Exhibit 10.2

 

COURTYARD

SVC89 Combined Portfolio

 

SECOND AMENDED AND RESTATED

MANAGEMENT AGREEMENT

 

by and among

 

Courtyard Management Corporation

as “MANAGER”

 

and

 

HPT TRS MRP, INC.

and

HPT CY TRS, Inc.

as “TENANT”

 

Dated as of December 31, 2019

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE I APPOINTMENT OF MANAGER 2       1.01 Appointment 2 1.02 Management of
the Hotels 2 1.03 Services Provided by Manager 5 1.04 Marketing Fund; Program
Services 7 1.05 Employees 8 1.06 Right to Inspect 10 1.07 Right of Offset 10    
  ARTICLE II TERM 11       2.01 Term 11       ARTICLE III COMPENSATION OF
MANAGER 12       3.01 Management Fees 12 3.02 Operating Profit 12       ARTICLE
IV ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS 15       4.01 Accounting, Interim
Payment and Annual Reconciliation 15 4.02 Books and Records 18 4.03 Accounts,
Expenditures 19 4.04 Annual Operating Projection 21 4.05 Working Capital 21 4.06
Fixed Asset Supplies 21       ARTICLE V REPAIRS, MAINTENANCE AND REPLACEMENTS 22
      5.01 Manager’s Maintenance Obligation 22 5.02 Repairs and Maintenance to
be Paid from Gross Revenues 22 5.03 Items to be Paid from Reserves 22 5.04
Reserve Estimates 24 5.05 Additional Requirements for Reserves 24 5.06 Ownership
of Replacements 24 5.07 Obligation to Provide Additional Reserve Funds 24 5.08
Additional Requirements Relating to Certain Capital Improvements 26      
ARTICLE VI INSURANCE, DAMAGE AND CONDEMNATION 27       6.01 Insurance 27 6.02
Damage and Repair 28 6.03 Damage Near End of Term 30 6.04 Condemnation 30 6.05
Partial Condemnation 30 6.06 Disbursement of Award 31 6.07 Temporary
Condemnation 31 6.08 Allocation of Award 31 6.09 Effect of Condemnation 31

 

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  Page     ARTICLE VII TAXES; OTHER CHARGES 32       7.01 Real Estate and
Personal Property Taxes 32       ARTICLE VIII OWNERSHIP OF THE HOTELS 33      
8.01 Ownership of the Hotels 33 8.02 Requirements for Mortgages 34 8.03
Subordination and Non-Disturbance Agreement 35 8.04 No Covenants, Conditions or
Restrictions 36 8.05 Liens; Credit 36       ARTICLE IX DEFAULTS 37       9.01
Manager Events of Default 37 9.02 Remedies for Manager Defaults 38 9.03
Additional Remedies for Manager Defaults 39 9.04 Non-Recourse Provision 39 9.05
Good Faith Dispute by Manager 40 9.06 Tenant Events of Default 40 9.07 Remedies
for Tenant Defaults 42 9.08 Good Faith Dispute by Tenant 43 9.09 Landlord
Defaults 43 9.10 Extraordinary Events 44       ARTICLE X ASSIGNMENT AND SALE 44
      10.01 Assignment 44 10.02 Sale of the Hotel 46       ARTICLE XI
MISCELLANEOUS 47       11.01 Right to Make Agreement 47 11.02 Actions by Manager
47 11.03 Relationship 47 11.04 Applicable Law 47 11.05 Recordation 47 11.06
Headings; Section References 48 11.07 Notices 48 11.08 Environmental Matters 49
11.09 Confidentiality 50 11.10 Projections 51 11.11 Actions to be Taken Upon
Termination 51 11.12 Trademarks, Trade Names and Service Marks 54 11.13 Data
Protection 54 11.14 Waiver 55 11.15 Partial Invalidity 55 11.16 Survival 55
11.17 Negotiation of Agreement 55 11.18 Intentionally Deleted 55 11.19 Entire
Agreement; Recitals 56 11.20 Affiliates 56 11.21 Competing Facilities 56

 

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    Page       11.22 Intentionally Deleted 56 11.23 Dispute Resolution;
Arbitration and Expert Resolution 57 11.24 Permitted Contests 59 11.25
Indemnification 60 11.26 Estoppel Certificates 60 11.27 Intentionally Deleted 61
11.28 Intentionally Deleted 61 11.29 Remedies Cumulative 61 11.30 Amendments and
Modifications 61 11.31 Construction; Nonrecourse 61 11.32 Counterparts; Headings
61 11.33 No Political Contributions 61 11.34 Single Agreement 62 11.35 REIT
Qualification 62 11.36 Further Compliance With Section 856(d) of the Code 62
11.37 Adverse Regulatory Event 63 11.38 Commercial Leases 63 11.39 Waiver of
Jury Trial 63 11.40 Waiver of Consequential, Incidental, Special & Punitive
Damages 64 11.41 Equity Interests in Tenant 64 11.42 No Rights of Third Parties
64 11.43 Intentionally Deleted 64 11.44 Non-Hotel Marketing Activities by Tenant
64 11.45 Single Agreement; Integration 64 11.46 Prior Management Agreement 64  
    ARTICLE XII DEFINITION OF TERMS 65       12.01 Definition of Terms 65

 

Exhibit A The Sites Exhibit B Central Office Services Exhibit C Franchise
Requirements Exhibit D Insurance Exhibit E Equity Interests in Tenant Exhibit F
Brands Addenda Property Information

 

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THIS SECOND AMENDED AND RESTATED MANAGEMENT AGREEMENT (this “Agreement”) is
executed as of the 31st day of December, 2019 (the “Execution Date”), but is to
become effective as of January 1, 2020 (the “Effective Date”), by and among HPT
TRS MRP, INC., a Maryland corporation (“MRP Tenant”), and HPT CY TRS, Inc., a
Maryland corporation (“CY Tenant” and, individually and together with MRP
Tenant, as the context may require, “Tenant”); and Courtyard Management
Corporation, a Delaware corporation (“Manager”).

 

RECITALS:

 

A.              Each Landlord (as defined herein) is the owner of fee title to
certain of the parcels of real property described on Exhibit A attached to this
Agreement and incorporated herein (the “Sites”) on which certain improvements
have been constructed consisting of a building or buildings containing in each
instance the number of Guest Rooms as specified on the Addenda hereto (as the
same shall be amended and revised from time to time), and certain other
amenities and related facilities (the “Buildings”). Each Site and the Buildings
on each such Site, in addition to certain other rights, improvements, and
personal property, are individually referred to as a “Hotel” and are
collectively referred to as the “Hotels” and more particularly described in the
definition in Section 12.01. Pursuant to the applicable Lease, Landlord has
leased certain of the Hotels (except for certain assets of Manager or the
applicable Tenant included within the definition of Hotels) which are subject to
this Agreement, to such Tenant.

 

B.               With respect to each Hotel, the applicable Tenant (either
directly or by an assignment and assumption agreement between such Tenant and
such Tenant’s predecessor-in-interest) and Manager have heretofore entered into
a Management Agreement specified on the Addenda hereto (collectively, and as
amended and restated, the “Prior Management Agreement”), pursuant to which such
Tenant has engaged Manager to manage and operate certain of the Hotels for the
account of such Tenant, and Manager has accepted such engagement. Effective as
of the Effective Date, such Tenant and Manager desire to amend and restate the
terms and conditions of each Prior Management Agreement in their entirety and
replace them with the terms and conditions set forth in this Agreement.

 

C.               Pursuant to the applicable Lease and certain other leases,
Tenant or an Affiliate of Tenant has leased other hotels from the Landlord or an
Affiliate of Landlord managed by Affiliates of Manager (all properties subject
to the Lease and/or such other leases at any given time, and as further
described in the definition of “Portfolio Properties” set forth in Article XII,
are collectively, the “Portfolio Properties”). Manager, Tenant and their
applicable Affiliates have agreed that revenues, working capital, reserves and
other items from the Portfolio Properties will be pooled, disbursed and
distributed in accordance with the terms and conditions of the Pooling
Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement and other good and valuable consideration, the receipt of which is
hereby acknowledged, Tenant and Manager agree as follows:

 

 

 

 

ARTICLE I

 

APPOINTMENT OF MANAGER

 

1.01         Appointment. Subject to the provisions of this Agreement, Tenant
hereby engages Manager to supervise, direct and control the management,
promotion and operation of the Hotels throughout the Term. Manager accepts said
engagement and agrees to manage the Hotels during the Term in accordance with
the terms and conditions of this Agreement. The Hotels shall each be known as a
Courtyard by Marriott, or Marriott Courtyard with such additional identification
as may be necessary to provide local identification. If the name of the
Courtyard by Marriott System is changed, Manager will change the name of the
Hotels to conform thereto. All capitalized terms shall have the meaning ascribed
to them in Article XII hereof.

 

1.02         Management of the Hotels.

 

A.            Manager shall manage and operate the Hotels in an efficient and
economical manner consistent with the prevailing standards in other hotels in
the System, including all activities in connection therewith which are customary
and usual to such an operation. Manager shall, in connection with the Hotels and
in accordance with the System Standards and the terms of this Agreement, perform
each of the following functions (provided that in all cases, except as otherwise
set forth in this Agreement, the costs and expenses of performing such functions
shall be Deductions):

 

1.                  Recruit, employ, supervise, direct and (when appropriate)
discharge all of the employees at the Hotels.

 

2.                  Establish prices, rates and charges for services provided in
the Hotels, including rates for Guest Rooms.

 

3.                  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.

 

4.                  Manage expenditures to replenish Inventories and Fixed Asset
Supplies, make payments on accounts payable and collect accounts receivable.

 

5.                  Arrange for and supervise public relations and advertising
and prepare marketing plans.

 

6.                  Procure all Inventories and replacement Fixed Asset
Supplies.

 

7.                  Prepare and deliver interim accountings, annual accountings,
Annual Operating Projections, Reserve Estimates and such other information as is
required by this Agreement.

 

8.                  Plan, execute and supervise repairs, maintenance alterations
and improvements at the Hotels.

 

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9.                  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 and provide such information related to risk
management to Tenant as Tenant may from time to time reasonably request.

 

10.                Obtain and keep in full force and effect, either in its own
name or in Tenant’s name, as may be required by applicable law, any and all
licenses and permits to the extent same is within the control of Manager (or, if
same is not within the control of Manager, Manager shall use all due diligence
and reasonable efforts to obtain and keep same in full force and effect).

 

11.                Reasonably cooperate (provided that Manager shall not be
obligated to enter into any amendments of this Agreement) in any attempt(s):

 

(a)                to effectuate a Sale of a Hotel under the terms of this
Agreement (provided that nothing herein shall affect the provisions of Section
10.02); or

 

(b)                to effectuate a direct or indirect sale or other disposition
of the Landlord’s interest in a Hotel as permitted under the Owner Agreement; or

 

(c)                to obtain any Qualified Mortgage.

 

12.               Subject to the requirements of Section 10.01 hereof, negotiate
and administer, on behalf of Tenant, leases, subleases, licenses and concession
agreements for all public space at the Hotels, including all stores, office
space and lobby space.

 

13.                On behalf of Tenant, negotiate, enter into and administer
service contracts and licenses for the operation of the Hotels, including
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.

 

14.                Negotiate, enter into and administer contracts for the use of
banquet and meeting facilities and Guest Rooms by groups and individuals.

 

15.               Take reasonable action to collect and institute in its own
name or in the name of Tenant 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.

 

16.                Make representatives available to consult with and advise
Tenant or Tenant’s designee at Tenant’s reasonable request concerning policies
and procedures affecting the conduct of the business of the Hotels.

 

17.                Collect on behalf of Tenant and account for and remit to
governmental authorities all applicable excise, sales, occupancy and use taxes
or similar governmental charges collected by or at the Hotels directly from
guests, members or other patrons, or as part of the sales price of any goods,
services or displays, such as gross receipts, admission or similar or equivalent
taxes, duties, levies or charges.

 

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18.                Keep Tenant advised of significant events which occur with
respect to the Hotels which might reasonably be expected to have a material
adverse effect on the financial performance or value of the Hotels.

 

19.                Perform such other tasks with respect to the Hotels as are
customary and consistent with the System Standards.

 

B.            The operation of the Hotels shall be under the exclusive
supervision and control of Manager which, except as otherwise specifically
provided in this Agreement, shall be responsible for the proper and efficient
operation of the Hotels. Subject to the terms of this Agreement, Manager shall
have discretion and control, free from interference, interruption or
disturbance, in all matters relating to management and operation of the Hotels,
including, without limitation, the following: charges for Guest Rooms and
commercial space; credit policies; food and beverage services; employment
policies; granting of leases, subleases, licenses and concessions for shops and
agencies within the Hotels consistent with the provisions of Section 10.01
hereof; receipt, holding and disbursement of funds; maintenance of bank
accounts; procurement of Inventories (including initial inventories), supplies
and services; promotion and publicity; payment of costs and expenses as are
specifically provided for in this Agreement or are otherwise reasonably
necessary for the proper and efficient operation of the Hotels; and, generally,
all activities necessary for operation of the Hotels.

 

C.            Manager shall use reasonable efforts to comply with and abide by
all Legal Requirements and Insurance Requirements pertaining to its operation of
the Hotels, provided that Manager shall have the right, but not the obligation,
in its reasonable discretion, to contest or oppose, by appropriate proceedings,
any such laws and regulations in accordance with Section 11.24 hereof. Except as
expressly provided to the contrary in this Agreement, all costs and expenses of
such compliance with respect to each Hotel shall be paid from Gross Revenues as
Deductions in the computation of Operating Profit of such Hotel or from the
Reserve of such Hotel, whichever is applicable, and the reasonable expenses of
any such contest shall be paid from Gross Revenues as Deductions with respect to
such Hotel.

 

D.            Manager shall use due diligence and exercise commercially
reasonable efforts to obtain and maintain all approvals necessary to use and
operate the Hotels in accordance with the System Standards and Legal
Requirements. Tenant shall cooperate with Manager in this regard and, in
connection therewith, shall execute all applications and consents required to be
executed by Tenant in order for Manager to obtain and maintain such approvals.
All costs incurred by Tenant in this regard shall be included in Deductions for
the applicable Hotel.

