 

RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS

 

87

19.1

 

Relationship

 

87

19.2

 

Further Actions

 

87

 

 

 

 

 

ARTICLE 20

 

APPLICABLE LAW

 

87

 

 

 

 

 

ARTICLE 21

 

SUCCESSORS AND ASSIGNS

 

88

21.1

 

Assignment

 

88

21.2

 

Binding Effect

 

91

 

 

 

 

 

ARTICLE 22

 

RECORDING

 

92

22.1

 

Memorandum of Agreement

 

92

 

vi

--------------------------------------------------------------------------------

 

ARTICLE 23

 

FORCE MAJEURE

 

92

23.1

 

Operation of Hotel

 

92

23.2

 

Extension of Time

 

92

 

 

 

 

 

ARTICLE 24

 

GENERAL PROVISIONS

 

92

24.1

 

Trade Area Restriction

 

92

24.2

 

Environmental Matters

 

94

24.3

 

Authorization

 

96

24.4

 

Severability

 

96

24.5

 

Merger

 

96

24.6

 

Formalities

 

96

24.7

 

Consent to Jurisdiction; No Jury Trial

 

97

24.8

 

Performance on Business Days

 

97

24.9

 

Attorneys’ Fees

 

97

24.10

 

Section and Other Headings

 

97

24.11

 

Documents

 

97

24.12

 

No Consequential Damages

 

98

24.13

 

No Political Contributions

 

98

24.14

 

REIT Qualification

 

98

24.15

 

Further Compliance with Section 856(d) of the Code

 

99

24.16

 

Adverse Regulatory Event

 

101

24.17

 

Adverse Canadian Event

 

101

24.18

 

Commercial Leases

 

104

24.19

 

Nonliability of Trustees

 

105

24.20

 

Arbitration

 

105

24.21

 

Estoppel Certificates

 

106

24.22

 

Confidentiality

 

107

24.23

 

Hotel Warranties

 

108

24.24

 

Currency

 

108

24.25

 

Baltimore Hotel

 

108

24.26

 

Parking at the Baltimore Hotel

 

110

24.27

 

Independent Covenants

 

114

24.28

 

Amendment and Restatement

 

114

 

vii

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