 

E.            Manager shall not use, and shall exercise commercially reasonable
efforts to prevent the use of, the Hotels’ and Manager’s personal property 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 Tenant’s or Landlord’s title
thereto or any portion thereof or might reasonably be expected to give rise for
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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F.            Manager shall, to the extent within Manager’s control, use
commercially reasonable efforts to cause Tenant to be in compliance with the
applicable Lease, and the costs of the same shall be paid as Deductions for the
applicable Hotel hereunder except as otherwise specifically provided for in this
Agreement.

 

1.03         Services Provided by Manager.

 

A.            Manager will provide the Central Office Services and will bear all
costs of the Central Office Services described in Exhibit B, and in no event
will the costs of the Central Office Services be charged to the Hotels as
Deductions, either directly or through the Above-Property Programs & Services.

 

B.            In operating the Hotels, Manager may provide or cause to be
provided, and the Hotels will participate in, certain functions for the
operation of the Hotels through the use of facilities, systems, equipment and
individuals not physically located at the Hotels, including Chain Services, MBS
Systems, Reservation Systems, Loyalty Programs, Marketing Fund Activities and
Program Services (collectively referred to as the “Above-Property Programs &
Services”).

 

C.            Manager will provide or cause to be provided, and each Hotel will
participate in, certain services (“Chain Services”) that are provided on a
comparable basis to System hotels as follows:

 

1.                  Chain Services include: (a) operational support for
engineering and food and beverage; human resources services (including training
services, manpower development, career development, management personnel
relocation, and payroll services); safety and loss prevention services;
accounting services; computer system development, support and operating costs;
monitoring and management support (such as area managers); and (b) additional
central or regional services that from time to time may be provided to hotels in
the System or in substitution for services now performed at individual System
hotels that may be more efficiently performed on a group basis. Chain Services
will not include services covered by the Program Services Contribution;

 

2.                  With respect to Legacy T234 Hotels, (a) only Central Office
Services and those services listed in clause (a) of the definition of Chain
Services in Section 1.03.C(1) as of the Effective Date are covered by the Legacy
T234 System Fee; (b) if there are expenditures that were originally treated as
Deductions but that are later determined to be more properly treated as Chain
Services, or if additional central or regional services are provided for the
benefit of hotels in the System after the Effective Date, then the Legacy T234
Hotels’ allocable share of such expenditures will be Deductions and will not be
covered by the Legacy T234 System Fee; and (c) likewise, if there are
expenditures that are listed in clause (a) of the definition of Chain Services
in Section 1.03.C(1) that are included in Chain Services on the Effective Date,
but that are later determined to be more properly provided at the Legacy T234
Hotels instead of on a central or regional basis, then such expenditures will
not later be treated as Deductions but will continue to be covered by the Legacy
T234 System Fee; and

 

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3.                  With respect to Legacy CY53 Hotels, only Central Office
Services are covered by the Legacy CY53 System Fee, and those services in the
definition of Chain Services in Section 1.03.C(1) as of the Effective Date will
not be covered by the Legacy CY53 System Fee and will instead be treated as
Deductions.

 

D.            Manager and/or its Affiliates may provide or cause to be provided,
and the Hotels will participate in, certain marketing programs (the “Additional
Marketing Programs”) that are not part of Chain Services, the Loyalty Programs
or the Marketing Fund Activities, or locally-generated public relations,
advertising, promotions and marketing programs. As of the Effective Date, the
Additional Marketing Programs include email marketing, internet search engine
marketing, transaction-based paid internet searches, sales lead referrals and
bookings, cooperative advertising programs, travel agency programs, incentive
awards and gift cards.

 

E.            Manager may, in its discretion, provide or cause to be provided
certain programs and processes that manage certain aspects of a Hotel’s finances
and accounting through processes that consolidate certain accounts payable,
billing and accounts receivable, and related functions and procedures, into one
or more shared services centers, or third party centers, for the System
(including any similar or successor systems or services, the “MBS Systems”).
Manager may change the scope, services, service provider, features and functions
of the MBS Systems from time to time as it determines in its reasonable
discretion to be most efficient and economical for the System.

 

F.            Manager may modify, add or delete categories of Above-Property
Programs & Services in its reasonable discretion. If Manager provides or causes
to be provided a new Above-Property Program & Service to a Hotel, then Manager
will determine whether such new Above-Property Program & Service is treated as a
Chain Service based on whether (i) the new Above-Property Program & Service
supports only a subgroup of System hotels, or selected or individual hotels, or
(ii) the costs of the new Above-Property Program & Service is more appropriately
recovered based on hotel usage. If either clause (i) or clause (ii) applies, the
new Above-Property Program & Service will not be treated as a Chain Service.

 

G.            The Above-Property Programs & Services may be delivered to (i) all
System hotels; (ii) certain subsets of System hotels based on certain criteria
such as hotel type; (iii) hotels on a local, regional or cluster basis; or (iv)
the Hotels and one or more other hotels or businesses on a shared basis. Any of
these programs and services may also be provided or delivered to any other
businesses. The Above-Property Programs & Services provided or delivered to the
Hotels may change from time to time as reasonably determined by Manager subject
to Sections 1.03.C(2), 1.03.C(3) and 1.03.F. Manager may change, discontinue or
reconstitute the Above-Property Programs & Services on a country regional, or
international basis.

 

H.            The Above-Property Programs & Services costs (including for the
avoidance of doubt the Program Services costs) will be allocated by Manager on a
fair and reasonable basis (for example, by the number of Guest Rooms, percentage
of Gross Room Revenues or other revenues, or volume of use) among all of the
properties participating in such programs and services, which basis may be
different for different groups of Above-Property Programs & Services and may
change from time to time as reasonably determined by Manager. Each Hotel’s costs
(i) will be Deductions; (ii) will include the actual costs of providing,
developing and supporting the Above-Property Programs & Services, including
corporate overhead and development costs related to the Above-Property Programs
& Services; (iii) will not include any profit component to Manager; and
(iv) will not include any amounts that are paid by or on behalf of Tenant
pursuant to any other provision of this Agreement for such Above-Property
Programs & Services. Manager may provide the Above-Property Programs & Services
to other Persons and properties that are not part of the System (or allow these
Persons and properties to use the Above-Property Programs & Services’ systems
and infrastructure) at a price that will include the recovery of these costs and
may also include a profit to Manager or its Affiliates. Tenant acknowledges that
the direct benefit to a Hotel from the Marketing Fund Activities (as defined
below) might not be proportionate to any individual Hotel’s cost allocation.

 

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I.            Any amounts that Manager collects in a Fiscal Year from the Hotels
and other hotels receiving the Above-Property Programs & Services which are not
used by Manager or its Affiliates to cover the costs incurred in providing
Above-Property Programs & Services during such Fiscal Year, will be carried
forward without interest and used to cover the costs incurred in future Fiscal
Years. If the amounts that Manager and its Affiliates collect from the Hotels
and other hotels for Above-Property Programs & Services are at any time
insufficient to cover the costs Manager or its Affiliates incur, then Manager
and its Affiliates may advance amounts from their own funds to cover the
shortfall. These advances may be interest bearing loans and will be repaid from
future amounts collected from the Hotels and other System hotels receiving the
Above-Property Programs & Services.

 

1.04          Marketing Fund; Program Services.

 

A.            Manager or its Affiliates will provide or cause to be provided,
and the Hotels will participate in, the following (collectively, the “Marketing
Fund Activities”):

 

1.                  brand research and strategy for sales and marketing;

 

2.                  creating, producing, placing and distributing marketing
materials in any form of media;

 

3.                  advertising, marketing, promotions, public relations and
sales campaigns, programs, sponsorships, seminars and other sales activities;

 

4.                  market research and oversight and management of the guest
voice program and the Loyalty Programs; and

 

5.                  retaining or employing personnel, advertising agencies,
marketing consultants, and other professionals or specialists to assist in
developing, implementing and administering any of the above.

 

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For the avoidance of doubt, as described in Section 1.03.D hereof, the Marketing
Fund Activities exclude any locally-generated public relations, advertising,
promotions and/or marketing programs.

 

B.            Tenant will pay Manager an amount equal to two percent (2%) of
Gross Room Revenues to reimburse Manager and its Affiliates for all costs
associated with the Marketing Fund Activities (the “Marketing Fund
Contribution”). Tenant will pay the Marketing Fund Contribution as part of the
Program Services Contribution described in this Section 1.04.

 

C.            Manager may change or reconstitute the Marketing Fund Activities
on a country, regional or international basis.

 

D.            As of the Effective Date, Program Services will include the
Marketing Fund Activities and Reservation Systems, as well as certain other
Above-Property Programs & Services specified by Manager (“Program Services”).
Program Services will also include the actual costs of providing, developing and
supporting the Program Services, including corporate overhead and development
costs related to the Program Services, costs for collecting and accounting for
any monies collected by Manager or its Affiliates for Program Services (the
“PSF”), reimbursing capital invested in developing such Program Services and
financing such capital.

 

E.            Beginning on the Effective Date, Tenant shall pay Manager the
Program Services Contribution (which shall include, but not be limited to, the
Marketing Fund Contribution) to reimburse Manager and its Affiliates for Program
Services.

 

F.            Manager may (i) use the PSF to cover the costs of Program Services
that benefit System hotels as a whole, groups of System hotels, or other lodging
properties operated or franchised by Manager or its Affiliates, or (ii) change
the programs and services covered by the PSF. Tenant acknowledges that the
direct benefit to a Hotel from the Program Services might not be proportionate
to the Program Services Contribution. Program Services will not necessarily
include all of the hotels in the System, and some Program Services may also
benefit or include Other Marriott Products.

 

1.05          Employees.

 

A.            All personnel employed at the Hotels shall at all times be the
employees of Manager. Subject to the terms of this Agreement, Manager shall have
absolute discretion with respect to all personnel employed at the Hotels,
including, without limitation, decisions regarding hiring (subject to Section
1.05.B), promoting, transferring, compensating, supervising, terminating,
directing and training all employees at the Hotels, and, generally, establishing
and maintaining all policies relating to employment; provided, however, that
Manager shall use commercially reasonable efforts to comply with all Legal
Requirements pertaining thereto and not enter into any written employment
agreements with any person which purport to bind Tenant and/or purport to be
effective regardless of a Termination, without obtaining Tenant’s consent, which
consent may be withheld in Tenant’s sole and absolute discretion. Manager shall
use reasonable efforts to comply with and abide by all Legal Requirements
regarding labor relations; if either Manager or Tenant shall be required,
pursuant to any such Legal Requirement, to recognize a labor union or to enter
into a collective bargaining with a labor union, the party so required shall
promptly notify the other party pursuant to this Section 1.05. Manager shall
indemnify Landlord and Tenant for all costs and expenses (including reasonable
attorneys’ fees) incurred by either of them if they are joined in or made party
to any third-party suit or cause of action in connection with an Employee Claim
where the basis of such Employee Claim is conduct by Manager that is a
substantial violation of the standards of responsible labor relations as
generally practiced by prudent owners or operators of similar hotel properties
in the general geographic area of the relevant Hotel, the costs of which shall
not be a Deduction. Any Dispute between Tenant and Manager as to whether or not
certain conduct by Manager is not in accordance with the aforesaid standards
shall be resolved by Arbitration pursuant to Section 11.23.A hereof. The
Arbitration proceedings described in the preceding sentence shall be conducted
independently of any arbitration proceedings with respect to such Employee Claim
pursuant to the applicable employee-related contract. All information regarding
individual Hotel employees, such as employee records and compensation
information, is proprietary to Manager and confidential and will not be
disclosed to Tenant except as otherwise expressly provided in this Agreement.

 

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B.            Manager shall have the authority to hire, dismiss or transfer each
Hotel’s general manager; provided, however, that Manager shall keep Tenant
reasonably informed with respect to such actions, including prior notification
to Tenant of Manager’s desire to transfer the general manager, and shall give
Tenant the opportunity to participate in the hiring process with respect to the
general managers as follows:

 

1.                  Manager shall provide Tenant at least thirty (30) days’
prior notice of any proposed hiring of a general manager. Manager shall consult
with Tenant to obtain any suggestions by Tenant as to the preferred background
and specific expertise of candidates for such Hotel position, which suggestions,
if any, Manager shall utilize in arriving at a preferred profile for candidates
for such position.

 

2.                  Manager shall submit to Tenant for its approval a reasonably
qualified candidate for such position. Tenant shall have a period of ten (10)
Business Days from its receipt of the applicable candidate’s resume within which
to interview and evaluate such candidate (provided that such candidate and the
necessary representatives of Tenant are reasonably available during such period
of time for such interview or evaluation, and such candidate shall not be
required to provide additional information or undertake testing of any sort as
part of such process). Tenant shall be deemed to have approved such candidate
unless Manager receives Tenant’s written disapproval of such candidate within
such ten (10)-Business Day period. If Tenant disapproves the first (1st)
candidate (based on the process described above), then Manager shall submit a
second (2nd) candidate, using the same process described above. If such second
(2nd) candidate is disapproved by Tenant (based on the same process described
above), then Manager shall submit a third (3rd) candidate, using the same
process as described above. If Tenant disapproves of all three (3) candidates
for the position submitted by Manager pursuant to the provisions of this Section
1.05.B, Manager shall have the right to select the person to be offered the
position of general manager, in Manager’s sole discretion, from the three (3)
candidates proposed to Tenant.

 

C.            Manager shall decide which, if any, of the employees of the Hotels
shall reside at the Hotels (provided that Tenant’s prior approval shall be
obtained if more than two (2) such employees and their immediate families reside
at any Hotel), and shall be permitted to provide free accommodations and
amenities to its employees and representatives living at or visiting the Hotels
in connection with its management or operation consistent with the Marriott
Companies usual practices for Marriott-managed hotels in the System. No person
shall otherwise be given gratuitous accommodations or services without prior
joint approval of Tenant and Manager except in accordance with usual practices
of the hotel and travel industry.

 

9

 

 

D.            Manager shall identify, appoint, assign, instruct and supervise
employees in connection with the operation of the Hotels which Manager deems
necessary or advisable for the operation of the Hotels.

 

E.            Tenant acknowledges that Manager has informed Tenant that Manager
and its Affiliates may collect and use Hotel Employee Personal Data to manage
Hotel employees as provided in this Agreement. Tenant shall notify Manager
promptly of any inquiry or complaint of which Tenant becomes aware that is
received from a Hotel employee, data protection authority or other third party
regarding the collection, use or transfer of Hotel Employee Personal Data.
Tenant will reasonably cooperate with Manager in any defense of such a
complaint, and will not, without Manager’s prior written consent, make any
intentional admission or take any action that would reasonably be expected to
adversely prejudice the defense or settlement of any third-party complaint
regarding Hotel Employee Personal Data or any investigation by a data protection
authority.

 

1.06          Right to Inspect. Manager shall permit Landlord and Tenant and
their respective authorized representatives to inspect or show the Hotels during
usual business hours upon not less than twenty-four (24) hours’ notice and to
make such repairs as Landlord is permitted or required to make pursuant to the
terms of the applicable Lease, provided that any inspection or repair by
Landlord 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 Landlord in its reasonable discretion, prior notice
shall not be required.

 

1.07          Right of Offset. Manager acknowledges that it shall not have, in
any instance, a right of offset against Tenant’s Priority with respect to any
Hotel under any circumstances (or against Aggregate Tenant’s Priority with
respect to Hotels for which the Pooling Agreement is in effect). Manager shall
have the right to offset against amounts due to Tenant with respect to any Hotel
pursuant to Section 3.02.B hereof (and against amounts due to Tenant pursuant to
Section 2.02.A of the Pooling Agreement with respect to Hotels for which the
Pooling Agreement is in effect) (but in all events excluding amounts due to
Tenant as Tenant’s Priority or Aggregate Tenant’s Priority), including amounts
(i) which Landlord or Tenant fail to advance to the Reserve for such Hotel which
either of them is required to make as provided for herein or in the applicable
Lease or Owner Agreement (in each instance as determined by the Expert pursuant
to Section 11.23.B, if applicable), or (ii) due under a final judgment against
Tenant obtained by Manager with respect to such Hotel, or (iii) which Tenant
fails to pay to Manager in violation of Section 4.01.D(2) of this Agreement with
respect to such Hotel. Except as expressly provided herein, Manager shall not
offset against the amounts owed to Tenant hereunder or under the Pooling
Agreement.

 

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ARTICLE II

TERM

2.01          Term.

 

A.            The Term of this Agreement shall be, for each Hotel, from the
Effective Date to the expiration or earlier termination of the Initial Term and,
if exercised in accordance with the terms hereof, the Renewal Term(s). The
Initial Term and, if exercised, each Renewal Term are collectively referred to
as the “Term.” The “Initial Term” for each Hotel shall begin on the Effective
Date for such Hotel as set forth in the preceding sentence, and, unless sooner
terminated as provided in this Agreement, shall continue until December 31,
2035. Provided that (1) Manager and its Affiliates have renewed all of the Other
Management Agreements for the first Renewal Term or second Renewal Term, as
applicable in accordance with their terms, and (2) there exists at the time of
renewal no Manager Event of Default under this Agreement or any of the Other
Management Agreements beyond the expiration of any applicable notice and cure
period and for which Tenant has, at such time, the right to terminate this
Agreement, the Term shall thereafter automatically be extended for each of two
(2) successive periods of ten (10) Fiscal Years each (each, a “Renewal Term”),
unless Manager gives Tenant and Landlord written notice of Manager’s decision
not to extend on or before the date which is twelve (12) months prior to the
date of the expiration of the Initial Term or first Renewal Term (as the case
may be), time being of the essence. If Manager does not extend the Initial Term
or first Renewal Term (as the case may be), then during such twelve (12)-month
period prior to the date of the expiration of the Initial Term or first Renewal
Term (as the case may be), Tenant shall have the right to effect an earlier
Termination of this Agreement with respect to such Hotel by written notice to
Manager, which Termination shall be effective as of the effective date which is
set forth in said notice, provided that said effective date shall be at least
one hundred twenty (120) days after the date of said notice, and in no event
earlier than July 1 of the year of such Termination, and such Termination shall
be in accordance with the provisions of Section 11.11 of this Agreement.
Notwithstanding the foregoing, the parties acknowledge and agree that Tenant’s
termination right pursuant to this Section 2.01.A shall only be exercised with
respect to all or none of the Hotels which are subject to this Agreement.

 

B.            Each Renewal Term shall commence on the day succeeding the
expiration of the Initial Term or the preceding Renewal Term, as the case may
be. All of the terms, covenants and provisions of this Agreement shall apply to
each such Renewal Term. If Manager shall give notice that it elects not to
extend the term in accordance with this Section 2.01, this Agreement shall
automatically terminate at the end of the Term then in effect, or such earlier
date as provided above, and Manager shall have no further option to extend the
Term of this Agreement. Otherwise, the extension of this Agreement shall be
automatically effected without the execution of any additional documents; it
being understood and agreed, however, that Manager and Tenant shall execute such
documents and agreements as either party shall reasonably require to evidence
the same.

 

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ARTICLE III

 

COMPENSATION OF MANAGER

 

3.01          Management Fees. In consideration of the services provided to
Tenant so that the Hotels become members of the System and in consideration of
the management services to be performed during the Term, Manager shall be paid,
with respect to each Hotel, the sum of the following as its management fees:

 

A.            The System Fee; plus

 

B.            The Base Management Fee; plus

 

C.            The First Incentive Management Fee; plus

 

D.            The Second Incentive Management Fee.

 

So long as the Pooling Agreement has not been terminated in accordance with its
terms with respect to the Hotels, payments of the Management Fees with respect
to periods for which the Pooling Agreement was in effect shall be made at the
time, and in the amounts, provided for under the Pooling Agreement.
Notwithstanding anything herein to the contrary, if, in any Fiscal Year or
portion thereof prior to the termination of the Pooling Agreement in accordance
with its terms with respect to one or more of the Hotels, the First Incentive
Management Fee or the Second Incentive Management Fee with respect to such
Hotels are not payable in full under the Pooling Agreement, Manager shall not be
entitled to the payment of the portion of the First Incentive Management Fee or
the Second Incentive Management Fee not payable under the terms of the Pooling
Agreement for such Fiscal Year or partial Fiscal Year with respect to such
Hotels, and in no event shall Tenant be liable for the payment of any such
unpaid portion to Manager. Notwithstanding anything herein to the contrary, if,
in any Fiscal Year after the termination of the Pooling Agreement in accordance
with its terms or with respect to a Hotel, the First Incentive Management Fee or
the Second Incentive Management Fee with respect to such Hotel is not payable
under Section 3.02.B hereof with respect to such Hotel, Manager shall not be
entitled to the payment of the portion of the First Incentive Management Fee or
the Second Incentive Management Fee not payable under Section 3.02.B hereof with
respect to such Hotel, and in no event shall Tenant be liable for the payment of
such portion of the First Incentive Management Fee or the Second Incentive
Management Fee to Manager with respect to such Hotel.

 

3.02          Operating Profit.

 

A.            So long as the Pooling Agreement has not been terminated in
accordance with its terms with respect to one or more of the Hotels, Operating
Profit for such Hotels with respect to periods for which the Pooling Agreement
was in effect shall be distributed, to the extent available, as provided in the
Pooling Agreement and the provisions of Section 3.02.B shall not apply.

 

B.            For any period during the Term after the termination of the
Pooling Agreement in accordance with its terms with respect to one or more of
the Hotels, Operating Profit for each such Hotel shall be distributed in the
following order of priority:

 

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1.                  First, to Tenant, in an amount equal to Tenant’s Priority
for such Hotel.

 

2.                  Second, to Tenant, in an amount equal to the amount of rent
due pursuant to the ground lease (if any) to which such Hotel is subject, as set
forth on the applicable Addendum for such Hotel (the “Ground Lease Rent”).

 

3.                  Third, to Manager, in an amount equal to the Base Management
Fee for such Hotel.

 

4.                  Fourth, pari passu, to (i) Tenant, in an amount necessary to
reimburse Tenant for all Tenant Working Capital Advances and Tenant Operating
Loss Advances made by Tenant, from time to time (collectively, “Tenant
Advances”) with respect to such Hotel which have not yet been repaid by
distributions pursuant to this Section 3.02.B(4), and (ii) to Marriott, in an
amount necessary to reimburse Marriott or any Affiliate for all Additional
Marriott Advances made by Marriott or any Affiliate (including Manager)
allocable to such Hotel and all Additional Manager Advances from time to time
which have not yet been repaid by distributions pursuant to this Section
3.02.B(4). If at any time the amounts available for distribution to Tenant and
Marriott with respect to a Hotel pursuant to this Section 3.02.B(4) (“Available
Funds”) are insufficient (a) to repay to Tenant all outstanding Tenant Advances
with respect to a Hotel (the “Sum Due Tenant”), and (b) to repay to Marriott all
outstanding Additional Marriott Advances and Additional Manager Advances with
respect to a Hotel (the “Sum Due Marriott”), then (x) Tenant shall be paid from
the Available Funds for such Hotel the amount obtained by multiplying a number
equal to the amount of the Available Funds by a fraction, the numerator of which
is the Sum Due Tenant and the denominator of which is the sum of the Sum Due
Tenant plus the Sum Due Marriott, and (y) Marriott shall be paid from the
Available Funds the amount obtained by multiplying a number equal to the amount
of the Available Funds for such Hotel by a fraction, the numerator of which is
the Sum Due Marriott and the denominator of which is the sum of the Sum Due
Tenant plus the Sum Due Marriott.

 

5.                  Fifth, to Manager, in an amount equal to any accrued, but
unpaid Base Management Fees for such Hotel.

 

6.                  Sixth, to Manager, in an amount equal to the First Incentive
Management Fee for such Hotel.

 

7.                  Seventh, to Tenant, in an amount up to sixty percent (60%)
of Operating Profit remaining after deducting amounts paid or payable in respect
of Sections 3.02.B(1) through (6) hereof necessary for the Security Deposit
Replenishment with respect to such Hotel.

 

8.                  Eighth, to Manager, in an amount equal to the Second
Incentive Management Fee for such Hotel.

 

9.                  Finally, to Tenant, the balance, if any.

 

13

 

 

C.            For any period during which a Hotel is no longer subject to the
terms of the Pooling Agreement pursuant to the terms thereof, Tenant shall
receive Tenant’s Priority in accordance with the terms hereof, subject, however,
to the provisions of this Section 3.02.C. If the Operating Profit for the
applicable Accounting Period, as determined by Manager, is less than Tenant’s
Priority with respect to such Accounting Period (a “Tenant’s Priority
Shortfall”), then such Tenant’s Priority Shortfall shall first be funded by
Security Deposit Advances, and if the Security Deposit is depleted or otherwise
insufficient to fund such Tenant’s Priority Shortfall, then the amount of the
Tenant’s Priority Shortfall required to satisfy the Tenant’s Termination
Threshold shall be funded by Marriott Guaranty Advances, subject to the terms of
the Marriott Guaranty Agreement, for so long as the Marriott Guaranty Agreement
is in effect, and any such amounts funded in excess of the Tenant’s Termination
Threshold shall be deemed to have been funded by Marriott as an Additional
Marriott Advance and/or Manager as an Additional Manager Advance (as applicable)
and not as a Marriott Guaranty Advance. Any amount of the Tenant’s Priority
Shortfall not funded from the Security Deposit or by Marriott or Manager shall
accrue and be paid as provided in Section 4.01 hereof. If a Guaranty Termination
Event has occurred, then Manager may, without any obligation and in its sole and
absolute discretion, fund up to the Post-Guaranty Termination Threshold, and any
such amounts funded by Manager following such Guaranty Termination Event shall
be deemed Additional Manager Advances. If (a) no Guaranty Termination Event has
occurred, and Marriott has not funded up to the Tenant’s Termination Threshold
under the Marriott Guaranty Agreement as provided herein for the applicable
Fiscal Year on a cumulative basis within ten (10) days of receiving written
request from Tenant or (b) a Guaranty Termination Event has occurred, and
Manager has not funded up to the Post-Guaranty Termination Threshold for the
applicable Fiscal Year on a cumulative basis within ten (10) days of receiving
written request from Tenant (such event, a “Manager Funding Termination Event”),
then Tenant shall have the right to effect a Termination of this Agreement with
respect to such Hotel by written notice to Manager, which Termination shall be
effective as of the effective date which is set forth in said notice; provided
that said effective date shall be at least sixty (60) days (or such longer
period required by applicable Legal Requirements concerning the termination of
Hotel employees) after the date of such notice. If the Termination is pursuant
to clause (a) of this Section 3.02.C, then such Termination (i) shall be in
accordance with the provisions of Section 11.11 of this Agreement, (ii) shall
constitute a Manager Default, and (iii) shall entitle Tenant to all rights and
remedies available to it with respect to a Manager Default as provided for in
Article IX hereof. If the Termination is due to a Manager Funding Termination
Event, then such Termination shall not constitute a Manager Default or Manager
Event of Default and shall be in accordance with the provisions of Section 11.11
of this Agreement. Notwithstanding the foregoing, the parties acknowledge and
agree that Tenant’s termination right pursuant to this Section 3.02.C shall only
be exercised with respect to all or none of the Hotels which are subject to this
Agreement.

 

D.            Notwithstanding the provisions of Section 3.02.B(2) hereof, the
parties hereby acknowledge and agree that none of Manager, Marriott or any of
their respective Affiliates are obligated to pay and in no event shall be liable
in any way whatsoever (i) for any payment of, or failure to pay, the Ground
Lease Rent to the lessor under any such ground lease; and/or (ii) if there is
insufficient Operating Profit to cover the full amount of such Ground Lease
Rent.

 

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ARTICLE IV

 

ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS

 

4.01          Accounting, Interim Payment and Annual Reconciliation.

 

A.            Within twenty (20) days after the close of each Accounting Period,
Manager shall deliver an interim accounting (the “Accounting Period Statement”)
to Tenant and Landlord showing for each Hotel, Gross Revenues, Gross Room
Revenues, occupancy percentage and average daily rate, Deductions, Operating
Profit, and applications and distributions thereof for the preceding Accounting
Period.

 

Only if the Pooling Agreement has been terminated in accordance with its terms
with respect to one or more Hotels, the following provisions for interim
distributions shall apply with respect to such Hotels for periods subsequent to
the termination date. Notwithstanding the order of distribution of Operating
Profit set forth in Section 3.02.B, for each Accounting Period, Manager shall,
with each interim accounting, transfer to Tenant any interim amounts due Tenant,
transfer to Marriott any interim amounts due to Marriott, and retain any interim
amounts due to Manager under Section 3.02.B, including, without limitation, the
Base Management Fee, the First Incentive Management Fee, and the Second
Incentive Management Fee calculated on a year-to-date basis for such Fiscal
Year. If the portion of Operating Profit to be distributed to Tenant pursuant to
Sections 3.02.B(1), (2), (4) or (7) is insufficient to pay each of such interim
amounts then due in full following the end of any Accounting Period, any such
interim amounts left unpaid shall be paid from and to the extent of Operating
Profit available therefor at the time distributions are made following
successive Accounting Periods until such interim amounts are paid in full, and
such payments shall be made from such available Operating Profit in the same
order of priority as other payments made on account of such items following such
Accounting Periods. If the portion of Operating Profit to be distributed to
Marriott or Manager pursuant to Sections 3.02.B(3), (4), (5), (6) or (8) is
insufficient to pay each of such interim amounts then due in full following the
end of any Accounting Period, any such interim amounts left unpaid shall be paid
from and to the extent of Operating Profit available therefor at the time
distributions are made following successive Accounting Periods until such
interim amounts are paid in full, and such payments shall be made from such
available Operating Profit in the same order of priority as other payments made
on account of such items following such Accounting Periods. The portion of
Operating Profit to be distributed as interim distributions to Tenant as
Tenant’s Priority, Ground Lease Rent and as Security Deposit Replenishment
pursuant to Section 3.02.B for the then-current Fiscal Year for each Hotel, as
well as the portion of Operating Profit to be retained by Manager as the Base
Management Fee, the First Incentive Management Fee and the Second Incentive
Management Fee pursuant to Section 3.02.B for each Hotel, shall be determined by
applying in each instance a cumulative prorated amount to such Tenant’s
Priority, Ground Lease Rent, Security Deposit Replenishment, Base Management
Fee, First Incentive Management Fee and Second Incentive Management Fee
(calculated on a year-to-date basis, with the prorated amount being one-twelfth
(1/12) of the total amount for each of such items for each Accounting Period of
each Fiscal Year) to the year-to-date cumulative Operating Profit of such Hotel
(all such portions being hereinafter collectively referred to as the “Prorated
Portions”). In each Accounting Period after the first Accounting Period of a
Fiscal Year, inclusive, the Prorated Portions shall be adjusted to reflect
distributions to Tenant, and retention by Manager, of Operating Profit with
respect to such Prorated Portions for prior Accounting Periods during the then
current Fiscal Year. All the distributions shall be made in the order of
priority as set forth in Section 3.02 hereof.

 

15

 

 

B.            Intentionally Deleted.

 

C.            1.      Calculations and payments of the First Incentive
Management Fee, the Second Incentive Management Fee, Tenant’s Priority, and
Ground Lease Rent for each Hotel and distributions of Operating Profit made with
respect to each Accounting Period within a Fiscal Year for each Hotel shall be
accounted for cumulatively within a Fiscal Year, but shall not be cumulative
from one Fiscal Year to the next. Calculations and payments of any Base
Management Fees or Reimburseable Advances payable pursuant to Sections
3.02.B(3), (4) and (5) hereof and the Security Deposit Replenishment shall be
accounted for cumulatively within a Fiscal Year, and shall be cumulative from
one Fiscal Year to the next. Calculations of Security Deposit Advances and
Marriott Guaranty Advances shall be accounted for cumulatively within a Fiscal
Year.

 

2.       Within sixty (60) days after the end of each Fiscal Year, Manager shall
deliver to Tenant and Landlord a statement (the “Annual Operating Statement”) in
reasonable detail summarizing the operations of the Hotels with respect to which
this Agreement was in effect for the immediately preceding Fiscal Year and an
Officer’s Certificate certifying that such Annual Operating Statement is true
and correct. The parties shall, within ten (10) Business Days after Tenant’s
receipt of such statement, make any adjustments, by cash payment, in the amounts
paid or retained for such Fiscal Year as are needed because of the final figures
set forth in such Annual Operating Statement; provided, however, that for any
period prior to the termination of the Pooling Agreement in accordance with its
terms with respect to any of the Hotels, the year-end adjustments for such Hotel
shall be made pursuant to the Pooling Agreement. Such final accounting shall be
controlling over the interim accountings and shall be final subject to
adjustments required as a result of an audit requested by Landlord or Tenant
below. No adjustment shall be made for any Operating Loss or Operating Profit
for any Hotel in a preceding or subsequent Fiscal Year.

 

D.            1.      In addition, on or before April 30 of each Fiscal Year,
commencing on April 30, 2021, Manager shall deliver to Tenant and Landlord an
Officer’s Certificate setting forth the totals of Gross Revenues, Deductions,
and the calculation of the First Incentive Management Fee, the Security Deposit
Replenishment and the Second Incentive Management Fee for each Hotel with
respect to which this Agreement was in effect for the preceding Fiscal Year. If
Tenant desires, at its own expense, that an audit be delivered with the delivery
of an Officer’s Certificate, Tenant shall notify Manager in writing no later
than February 1 of the Fiscal Year in which such Officer’s Certificate will be
delivered. Such audit shall be completed by a firm of independent certified
public accountants proposed by Manager and approved by Tenant and Landlord
(which approval shall not be unreasonably withheld or delayed). Any dispute
concerning the correctness of an audit shall be settled by an Expert in
accordance with Section 11.23.B. Manager shall pay the cost of any such audit
revealing an understatement of Operating Profit by more than five percent (5%),
and such amount shall not be a Deduction. Notwithstanding anything contained in
this Agreement to the contrary, Manager shall remain obligated to deliver an
Officer’s Certificate as required by the Prior Management Agreement on or before
April 30, 2020 (if applicable). Tenant shall have the right to audit such
Officer’s Certificate in accordance with the Prior Management Agreement (if
applicable), and the parties shall make such adjustments with respect thereto as
would be required under the Prior Management Agreement (if applicable).

 

16

 

 

2.       If the Security Deposit Replenishment or any other amounts due to
Tenant as shown in the Officer’s Certificate provided in Section 4.01.D(1) above
for any Hotel exceed the amounts previously paid with respect thereto to Tenant,
Manager shall promptly pay such excess to Tenant at such time as the Officer’s
Certificate is delivered, together with interest at the Disbursement Rate, which
interest shall accrue from the close of such preceding Fiscal Year until the
date that such certificate is required to be delivered and, thereafter, such
interest shall accrue at the Overdue Rate, until the amount of such difference
shall be paid or otherwise discharged. Manager shall notify Tenant of such
payment and the amount thereof and Manager shall promptly render a statement to
Tenant setting forth the adjustments required to be made to the distributions
under Section 3.02.B for such Fiscal Year and the parties shall promptly make,
and cause their respective Affiliates to make, any adjustments or additional
payments or reimbursements required to comply with such revised statement. If
the Security Deposit Replenishment due as shown in the Officer’s Certificate for
any Hotel is less than the amount previously paid with respect thereto to
Tenant, Tenant shall within ten (10) Business Days of receipt of written request
from Manager, pay such excess to Manager, together with interest at the
Disbursement Rate, which interest shall accrue from the date of such overpayment
until it is repaid. Manager shall notify Tenant of the requirement of such
payment and the amount thereof and Manager shall promptly render a statement to
Tenant setting forth the adjustments required to be made to the distributions
under Section 3.02.B for such Fiscal Year and the parties shall promptly make,
and cause their respective Affiliates to make promptly, any adjustments or
additional payments or reimbursements required to comply with such revised
statement. Notwithstanding anything contained in this Agreement to the contrary,
Manager and Tenant shall comply with their obligations under the Prior
Management Agreement with respect to the Officer’s Certificate to be delivered
by Manager on or before April 30, 2020 (if applicable).

 

E.            To the extent there is an Operating Loss for any Fiscal Year with
respect to a Hotel, Tenant shall have the right, without any obligation and in
its sole and absolute discretion, to advance funds required to fund such
deficiency within twenty (20) days after Manager has delivered written notice
thereof to Tenant; provided, however, during any period in which any Hotel is
subject to the Pooling Agreement, the determination of any Operating Loss for
such Hotel shall be made based on the aggregate of the Operating Profit and
Operating Losses of all Portfolio Properties and Tenant’s rights shall be
governed by the terms and provisions of the Pooling Agreement. Any Operating
Loss so funded by Tenant shall constitute a “Tenant Operating Loss Advance.” If
Tenant does not fund such Operating Loss in accordance with the terms of this
Section 4.01.E, then Manager shall also have the right, within twenty (20) days
after such initial twenty (20)-day period, without any obligation and in its
sole and absolute discretion, to advance funds required to fund such Operating
Loss, and any such advance shall constitute an Additional Manager Advance with
respect to such Hotel. Any Tenant Operating Loss Advances and/or Additional
Manager Advances shall be repaid in accordance with Section 3.02.B(4) hereof.

 

17

 

 

F.            1.      In addition, Manager shall provide Landlord and Tenant
with information relating to the Hotels and public information relating to
Manager and its Affiliates that (a) may be required in order for Landlord or
Tenant as the case may be to prepare financial statements in accordance with
GAAP or to comply with applicable securities laws and regulations and the SEC’s
interpretation thereof, (b) may be required for Tenant or Landlord to prepare
federal, state or local tax returns, or (c) is of the type that Manager
customarily prepares for other hotel owners; provided, however, that (i) Manager
reserves the right, in good faith, at Manager’s expense, to challenge and
require Landlord and Tenant to use commercially reasonable efforts to challenge
any assertion by the SEC, any other applicable regulatory authority, or
Landlord’s or Tenant’s independent public accountants that applicable law,
regulations or GAAP require the provision or publication of Proprietary
Information, (ii) Landlord and Tenant shall not, without Manager’s consent
(which consent shall not be unreasonably withheld, delayed or conditioned),
acquiesce to any such challenged assertion until Landlord and Tenant have
exhausted all reasonable available avenues of administrative review, and
(iii) Landlord and Tenant shall consult with Manager in pursuing any such
challenge and will allow Manager to participate therein, at Manager’s expense,
if and to the extent that Manager so elects. Landlord and Tenant acknowledge
that the foregoing does not constitute an agreement by Manager either to join in
Landlord and Tenant filing with or appearance before the SEC or any other
regulatory authority or to take or consent to any other action which would cause
Manager to be liable to any third party for any statement or information other
than those statements incorporated by reference pursuant to clause (a) above.

 

2.       Subject to such Person entering into a confidentiality agreement with
Manager as Manager may reasonably require, Tenant may at any time, and from time
to time, provide copies of any of the statements furnished under this Section
4.01 to any Person which has made or is contemplating making a Qualified
Mortgage, or another lender, or a prospective lender with respect to one or more
of the Hotels.

 

3.       In addition, Landlord and Tenant shall have the right, from time to
time at Landlord’s or Tenant’s (as the case may be) sole cost and expense, upon
reasonable written notice, during Manager’s customary business hours, to cause
Manager’s books and records with respect to the Hotels to be audited by auditors
selected by Landlord or Tenant (as the case may be) at the place or places where
such books and records are customarily kept, provided that, prior to conducting
such audit, Landlord or Tenant, as the case may be, shall enter into a
confidentiality agreement with Manager, such agreement to be in form and
substance reasonably satisfactory to Landlord or Tenant (as the case may be) and
Manager.

 

4.02          Books and Records.

 

A.            Books of control and account pertaining to operations at the
Hotels shall be kept on the accrual basis and in all material respects in
accordance with the Uniform System of Accounts and with GAAP (provided that, to
the extent of a conflict between the two, GAAP shall control over the Uniform
System of Accounts), or in accordance with such industry standards or such other
standards with which Manager and its Affiliates are required to comply from time
to time, with the exceptions, if any, provided in this Agreement and the Pooling
Agreement, to the extent applicable which will accurately record the Gross
Revenues of the Hotels and applications 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 Year (which obligation shall survive termination hereof).

 

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B.                 Tenant may at reasonable intervals during Manager’s normal
business hours examine such books and records including, without limitation,
supporting data and sales and excise tax returns. If Tenant desires, at its own
expense, to audit, examine, or review the annual operating statement which is
described in Section 4.01.C(2), Tenant shall notify Manager in writing within
one (1) year after receipt of such statement of its intention to audit and begin
such audit within such one (1) year after Manager’s receipt of such notice.
Tenant shall use commercially reasonable efforts to complete such audit as soon
as practicable after the commencement thereof, subject to reasonable extension
if Tenant’s or its accountant’s inability to complete the audit within such time
is caused by Manager. If Tenant does not make such an audit, then such statement
shall be deemed to be conclusively accepted by Tenant as being correct, and
Tenant shall have no right thereafter, except for adjustments made pursuant to
an audit requested by Landlord under the Owner Agreement or in the event of
fraud by Manager, to question or examine the same. If any audit by Tenant or
Landlord as aforesaid (1) discloses an understatement of any net amounts due
Tenant and its Affiliates, in the aggregate, hereunder (and, prior to the
termination of the Pooling Agreement in accordance with its terms with respect
to the Hotels and the Other Management Agreements for the Fiscal Year in
question) Manager shall, and shall cause its Affiliates, to promptly pay Tenant
such net amounts found to be due, plus interest thereon at the Overdue Rate from
the date such amounts should originally have been paid, or (2) discloses that
Manager and its Affiliates have not received, in the aggregate, any net amounts
due them hereunder (and, prior to the termination of the Pooling Agreement in
accordance with its terms with respect to the Hotels and the Other Management
Agreements for the Fiscal Year in question), Tenant shall, and shall cause its
Affiliates, to promptly pay Manager such net amounts, plus interest thereon (at
the Prime Rate plus one percent (1%) per annum) from the date such amounts
should originally have been paid. Manager shall promptly after completion of the
adjustments required as a result of any such audit, render a statement to Tenant
setting for that adjustments required to be made to the distributions under
Section 3.02.B for such Fiscal Year which reflect all adjustments made to the
amounts due Tenant, Marriott and/or Manager as a result of such audit and the
parties shall make and cause their respective Affiliates to make any adjustments
or additional payments or reimbursements required to comply with such revised
statement. Any dispute concerning the correctness of an audit shall be settled
by the Expert in accordance with Section 11.23.B. Manager shall pay the cost of
any audit revealing understatement of Operating Profit by more than five percent
(5%), and such amount shall not be a Deduction from Gross Revenues.

 

C.                 Manager shall have the right, at its option, to provide
Tenant with automated delivery, in electronic format, of the data required under
Sections 4.01.A, 4.01.C(2), 4.01.D(1), 4.02.A and 4.04 (consistent with the
then-current standard operating procedures generally employed by Manager with
respect to other hotels in the System), which delivery may be by means of a link
to an intranet website of Manager or an Affiliate provided contemporaneous
notice of the posting of data is provided to Tenant via electronic mail to a
person designated in writing by Tenant to Manager. The parties shall cooperate
reasonably with each other in order to adapt to new technologies that may be
available with respect to the transmission of such data.

 

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4.03          Accounts, Expenditures.

 

A.                Tenant irrevocably authorizes and directs Manager to pay, and
Manager agrees to pay (or repay, as applicable), without notice, demand or
request therefor, but in each instance subject to the provisions of the Pooling
Agreement, if applicable, and the Marriott Guaranty Agreement, if applicable,
with respect to each of the Hotels: (1) Tenant’s Priority to Tenant when due and
payable hereunder, (2) the Ground Lease Rent (if any) to Tenant, (3) the Base
Management Fee to itself, (4) distributions to Tenant, Marriott and/or Manager
with respect to the Tenant Advances, Additional Marriott Advances and Additional
Manager Advances, (5) any accrued, but unpaid Base Management Fees to itself,
(6) the First Incentive Management Fee to itself, (7) the Security Deposit
Replenishment to Tenant, (8) the Second Incentive Management Fee to itself, and
(9) the remaining balance, if any, to Tenant, in each of the foregoing instances
set forth in this Section 4.03.A(1) through (9), at the time interim
distributions are made pursuant to Section 4.01 hereof (except as otherwise set
forth herein), and to the extent of the sufficiency of, and in the order of,
distribution of Operating Profit under Section 3.02.B. Subject to Section
4.03.D, Manager is authorized to, and shall, make all expenditures required to
be made hereunder with respect to the operation of the Hotels, but only from
funds available for such payments under the terms of this Agreement or under the
terms of the Pooling Agreement, if applicable, or under the Marriott Guaranty
Agreement, if applicable.

 

B.                 Notwithstanding anything herein to the contrary, within sixty
(60) days after the end of each Fiscal Year, Marriott or Manager shall determine
whether any Additional Manager Advance, any Additional Marriott Advance or any
Marriott Guaranty Advance (pursuant to the terms of the Marriott Guaranty
Agreement) was made with respect to such Fiscal Year, and if Marriott or Manager
has made such an advance with respect to such Fiscal Year, then Marriott or
Manager shall advise Tenant in writing of the type and amount of such advance,
and the balance of the Aggregate Amount Funded shall be deemed increased by the
amount of any Marriott Guaranty Advance.

 

C.                 Subject to the terms of the Pooling Agreement, as
appropriate, all escrow reserve accounts and funds derived from the operation of
the Hotels shall be deposited by Manager in a bank account(s) in a bank
designated by Manager. Withdrawals from said accounts shall be made solely by
representatives of Manager whose signatures have been authorized. Reasonable
petty cash funds shall be maintained at the Hotels.

 

D.                Manager shall not be required to make any advance or payment
hereunder or to or for the account of Tenant except out of funds available
therefor pursuant to the terms of this Agreement except as otherwise set forth
herein or in any of the Incidental Documents, and Manager shall not be obligated
to incur any liability or obligation for Tenant’s account without assurances
satisfactory to Manager that necessary funds for the discharge thereof will be
provided by Tenant. In any event, if any such liability or obligation is
incurred by Manager for Tenant’s account and Marriott does not have funds
available under the Pooling Agreement or Manager does not have funds hereunder
if the Pooling Agreement is not in effect with respect to the applicable Hotel,
to pay such amount on or before twenty (20) days after the end of the Accounting
Period in which such liability or obligation was paid, the amount advanced to
pay such obligation shall be an Additional Manager Advance which shall be repaid
as provided in Section 3.02.B hereof.

 

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4.04          Annual Operating Projection. Manager shall furnish to Tenant for
its review, at least thirty (30) days prior to the beginning of each Fiscal Year
(or such earlier date if that becomes the prevailing practice within the
System), a statement of the estimated financial results of the operation of each
such Hotel for the forthcoming Fiscal Year (“Annual Operating Projection”). Such
projection shall project the estimated Gross Revenues, departmental profits,
Deductions, and Operating Profit for the ensuing Fiscal Year for each such
Hotel. Manager agrees to take reasonable steps to ensure that, at Tenant’s
request, qualified personnel from Manager’s staff are available to explain such
Annual Operating Projections to Tenant. A meeting (or meetings) for such purpose
shall be held, at Tenant’s request, within a reasonable period of time after the
submission to Tenant of the Annual Operating Projection. Manager will at all
times give good faith consideration to Tenant’s suggestions regarding any Annual
Operating Projection. Manager shall thereafter submit to Tenant, by no later
than seventy-five (75) days after the beginning of such Fiscal Year, a modified
Annual Operating Projection if any changes are made following receipt of
comments from Tenant. Manager shall endeavor to adhere to the Annual Operating
Projection. It is understood, however, that the Annual Operating Projection is
an estimate only and that unforeseen circumstances such as, but not limited to,
the costs of labor, material, services and supplies, casualty, operation of law,
or economic and market conditions may make adherence to the Annual Operating
Projection impracticable, and Manager shall be entitled to depart therefrom due
to causes of the foregoing nature; provided, however, that nothing herein shall
be deemed to authorize Manager to take any action prohibited by this Agreement
or to reduce Manager’s other rights or obligations hereunder.

 

4.05          Working Capital.

 

A.                Subject to the terms of the Pooling Agreement, upon written
notice from Manager, Tenant shall, within ten (10) Business Days of Manager’s
request, advance funds necessary to maintain Working Capital at levels
determined by Manager to be reasonably necessary to satisfy the needs of the
Hotels as their operation may from time to time require (such additional funds,
the “Additional Working Capital”). Any such request by Manager shall be
accompanied by a reasonably detailed explanation of the reasons for the request.
All Additional Working Capital shall be utilized by Manager on behalf of Tenant
for the purposes of this Agreement pursuant to cash-management policies
established for the System; provided, however, that so long as any of the Hotels
are subject to the Pooling Agreement, the Working Capital for such Hotels will
be pooled with working capital provided under the Other Management Agreements
and may be used to fund working capital needs for all Portfolio Properties. If
Tenant fails to timely fund such Additional Working Capital within ten (10)
Business Days after Manager’s request for the same, then, without affecting
Manager’s other rights and remedies under this Agreement, Manager shall have the
right, without any obligation and in its sole and absolute discretion, to
advance such Additional Working Capital within ten (10) Business Days after such
initial ten (10)-Business Day period, and all such advances shall constitute
Tenant Working Capital Advances or Additional Manager Advances, as applicable,
and shall be repaid as provided in Section 3.02.B(4) hereof.

 

B.                 Subject to the Pooling Agreement, upon a Termination, Manager
shall disburse to Tenant all Working Capital remaining after payment of all
Deductions and all amounts owed to Manager hereunder and amounts payable by
Tenant hereunder (including funds to be held in escrow under Sections
6.01.B(2)(e) and 11.11.I).

 

4.06          Fixed Asset Supplies. Any Fixed Asset Supplies that are necessary
to maintain Fixed Asset Supplies at levels determined by Manager to be necessary
to satisfy the needs of each Hotel, as their operation may from time to time
require, shall be paid from Gross Revenues of such Hotel as Deductions. Such
additional Fixed Asset Supplies shall remain the property of Tenant throughout
the Term of this Agreement and upon Termination, except for Fixed Asset Supplies
purchased by Manager pursuant to Section 11.11.E.

 

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ARTICLE V

 

REPAIRS, MAINTENANCE AND REPLACEMENTS

 

5.01          Manager’s Maintenance Obligation. Except as provided in Section
5.02 hereof, and subject to the availability of sufficient funds in the
applicable Reserves, Manager shall maintain the Hotels including all private
roadways, sidewalks and curbs located thereon in good order and repair,
reasonable wear and tear excepted (whether or not the need for such repairs
occurs as a result of Tenant’s or Manager’s use, any prior use, the elements or
the age of the Hotels, or any portion thereof), and in conformity with Legal
Requirements, System Standards and any Existing CC&Rs or Future CC&Rs (which
Future CC&Rs must be approved in writing by Manager if the same may be
reasonably expected to interfere in any material way with the operation of or
financial performance of a Hotel). Except as provided in Section 5.02 hereof,
and subject to the availability of sufficient funds in the applicable Reserve
for each Hotel with respect to capital items, and the sufficiency of Gross
Revenue and Working Capital for each Hotel otherwise, in each instance, as
applicable, Manager shall promptly make or cause to be made all necessary and
appropriate repairs, replacements, renewals, and additions thereto 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). All
repairs, renovations, alterations, improvements, renewals, replacements or
additions 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 federal, state and local statutes, ordinances, by-laws, codes, rules
and regulations relating to any such work. Subject to the availability of
sufficient funds in the applicable Reserve for each Hotel or otherwise available
pursuant to this Agreement, Manager shall not take or omit to take any action,
with respect to the Hotel (and not the System as a whole) the taking or omission
of which would materially and adversely impair the value of any Hotel or any
part thereof for its use as a hotel. The cost and expense incurred in connection
with Manager’s obligations hereunder shall be paid either from funds provided by
Tenant or Landlord as provided for herein, Gross Revenues, Working Capital or
from the Reserves, pursuant to Sections 5.02 and 5.03 below.

 

5.02          Repairs and Maintenance to be Paid from Gross Revenues. Manager
shall promptly make or cause to be made, such routine maintenance, repairs and
minor alterations as it determines are necessary to comply with Manager’s
obligations under Section 5.01. The phrase “routine maintenance, repairs, and
minor alterations” as used in this Section 5.02 shall include only those which
are normally expensed under GAAP. The cost of such maintenance, repairs and
alterations shall be paid from Gross Revenues for such Hotel (and not from such
Hotel’s Reserves) and shall be treated as a Deduction in determining Operating
Profit for such Hotel.

 

5.03          Items to be Paid from Reserves.

 

A.                To the extent funds are in the applicable Reserves for each
Hotel or such funds are provided by Tenant or Landlord under Section 5.07
hereof, Manager shall promptly make or cause to be made, all of the items listed
in Section 5.03.B below as are necessary to comply with Manager’s obligations
under Section 5.01 hereof. The cost of such items shall be paid from the
applicable Reserve and not from Gross Revenues of a Hotel.

 

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B.                 Manager has established for each Hotel, and currently holds
funds in, an interest bearing escrow reserve account (each, a “Reserve” and
collectively, the “Reserves”), which Reserves shall not be comingled with any
other funds except for the Reserves of other Portfolio Properties, in a bank or
similar institution designated by Manager and reasonably acceptable to Tenant
and Landlord, to cover the cost of:

 

1.                  Replacements, renewals and additions related to the FF&E at
each Hotel; and

 

2.                  Subject to Section 5.02 hereof, routine or non-major
repairs, renovations, renewals, additions, alterations, improvements or
replacements and maintenance to each Hotel which are normally capitalized (as
opposed to expensed) under GAAP, such as exterior and interior repainting;
resurfacing building walls, floors, roofs and parking areas; and replacing
folding walls and the like (but which are not major repairs, alterations,
improvements, renewals, replacements, or additions to each Hotel’s structure,
roof, or exterior façade, or to its mechanical, electrical, heating,
ventilating, air conditioning, plumbing or vertical transportation systems); and

 

3.                  Major repairs, renovations, additions, alterations,
improvements, renewals or replacements to each Hotel including, without
limitation, with respect to its structure, roof, or exterior façade, and to its
mechanical, electrical, heating, ventilating, air conditioning, plumbing or
vertical transportation systems; and

 

4.                  All lease payments for equipment and other personal property
reasonably necessary for the operation of each Hotel; and

 

C.                 Manager shall transfer into the Reserve for each Hotel the
amounts as provided on the applicable Addendum. Transfers into each Reserve
shall be made at the time of each interim accounting described in Section 4.01.A
hereof. All amounts transferred to each Reserve shall be deducted from Gross
Revenues in determining Operating Profit for the applicable Hotel and shall be
deposited in the Reserve account described in Section 5.03.B.

 

D.                Manager shall from time to time, with respect to each Hotel,
make expenditures for the items described in Sections 5.03.B(1), (2), (3), and
(4), as it deems necessary without the approval of Landlord or Tenant. At the
end of each Fiscal Year, any amounts remaining in the Reserve for a Hotel shall
be carried forward to the next Fiscal Year. Proceeds from the sale of FF&E no
longer necessary to the operation of a Hotel shall be added to the Reserve for
such Hotel, and shall not be included in Gross Revenue for such Hotel. The
Reserves will be kept in interest-bearing accounts, and any interest which
accrues thereon shall be retained in such Reserve. Neither (1) proceeds from the
disposition of FF&E, nor (2) interest which accrues on amounts held in the
Reserves, shall (a) result in any reduction in the required contributions to the
Reserves set forth in Section 5.03.C above, nor (b) be included in Gross
Revenues.

 

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5.04          Reserve Estimates. Manager shall prepare and deliver to Tenant and
Landlord for their review, at the same time the Annual Operating Projection is
submitted, an estimate for each Hotel (each, a “Reserve Estimate”) of the
Reserve expenditures necessary during the forthcoming Fiscal Year for
(1) replacements, renewals, and additions to the FF&E of such Hotel and
(2) repairs, renovations, additions, alterations, improvements, renewals or
replacements to such Hotel of the nature described in Section 5.03.B, for the
forthcoming Fiscal Year. Manager agrees to take reasonable steps to ensure that,
at Tenant’s or Landlord’s request, qualified personnel from Manager’s staff are
available to explain each proposed Reserve Estimate with respect to expenditures
described in Section 5.03.B(3). A meeting (or meetings) for such purpose shall
be held, at Tenant’s or Landlord’s request, within a reasonable period of time
after the submission to Tenant or Landlord of the applicable Reserve Estimate.
Any disputes as to items in each Reserve Estimate for expenditures described in
Section 5.03.B(3) shall be resolved as set forth in Sections 5.07.C and 5.07.D
hereof. Such expenditures shall be funded from the applicable Reserve to the
extent funds are available therefor or from funds provided under Section 5.07
hereof.

 

5.05          Additional Requirements for Reserves.

 

A.                All expenditures from the Reserves 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
System Standards.

 

B.                 Manager shall provide to Tenant and Landlord within forty
(40) Business Days after the end of each Accounting Period, a statement setting
forth, on a line item basis, Reserve expenditures made to date and any variances
or anticipated variances and/or amendments from the applicable Reserve Estimate.

 

C.                 Notwithstanding anything contained herein to the contrary, it
is understood and agreed that so long as the Pooling Agreement is applicable to
the Hotels, the Reserves pursuant to this Agreement and the Other Management
Agreements to which the Pooling Agreement is then applicable shall be maintained
and used on a pooled basis such that all Reserve funds shall be deposited in a
single account and Manager and the managers under the Other Management
Agreements may apply any funds therein to any of the Portfolio Properties in
accordance with the terms of this Agreement, the Other Management Agreements,
and the Pooling Agreement.

 

D.                Other than Tenant’s or Manager’s personal property, all
materials which are scrapped or removed in connection with the making of any
major or non-major repairs, renovation, additions, alterations, improvements,
removals or replacements as described in Section 5.03.B above, or Section 5.08
below should be disposed of by Manager and the net proceeds thereof shall be
deposited in the applicable Reserve and not included in Gross Revenue.

 

5.06          Ownership of Replacements. All repairs, renovations, additions,
alterations, improvements, renewals or replacements made pursuant to this
Article V, and all amounts kept in the Reserves, shall, except as otherwise
provided in this Agreement, be the property of Tenant or Landlord, as
applicable, as provided under the applicable Lease.

 

5.07          Obligation to Provide Additional Reserve Funds.

 

A.                Notwithstanding anything contained herein to the contrary, no
expenditures in excess of the applicable Reserves shall be made without the
approval of Tenant during the last two (2) years of a Lease Term (unless Tenant
has exercised its rights for a renewal term under the applicable Lease) except
those 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.

 

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B.                 If, at any time, the funds in any Reserve shall be
insufficient or are reasonably projected to be insufficient for necessary and
permitted expenditures thereof, Manager shall give Landlord and Tenant written
notice thereof, which notice shall set forth, in reasonable detail, the nature
of the required or permitted action, the estimated cost thereof (including the
amount which is in excess of the amount of funds in such Reserve) and such other
information with respect thereto as Landlord or Tenant may reasonably require,
and the following shall apply: Provided that (1) there then exists no Manager
Default that has a material adverse effect on Tenant and which arises from acts
or failures to act by Manager with respect to such Hotel, and (2) Manager shall
comply with the provisions of Section 5.08 hereof, if applicable, Tenant shall,
within thirty (30) Business Days after such notice, or such later date as
Manager may direct by reasonable prior notice, disburse (or cause Landlord to
disburse) such required funds to Manager for deposit into the Reserves as one or
more lump sum contributions, in which event Tenant’s Priority with respect to
such Hotel shall be adjusted as provided for herein in the definition of
Tenant’s Priority and the Addendum for such Hotel shall be revised in accordance
therewith.

 

C.                 If Landlord or Tenant disputes Manager’s request for a lump
sum contribution to a Reserve, Manager shall attempt to resolve such dispute
through negotiation. If after one meeting (or conference call) of direct
negotiations between Manager and Landlord or Tenant, as applicable, any party
determines that open issues cannot be resolved within sixty (60) days, such
matters shall be settled by the Expert in accordance with Section 11.23.B.
Tenant and Landlord shall, to the extent possible, identify items in dispute on
a line by line basis.

 

D.                A failure or refusal by Landlord or Tenant to provide the
additional funds required in accordance with Section 5.07.B above within the
time period set forth in Section 5.07.B (including after any Expert resolution
pursuant to Section 11.23.B, if applicable) shall entitle Manager, at its
option, to notify Landlord and Tenant in writing that Manager may terminate this
Agreement with respect to the applicable Hotel. If Tenant does not deposit in
such Reserve the additional funds required in accordance with Section 5.07.B
within thirty (30) days after receipt of such notice of intent to terminate,
Manager may, in its sole and absolute discretion, (i) elect to terminate this
Agreement with respect to the applicable Hotel by written notice to Tenant and
this Agreement shall terminate with respect to such Hotel as of the date that is
one hundred eighty (180) days after the date of Tenant’s receipt of Manager’s
termination notice, and which Termination shall otherwise be in accordance with
the provisions of Section 11.11 hereof (an “FF&E Termination”), or (ii) exercise
any remedy available at law or in equity (except as specifically limited
herein). If Manager elects to effect an FF&E Termination, then, at Manager’s
election and direction, Tenant shall enter into a franchise agreement with
Marriott for such applicable Hotel (such an event, a “Franchise Conversion”),
and Tenant shall satisfy the requirements set forth on Exhibit C.
Notwithstanding the foregoing, Manager may advance the needed Reserve funds if
(1) such funds are required in order for the Hotel to comply with System
Standards related to the health or safety of persons or property on or about
such Hotel; (2) such funds are required by reason of or under any Insurance
Requirement or Legal Requirement, or otherwise required for the continued safe
and orderly operation of such Hotel; (3) there is an emergency threatening such
Hotel or the life or property of such Hotel’s guests; or (4) the failure to take
remedial action may subject Manager, Landlord, Tenant, their Affiliates or any
of their respective directors, managers, officers or employees to civil or
criminal liability (other than de minimis civil fines or fees) (in each case,
the “Emergency Funding”). Tenant agrees and authorizes Manager to reimburse
Manager for such Emergency Funding from future Reserves of such Hotel, unless
Manager elects to treat such Emergency Funding as an Additional Manager Advance
with respect to the Hotel.

 

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5.08          Additional Requirements Relating to Certain Capital Improvements.

 

A.                Prior to commencing construction of any additions or
modifications to any structural element of any Hotel, the cost of which is
reasonably estimated to exceed $300,000, as adjusted as provided below (other
than Renovations made pursuant to the Renovation-Related Agreements) (a “Capital
Addition”) (other than any Capital Addition which is reasonably required to be
made immediately in order to prevent imminent damage or danger to person or
property or to subject Manager, Tenant or Landlord to criminal liability),
Manager shall submit, to Tenant and Landlord in writing, a proposal setting
forth, in reasonable detail, any such proposed improvement and cost estimate
therefor and shall provide to Tenant and to Landlord such plans and
specifications, and such permits, licenses, contracts and such other information
concerning the same as Landlord or Tenant may reasonably request. Landlord and
Tenant shall have twenty (20) Business Days to approve or disapprove all
materials submitted to Landlord or Tenant, as the case may be, in connection
with any such proposal. Failure of Landlord or Tenant to respond to Manager’s
proposal within twenty (20) Business Days after receipt of all information and
materials requested by Landlord or Tenant (if applicable) in connection with the
proposed improvement shall be deemed to constitute approval of the same by the
failing party.

 

B.                 In the event any dispute shall arise with respect to the
withholding of any approval by either Landlord or Tenant, Manager shall meet
with Landlord and Tenant to discuss the objections of Landlord or Tenant, and
Manager, Landlord and Tenant shall attempt in good faith to resolve any
disagreement relating to the proposal submitted by Manager. If after sixty (60)
days such disagreement has not been resolved, any party may submit the issue to
the Expert in accordance with Section 11.23.B. No Capital Addition 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 the Site) including, without limitation,
tie-ins of buildings or other structures or utilities (other than connections to
public utilities). Manager shall not finance the cost of any construction of
such improvements by the granting of a lien on, or security interest in, such
Hotel or Manager’s interest therein without the prior written consent of
Landlord, which consent may be in Landlord’s sole discretion.

 

C.                 The $300,000 limit referred to above shall be increased from
time to time to an amount equal to $300,000 multiplied by a fraction, the
denominator of which shall be the Index for the nearest month prior to the
Effective Date and the numerator of which shall be the Index for the nearest
month for which the Index is available prior to the first day of the Accounting
Period in which such determination is being made.

 

D.                Landlord and Tenant may not withhold their approval of any
Capital Addition described in this Section 5.08 if (1) such Capital Addition is
required in order for the Hotels to comply with System Standards; (2) such
Capital Addition is 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; (3) such Capital Addition is required by reason of an
emergency threatening the Hotel or the life or property of Hotel guests; or
(4) the failure to take remedial action may subject Manager, Landlord, Tenant,
their Affiliates or any of their respective directors, managers, officers or
employees to civil or criminal liability (other than de minimis civil fines or
fees). If Manager takes such action, then it will promptly notify Tenant.

 

26

 

 

E.                 Notwithstanding anything to the contrary contained herein,
prior to commencement of any major repairs, renovations, additions, alterations,
improvements, renewals or replacements of the nature described in Section
5.03.B(3) hereof with respect to the Legacy CY53 Hotels (other than Renovations
made pursuant to the Renovation-Related Agreements) (each, a “Legacy CY53
Capital Expenditure”), Manager shall submit, to Tenant in writing, a proposal
setting forth, in reasonable detail, any such proposed Legacy CY53 Capital
Expenditure and cost estimate therefor. Tenant shall have twenty (20) Business
Days to approve or disapprove of the proposed Legacy CY53 Capital Expenditure,
as the case may be, in connection with any such proposed Legacy CY53 Capital
Expenditure. Failure of Tenant to respond to Manager’s proposal within twenty
(20) Business Days after receipt of such proposal by Tenant in connection with
the proposed Legacy CY53 Capital Expenditure shall be deemed to constitute
approval of the same. In the event any dispute shall arise with respect to the
withholding of any approval by Tenant, Manager shall meet with Tenant to discuss
the objections of Tenant, and Manager and Tenant shall attempt in good faith to
resolve any disagreement relating to the proposed Legacy CY53 Capital
Expenditure submitted by Manager. If after sixty (60) days such disagreement has
not been resolved, either party may submit the issue to the Expert in accordance
with Section 11.23.B. Notwithstanding the foregoing, Tenant may not withhold its
approval if (1) such Legacy CY53 Capital Expenditure is required in order for
the Legacy CY53 Hotels to comply with System Standards; (2) such Legacy CY53
Capital Expenditure is required by reason of or under any Insurance Requirement
or Legal Requirement, or otherwise required for the continued safe and orderly
operation of each Legacy CY53 Hotel; (3) such Legacy CY53 Capital Expenditure is
required by reason of an emergency threatening a Legacy CY53 Hotel or the life
or property of any Legacy CY53 Hotel guests; or (4) the failure to take remedial
action may subject Manager, Landlord, Tenant, their Affiliates or any of their
respective directors, managers, officers or employees to civil or criminal
liability (other than de minimis civil fines or fees). If Tenant does not
promptly fund, or fails to reimburse Manager for, any Legacy CY53 Capital
Expenditure of the nature described in clauses (1) through (4) of this Section
5.08.E, then Manager may, in its sole and absolute discretion, (i) terminate
this Agreement with respect to the applicable Legacy CY53 Hotel by written
notice to Tenant, which Termination shall be effective as of the effective date
which is set forth in said notice, provided that said effective date shall be at
least sixty (60) days (or such longer period required by applicable Legal
Requirements concerning the termination of Hotel employees) after the date of
such notice, or (ii) exercise any remedy available at law or in equity (except
as specifically limited herein).

 

ARTICLE VI

 

INSURANCE, DAMAGE AND CONDEMNATION

 

6.01          Insurance. Tenant and Manager will comply with their respective
obligations under the insurance provisions in Exhibit D. Tenant and Manager
hereby agree that, as of the Effective Date, Manager will procure and maintain
property insurance for the Hotels pursuant to Section 6.01.A of Exhibit D;
provided; however, that Tenant may elect to procure and maintain such property
insurance subject to and in accordance with the provisions of Section 6.01.A of
Exhibit D.

 

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6.02          Damage and Repair.

 

A.                If, during the Term with respect to any Hotel, such Hotel
shall be totally or partially destroyed and the Hotel is thereby rendered
Unsuitable for Its Permitted Use, (1) Manager may terminate this Agreement with
respect to such Hotel by sixty (60) days’ written notice to Tenant and Landlord
(which Termination shall not be deemed due to a Manager Default), or (2) if the
applicable Lease has been terminated as a result of such casualty, Tenant may
terminate this Agreement with respect to such Hotel by written notice to Manager
and Landlord, whereupon, this Agreement and the applicable Lease, with respect
to such Hotel, shall terminate and Landlord shall be entitled to retain the
insurance proceeds payable on account of such damage.

 

B.                 If, during the Term with respect to any Hotel, such Hotel is
damaged or destroyed by fire, casualty or other cause but is not rendered
Unsuitable for Its Permitted Use and the applicable Lease is not terminated in
accordance with its terms with respect to such Hotel, subject to Sections 6.02.C
and 6.02.D below, and provided there then exists no Manager Default which arises
from acts or failures to act by Manager with respect to such Hotel, then Tenant
shall forward to Manager the funds necessary to repair or replace the damaged or
destroyed portion of the Hotel to the same condition as existed previously and
Manager shall have the right to discontinue operating the Hotel to the extent it
deems necessary to comply with applicable law, ordinance, regulation or order or
as necessary for the safe and orderly operation of the Hotel.

 

C.            1.       If the cost of the repair or restoration of a Hotel is
less than the sum of the deductible plus the amount of insurance proceeds
received by Landlord or Tenant, Tenant shall be required to make available the
funds necessary (minus the amount of such deductible) to cause such Hotel to be
repaired and restored to the extent of such insurance proceeds. The amount of
such deductible shall be funded first from the Reserve for the applicable Hotel,
and to the extent such Reserve is insufficient therefor, the balance shall be
funded by Tenant, and any such funding by Tenant shall result in an adjustment
to Tenant’s Priority with respect to such Hotel as if Tenant had made a lump sum
deposit into the Reserve for such Hotel, in the manner set forth in the
definition of Tenant’s Priority, and the Addendum applicable to such Hotel shall
be revised in accordance therewith.

 

2.       If the cost of the repair or restoration of such Hotel exceeds the
amount of insurance proceeds received by Landlord, plus the deductible amount,
Manager shall give notice to Tenant and Landlord setting forth in reasonable
detail the nature of such deficiency, and Tenant shall promptly thereafter
advise Manager in writing whether Tenant shall pay and assume the amount of such
deficiency (Tenant having no obligation to do so, except that, if Tenant shall
elect to make such funds available, the same shall become an irrevocable
obligation of Tenant). In the event Tenant shall elect not to pay and assume the
amount of such deficiency, Landlord shall have the right (but not the
obligation), exercisable at Landlord’s sole election by written notice to Tenant
and Manager, given within sixty (60) days after Manager’s notice of the
deficiency, to elect to make available for application to the cost of repair or
restoration the amount of such deficiency. In the event that neither Landlord
nor Tenant shall elect to make such deficiency available for restoration,
(a) Manager may effect Termination of this Agreement with respect to such Hotel
by written notice to Tenant and Landlord (which Termination shall not be deemed
due to a Manager Default), or (b) if the applicable Lease has been terminated
with respect to such Hotel as a result of such casualty, Tenant may effect a
Termination of this Agreement with respect to such Hotel by written notice to
Manager and Landlord, whereupon, this Agreement shall terminate with respect to
such Hotel as provided in Section 6.02.A.

 

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D.                 In the event Tenant is required to make available the funds
necessary to restore a Hotel, Tenant shall promptly do so and such funds shall
be used to perform the repair and restoration of such Hotel, so as to restore
such Hotel in compliance with all Legal Requirements and so that such Hotel
shall be, to the extent practicable, substantially equivalent in value and
general utility to its general utility and value immediately prior to such
damage or destruction and in compliance with System Standards. Manager shall, at
Tenant’s request, provide general supervisory services with respect to
completion of such work as part of the services provided hereunder in
consideration of the management fees paid to Manager; however, Manager shall not
be obligated to provide additional secure services unless Tenant and Manager
enter into separate arrangements to provide such services and for stated
additional consideration. Subject to the terms of the applicable Lease, Landlord
shall advance the insurance proceeds and any additional amounts payable by
Landlord pursuant to this Section 6.02.D to Tenant regularly during the repair
and restoration period so as to permit payment for the cost of any such
restoration and repair. Any such advances shall be made not more than monthly
within ten (10) Business Days after Tenant submits to Landlord a written
requisition and substantiation therefor on AIA Forms G702 and G703 (or on such
other form or forms as may be reasonably acceptable to Landlord). Landlord may,
at its option, condition advancement of said insurance proceeds and other
amounts on (i) the absence of an Event of Default (as defined in the applicable
Lease), (ii) its approval of plans and specifications of an architect
satisfactory to Landlord (which approval shall not be unreasonably withheld or
delayed), (iii) general contractors’ estimates, (iv) architect’s certificates,
(v) unconditional lien waivers of general contractors, if available,
(vi) evidence of approval by all governmental authorities and other regulatory
bodies whose approval is required and (vii) such other certificates as Landlord
may, from time to time, reasonably require.

 

E.                 If this Agreement is not otherwise terminated with respect to
a totally or partially destroyed Hotel as permitted herein, and Landlord and/or
Tenant makes funds available to repair and restore any such Hotel, then, except
for deductibles which are addressed in Section 6.02.C above, any reserves,
losses, costs or expenses which are uninsured or are not otherwise self-insured
because the same are not required to be insured or self-insured hereunder (as
applicable, the “Uninsured Costs”), shall be accounted for in accordance with
the following sentence. Effective as of the first day of the Accounting Period
immediately following the completion of the repair or restoration of the Hotel
(or, if the Hotel, or any portion thereof, was closed as a result of the damage
or destruction, then as of the first day of the Accounting Period immediately
following the date the Hotel, or such portion thereof, is reopened), the
Tenant’s Priority with respect to such Hotel shall be the greater of (i) the
Tenant’s Priority for such Hotel as of the day immediately preceding any such
damage or destruction, or (ii) eight percent (8%) multiplied by the total cost
(including any Uninsured Costs) to repair and restore the Hotel in accordance
with the terms of this Agreement.

 

F.                  All business interruption insurance proceeds shall be paid
to Manager and included in Gross Revenues. Any casualty which does not result in
a Termination of this Agreement with respect to the applicable Hotel shall not
excuse the payment of sums due to Tenant hereunder with respect to such Hotel.

 

29

 

 

G.                Manager hereby waives any statutory rights of termination
which may arise by reason of any damage to or destruction of any Hotel.

 

6.03          Damage Near End of Term. Notwithstanding any provisions of Section
6.01, Section 6.02 or Exhibit D hereof to the contrary, if damage to or
destruction of any Hotel occurs during the last twelve (12) months of the Term
(including any exercised Renewal Term) and if such damage or destruction cannot
reasonably be expected to be fully repaired and restored prior to the date that
is nine (9) months prior to the end of such Term (including any exercised
Renewal Term), then the provisions of Section 6.02.A shall apply as if such
Hotel had been totally or partially destroyed and such Hotel operated thereon
rendered Unsuitable for Its Permitted Use.

 

6.04          Condemnation. If either (i) the whole of a Hotel shall be taken by
Condemnation, or (ii) a Condemnation of less than the whole of a Hotel renders
such Hotel Unsuitable for Its Permitted Use, then this Agreement shall terminate
and Tenant and Landlord shall seek the Award for their interests in such Hotel
as provided in the applicable Lease. In addition, Manager shall have the right
to initiate 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 Tenant and Landlord only if such award or
compensation does not reduce the award or compensation otherwise available to
Tenant and Landlord. For this purpose, any award or compensation received by any
holder of a Mortgage on a Hotel shall be deemed to be an award of compensation
received by Landlord.

 

6.05          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, Manager shall, to the extent of the Award and any additional
amounts disbursed by Tenant or Landlord as hereinafter provided, 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 the Hotel located thereon existing immediately prior to such
Condemnation, in full compliance with all Legal Requirements, subject to the
provisions of this Section 6.05. Manager shall, at Tenant’s request, provide
general supervisory services with respect to completion of such work as part of
the services provided hereunder in consideration of the management fees paid to
Manager, however, Manager shall not be obligated to provide additional services
unless Tenant and Manager enter into separate arrangements to provide such
services and for stated additional consideration. If the cost of the repair or
restoration of the Hotel exceeds the amount of the Award, then Manager shall
give Landlord and Tenant written notice thereof, which notice shall set forth in
reasonable detail the nature of such deficiency, and Tenant shall promptly
thereafter advise Manager in writing whether Tenant will pay and assume the
amount of such deficiency (Tenant having no obligation to do so, except that if
Tenant shall elect to make such funds available, the same shall become an
irrevocable obligation of Tenant pursuant to this Agreement). In the event
Tenant shall elect not to pay and assume the amount of such deficiency, Landlord
shall have the right (but not the obligation), exercisable at Landlord’s sole
election by notice to Tenant and Manager given within sixty (60) days after
Tenant’s notice of the deficiency, to elect to make available for application to
the cost of repair or restoration the amount of such deficiency. In the event
neither Landlord nor Tenant shall elect to make such deficiency available for
restoration, either Manager or Tenant may terminate this Agreement with respect
to such Hotel.

 

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6.06          Disbursement of Award. Subject to the terms hereof, Tenant or
Landlord, as applicable, shall contribute to the cost of restoration that part
of the Award necessary to complete such repair or restoration, together with
severance and other damages awarded for such Hotel and any deficiency Tenant or
Landlord, as applicable, has agreed to disburse, to Manager regularly during the
restoration period so as to permit payment for the cost of such repair or
restoration. Landlord may, at its option, condition advancement of such Award
and other amounts on (i) the absence of any Manager Event of Default, (ii) its
approval of plans and specifications of an architect satisfactory to Landlord
(which approval shall not be unreasonably withheld or delayed), (iii) general
contractors’ estimates, (iv) architect’s certificates, (v) unconditional lien
waivers of general contractors, if available, (vi) evidence of approval by all
governmental authorities and other regulatory bodies whose approval is required,
and (vii) such other certificates as Landlord may, from time to time, reasonably
require. Landlord’s and Tenant’s obligation under this Section 6.06 to disburse
the Award and such other amounts shall be subject to (x) the collection thereof
by Landlord and (y) the satisfaction of any applicable requirements of any
Qualified Mortgage, and the release of such Award by the applicable Mortgagee.
Tenant’s obligation to restore the applicable Hotel shall be subject to the
release of the Award to Landlord by the applicable Mortgagee under a Qualified
Mortgage.

 

6.07          Temporary Condemnation. In the event of any temporary Condemnation
of a Hotel or Tenant’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 be paid to Manager and shall constitute Gross Revenues. Tenant
shall, promptly upon the termination of any such period of temporary
Condemnation, at its sole cost and expense, restore such Hotel to the condition
that existed immediately prior to such Condemnation, in full compliance with all
Legal Requirements, unless such period of temporary Condemnation shall extend
beyond the expiration of the Term, in which event Tenant shall not be required
to make such restoration. For purposes of this Section 6.07, 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.

 

6.08          Allocation of Award. Except as provided in Sections 6.06 and 6.07
and the second and third sentences of this Section 6.08, the total Award shall
be solely the property of and payable to Landlord. Any portion of the Award made
for the taking of Tenant’s leasehold interest in a Hotel, loss of business, the
taking of Tenant’s Personal Property, or Tenant’s removal and relocation
expenses shall be the sole property of, and payable to, Tenant. Any portion of
the Award made for the taking of Manager’s interest in a Hotel or Manager’s loss
of business during the remainder of the Term hereof shall be the sole property
of, and payable to, Manager, subject to the provisions of Section 6.04 hereof.
In any Condemnation proceedings, Landlord, Tenant, and Manager shall each seek
its own Award in conformity herewith, at its own expense.

 

6.09          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 Tenant hereunder
with respect to such Hotel and this Agreement shall remain in full force and
effect.

 

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ARTICLE VII

 

TAXES; OTHER CHARGES

 

7.01          Real Estate and Personal Property Taxes.

 

A.                Subject to Section 11.24 relating to permitted contests,
Manager shall pay, from Gross Revenues for each Hotel, all Impositions with
respect to such Hotel, before any fine, penalty, interest or cost (other than
any opportunity cost as a result of a failure to take advantage of any discount
for early payment) may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and shall promptly, upon
request, furnish to Landlord and Tenant copies of official receipts or other
reasonably satisfactory proof evidencing such payments. Any such payments shall
be a Deduction in determining Operating Profit for such Hotel. If any such
Imposition may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Manager may exercise the option to pay the same (and any accrued interest on the
unpaid balance of such Imposition) in installments and, in such event, shall pay
such installments during the Term as the same become due and before any fine,
penalty, premium, further interest or cost may be added thereto. Manager shall,
upon request, provide such data as is maintained by Manager with respect to any
Hotel as may be necessary to prepare any required returns and reports by
Landlord or Tenant.

 

Tenant shall give, and will use reasonable efforts to cause Landlord to give,
copies of official tax bills and assessments which it may receive with respect
to any Hotel and prompt notice to Tenant and Manager of all Impositions payable
by Tenant under the applicable Lease of which Tenant or Landlord, as the case
may be, at any time has knowledge; provided, however, that Landlord’s or
Tenant’s failure to give any such notice shall in no way diminish Manager’s
obligation hereunder to pay such Impositions (except that Landlord or Tenant, as
applicable, shall be responsible for any interest or penalties incurred as a
result of Landlord’s or Tenant’s, as applicable, failure promptly to forward the
same).

 

B.                 The word “Impositions” as used in this Agreement shall
include, but not be limited to, franchise taxes under the laws of the State(s)
and gross receipt or general excise taxes or sales taxes payable on (i) Rent
payable to Landlord, (ii) all sums payable to Tenant pursuant to this Agreement
(or the Pooling Agreement with respect to Hotels to which the Pooling Agreement
is applicable), and (iii) all sums payable to Manager pursuant to this Agreement
as System Fees or Management Fees (or pursuant to the Pooling Agreement with
respect to Hotels to which the Pooling Agreement is applicable), if any, but
shall not include the following, all of which shall be paid from the applicable
Reserve, and not from Gross Revenues:

 

1.                  Special assessments (regardless of when due or whether they
are paid as a lump sum or in installments over time) imposed because of
facilities which are constructed by or on behalf of the assessing jurisdiction
(for example, roads, sidewalks, sewers, culverts, etc.) which directly benefit a
Hotel (regardless of whether or not they also benefit other buildings), which
assessments shall be treated as capital costs of construction and not as
Deductions; and

 

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2.                  “Impact Fees” (regardless of when due or whether they are
paid as a lump sum or in installments over time) which are required as a
condition to the issuance of site plan approval, zoning variances or building
permits, which impact fees shall be treated as capital costs of construction and
not as Deductions.

 

C.                 Notwithstanding anything herein to the contrary, each of
Tenant and Manager shall pay from its own funds (and not from Gross Revenues of
any Hotel or any Reserve) any franchise, corporate, estate, inheritance,
succession, capital levy or transfer tax imposed on Tenant or Manager, as
applicable, or any income tax imposed (but not gross receipt or general excise
taxes) on any income of Tenant or Manager (including distributions to Tenant
pursuant to Article III hereof).

 

D.                Manager shall cause to be paid, with respect to each Hotel,
when due, from Gross Revenues, as Deductions, for such Hotel, to the extent of
the sufficiency of funds available therefore:

 

1.                  Utility Charges — all charges for electricity, power, gas,
oil, water and other utilities used in connection with each Hotel.

 

2.                  Insurance Premiums — all premiums for the insurance coverage
required to be maintained pursuant to Section 6.01 and Exhibit D hereof.

 

3.                  Other Charges — all other amounts, liabilities and
obligations arising in connection with the operation of each Hotel except those
obligations expressly assumed by Landlord or Tenant pursuant to the provisions
of this Agreement or any of the Incidental Documents or expressly stated not to
be paid from Gross Revenues of a Hotel pursuant to this Agreement.

 

ARTICLE VIII

 

OWNERSHIP OF THE HOTELS

 

8.01          Ownership of the Hotels.

 

A.                Tenant hereby covenants that it will not hereafter impose or
consent to the imposition of any liens, encumbrances or other charges, except as
follows:

 

1.                  easements or other encumbrances that do not adversely affect
the operation of a Hotel by Manager and that are not prohibited pursuant to
Section 8.04 of this Agreement;

 

2.                  mortgages which constitute Qualified Mortgages and related
security instruments;

 

33

 

 

3.                  liens for taxes, assessments, levies or other public charges
not yet due or due but not yet payable; or

 

4.                  equipment leases for office equipment, telephone, motor
vehicles and other property approved by Manager.

 

B.                 Subject to liens permitted by Section 8.01.A hereof and
further subject to liens permitted to be placed by Landlord pursuant to the
Owner Agreement, Tenant covenants that, so long as there then exists no Manager
Default which arises from acts or failures to act by Manager with respect to
each Hotel, Manager shall quietly hold, occupy and enjoy such Hotel throughout
the Term hereof free from hindrance, ejection or molestation by Tenant or
Landlord or other party claiming under, through or by right of Tenant or
Landlord. Tenant agrees to pay and discharge any payments and charges and, at
its expense, to prosecute all appropriate actions, judicial or otherwise,
necessary to assure such free and quiet occupation as set forth in the preceding
sentence. Tenant will reasonably cooperate with Manager and its Affiliates in
connection with Manager’s operation of the Hotels.

 

C.                 Tenant will make all payments under any Mortgage by the due
date from its own funds and not as Deductions. Manager has no responsibility for
payment of debt service.

 

8.02          Requirements for Mortgages.

 

A.                Tenant and/or Landlord may encumber a Hotel individually, or
with one or more other Portfolio Properties, with any Mortgage that meets all of
the following requirements (each, a “Qualified Mortgage”):

 

1.                  the proposed Mortgage is from an Institutional Lender and is
on commercially reasonable terms;

 

2.                  for Mortgages other than for the initial construction of a
Hotel, the outstanding aggregate principal amount secured by all Mortgages,
including the proposed Mortgage, is seventy percent (70%) or less of the fair
market value of the Portfolio Properties subject to the proposed Mortgage
measured as of the Finance Date;

 

3.                  the ratio, as of the Finance Date, of (a) aggregate
Operating Profit for the twelve (12) full Accounting Periods immediately before
the Finance Date to (b) debt service for the same period for all Mortgages
encumbering the Portfolio Properties that are subject to the proposed Mortgage,
including the proposed Mortgage, equals or exceeds 1.4 to 1; and

 

4.                  Mortgagee and Manager enter into an SNDA.

 

B.                 Manager may provide information about a Hotel to any
Mortgagee, or to any Affiliate of Manager that provides any financing in
connection with such Hotel, that such Mortgagee or such Affiliate reasonably
requests. Upon Manager’s request, Tenant will promptly provide drafts, and the
executed term sheets and loan documents for all Mortgages encumbering the
Hotels.

 

34

 

 

C.                 If any action taken by a Mortgagee materially and adversely
restricts Manager from operating a Hotel in accordance with the System
Standards, then (i) such action will constitute a Tenant Default; and
(ii) Manager may terminate this Agreement with respect to such Hotel upon at
least sixty (60) days’ prior written notice to Tenant without affecting
Manager’s other rights and remedies under this Agreement.

 

D.                If title to or possession of a Hotel is transferred by
judicial or administrative process (for example, by Foreclosure or bankruptcy
proceedings) to a Person that does not meet the requirements in Section 10.02.A,
then Manager may terminate this Agreement with respect to such Hotel upon at
least sixty (60) days’ prior written notice to Tenant without affecting
Manager’s other rights and remedies under this Agreement.

 

8.03          Subordination and Non-Disturbance Agreement.

 

A.                Tenant will obtain from any Mortgagee that holds a Mortgage as
of or after the Effective Date an agreement, reasonably satisfactory to Manager
and recordable in the jurisdiction where each Hotel is located (the “SNDA”),
which provides that:

 

1.                  the right, title and interest of Manager in and to such
Hotel under this Agreement will be subject and subordinate to the lien of the
Mortgage;

 

2.                  if there is a Foreclosure under the Mortgage, then Manager
will not be named as a party in any Foreclosure, and so long as no Manager Event
of Default (beyond the applicable notice and cure period, if any) has occurred
thereunder which entitles Tenant to terminate this Agreement with respect to
such Hotel, (a) this Agreement will not terminate by reason of such Foreclosure,
(b) Mortgagee and any Subsequent Tenant will recognize the rights of Manager
under this Agreement, and (c) Manager’s rights to operate such Hotel under this
Agreement will not be disturbed; and

 

3.                  if there is a Foreclosure under the Mortgage, then Manager
will be obligated to each Subsequent Tenant to perform under the terms of this
Agreement with the same force and effect as if the Subsequent Tenant were the
Tenant, for as long as the Subsequent Tenant meets the requirements of Section
10.02.A.

 

B.                 If the SNDA requires Manager to pay amounts otherwise due to
Tenant under this Agreement directly to Mortgagee or its designee, rather than
to Tenant, then Tenant hereby irrevocably consents to such payment.

 

C.                 If Tenant does not obtain an SNDA for any Mortgage, then
Manager may terminate this Agreement upon at least sixty (60) days’ prior
written notice to Tenant without affecting Manager’s other rights and remedies
under this Agreement.

 

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8.04          No Covenants, Conditions or Restrictions.

 

A.                Tenant represents and warrants that, with respect to each
Hotel and as of the Effective Date, there are not, and covenants that during the
Term of this Agreement Tenant shall not enter into (unless Manager has given its
prior written consent thereto, which consent shall not be unreasonably withheld,
conditioned or delayed), any covenants, conditions or restrictions, including
reciprocal easement agreements, common area assessments or cost-sharing
arrangements (collectively referred to as “Future CC&Rs”) affecting any Site or
Hotel that would (i) prohibit or limit Manager from operating such Hotel in
accordance with System Standards, including related amenities of such Hotel;
(ii) allow such Hotel facilities (for example, parking spaces) to be used by
persons other than guests, invitees or employees of such Hotel; (iii) allow the
Hotel facilities to be used for specified charges or rates that have not been
approved by Manager; or (iv) subject the Hotel to exclusive arrangements
regarding food and beverage operation, retail merchandise or any other
operations or part of the Hotel. With respect to each Hotel, Manager hereby
consents to (a) any easements, covenants, conditions or restrictions, including
without limitation any reciprocal easement agreements or cost-sharing
agreements, existing as of the date Landlord acquired title to such Hotel, and
(b) any of the foregoing items with respect to such Hotel existing as of the
Effective Date and of which Manager has knowledge (all of the foregoing,
collectively, the “Existing CC&Rs”).

 

B.                 All financial obligations imposed on Tenant or on a Hotel
pursuant to any Future CC&Rs for which Manager’s consent is required under
Section 8.04.A above shall be paid by Tenant from its own funds, and not from
Gross Revenues of a Hotel or from the Reserve of a Hotel, unless Manager has
given its prior written consent to such Future CC&Rs as required under Section
8.04.A.

 

C.                 Manager shall manage, operate, maintain and repair each Hotel
in compliance with all obligations imposed on Tenant, Landlord or such Hotel
pursuant to any Existing CC&Rs or Future CC&Rs (unless Manager’s consent is
required for such Future CC&Rs and Manager does not consent to such Future
CC&Rs) to the extent such Existing CC&Rs and Future CC&Rs relate to the
management, operation, maintenance and repair of such Hotel.

 

8.05          Liens; Credit. Manager and Tenant shall use commercially
reasonable efforts to prevent any liens from being filed against any Hotel which
arise from any maintenance, repairs, alterations, improvements, renewals or
replacements in or to such Hotels. Manager and Tenant shall cooperate, and
Tenant shall cause the Landlord to cooperate, fully in obtaining the release of
any such liens, and the cost thereof, if the lien was not occasioned by the
fault of a party, shall be treated the same as the cost of the matter to which
it relates. If the lien arises as a result of the fault of a party, then the
party at fault shall bear the cost of obtaining the lien release. 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.

 

Subject to the right to contest matters set forth in Section 11.24 hereof and
for encumbrances permitted under Section 8.01 hereof, Manager shall not, to the
extent funds to pay the same are provided on a timely basis as required
hereunder, directly or indirectly, create or allow to remain and shall promptly
discharge any lien, encumbrance, attachment, title retention agreement or claim
upon any Hotel, except (a) existing liens for those taxes of Landlord which
Manager is not required to pay hereunder, (b) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (i) the same are
not yet due and payable, or (ii) are being contested in accordance with Section
11.24, (c) liens of mechanics, laborers, materialmen, suppliers or vendors
incurred in the ordinary course of business that are not yet due and payable or
are for sums that are being contested in accordance with Section 11.24 and
(d) any Mortgages or other liens which are the responsibility of Landlord.

 

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ARTICLE IX

 

DEFAULTS

 

9.01          Manager Events of Default. Each of the following shall constitute
a “Manager Event of Default” to the extent permitted by applicable law:

 

A.                The filing by Manager or Marriott of a voluntary petition in
bankruptcy or insolvency or a petition for reorganization under any bankruptcy
law, or the admission by Manager that it is unable to pay its debts as they
become due, or the institution of any proceeding by Manager for its dissolution
or termination. Upon the occurrence of any Manager Event of Default as described
under this Section 9.01.A, said Manager Event of Default shall be deemed a
“Manager Default” under this Agreement.

 

B.                 The consent by Manager or Marriott 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 by Manager. Upon the
occurrence of any Manager Event of Default as described under this Section
9.01.B, said Manager Event of Default shall be deemed a “Manager Default” under
this Agreement.

 

C.                 The entering of an order, judgment or decree by any court of
competent jurisdiction, on the application of a creditor, adjudicating Manager
or Marriott 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 or Marriott’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). Upon the occurrence of any Manager Event of
Default as described under this Section 9.01.C, said Manager Event of Default
shall be deemed a “Manager Default” under this Agreement.

 

D.                The failure of Marriott or Manager or any Affiliate of either
of them to make any payment required to be made by any of them in accordance
with the terms of this Agreement, or any Incidental Document on or before the
date due. Upon the occurrence of any Manager Event of Default as described under
this Section 9.01.D, said Manager Event of Default shall be deemed a “Manager
Default” under this Agreement if Marriott or Manager or such Affiliate fails to
cure such Manager Event of Default (1) within any applicable notice and cure
period, if any, provided in the document pursuant to which such payment is to be
made, or (2) otherwise, eight (8) days after receipt of written notice from the
other party to such document demanding such cure.

 

E.                 The failure of Marriott or Manager or any Affiliate of either
of them to perform, keep or fulfill any of the other covenants, undertakings,
obligations or conditions set forth in this Agreement, or the occurrence of an
“Event of Default” under any Incidental Document as a result of a material
breach by Marriott or Manager or any such Affiliate thereunder, on or before the
date required for the same. Upon the occurrence of any Manager Event of Default
as described under this Section 9.01.E, said Manager Event of Default shall be
deemed a “Manager Default” under this Agreement if Marriott or Manager or such
Affiliate fails to cure such Manager Event of Default within thirty (30) days
after receipt of written notice from Tenant demanding such cure, or, if the
Manager Event of Default is susceptible of cure, but such cure cannot be
accomplished within said thirty (30)-day period of time, if Marriott or Manager
or such Affiliate fails to commence the cure of such Manager Event of Default
within fifteen (15) days of such notice or thereafter fails to diligently pursue
such efforts to completion.

 

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F.                  The failure of Manager to maintain insurance coverages
required to be maintained by Manager under Article VI hereof (excluding
insurance elected to be maintained by Tenant pursuant to Article VI hereof), and
such failure shall constitute a Manager Default hereunder if it continues for
eight (8) days after written notice thereof from Tenant (except that no notice
shall be required if any such insurance coverage shall have lapsed).

 

G.                Any material representation or warranty made by Manager or any
Affiliate in this Agreement or in any Incidental Document proves to have been
false in any material respect on the date when made or deemed made, and the same
shall constitute a Manager Default if Manager fails to cure or change the fact
or event which caused such representation or warranty to have been false when
made within fifteen (15) Business Days of receiving notice of such falseness
from Tenant; provided, however, that if such default is susceptible of cure but
such cure cannot reasonably be accomplished with the use of due diligence within
such period of time and if, in addition, Manager commences to cure or cause to
be cured such default within fifteen (15) Business Days after receiving notice
thereof from Tenant and thereafter prosecutes the cure of such default with due
diligence, such period of time shall be extended to such period of time as may
be reasonably necessary to cure such default with due diligence.

 

H.                The occurrence of any other event described in this Agreement
as a Manager Default, including without limitation, the events described in
Section 3.02.C, or the occurrence of a Manager Default as described in the
Pooling Agreement.

 

9.02          Remedies for Manager Defaults.

 

A.                In the event of a Manager Default that has a material adverse
effect on Tenant, but subject in all events to Section 9.02.B below, Tenant
shall have the right to: (1) terminate this Agreement with respect to the
applicable Hotel under which such Manager Default arose by written notice to
Manager, which Termination shall be effective as of the effective date which is
set forth in said notice, provided that said effective date shall be at least
sixty (60) days (or such longer period required by applicable Legal Requirements
concerning the termination of Hotel employees) after the date of such notice;
(2) 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;
or (3) avail itself of the remedies described in Section 9.03. The parties agree
that a Manager Default under Section 9.01.A, 9.01.B, 9.01.C, or 9.01.F will be
deemed to have a material adverse effect on Tenant.

 

B.                 Notwithstanding anything herein to the contrary, in the event
of a Manager Default for which Tenant intends or desires to terminate this
Agreement, Tenant shall have the right to do so provided that Tenant must
simultaneously terminate this Agreement as to all Hotels which are at such time
subject to this Agreement.

 

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C.                 Any payments received by Tenant under any of the provisions
of this Agreement during the existence or continuance of a Manager Default (and
any payment made to Tenant from others rather than Manager due to the existence
of any Manager Default) shall be applied to Manager’s current and past due
obligations under this Agreement in such order as Tenant may determine or as may
be prescribed by applicable law.

 

9.03          Additional Remedies for Manager Defaults.

 

A.                Upon the occurrence of a Manager Default under the provisions
of Section 9.01.D, the amount owed to Tenant or any Affiliate of Tenant pursuant
thereto shall accrue interest, at an annual rate equal to the Overdue Rate, from
and after the date on which such payment was originally due.

 

B.                 The rights granted under this Article IX shall not be in
substitution for, but shall be in addition, to, any and all rights and remedies
available to Tenant (including, without limitation, injunctive relief and
damages) by reason of applicable provisions of law or equity.

 

C.                 At any time after the occurrence of a Manager Event of
Default, Tenant shall have the right, but shall not be obligated, to cure a Life
Safety Event occurring at a Hotel by performing necessary repairs and/or
maintenance after first providing Manager with written notice of such Life
Safety Event, and requesting that such Life Safety Event be cured by Manager
within five (5) Business Days. If (1) a Life Safety Event remains uncured
following the applicable notice period in the foregoing sentence or (2) such
Life Safety Event is not curable within such notice period and Manager has
failed to begin to cure such Life Safety Event within such notice period (or
fails to diligently proceed to cure such Life Safety Event to completion after
commencing to do so within such notice period), then Manager shall permit
Landlord and/or Tenant, upon five (5) Business Days’ written notice to Manager,
to enter upon the applicable Hotel solely for the purposes of effecting a cure
for such Life Safety Event, provided (i) Landlord and/or Tenant, as applicable,
act strictly in accordance with the terms of the applicable Lease, this
Agreement and applicable Legal Requirements, and (ii) Landlord and/or Tenant, as
applicable, do not unreasonably interfere with the operation of such Hotel and
use commercially reasonable efforts to ensure that any work performed at such
Hotel is performed in such a manner that minimizes any disruption in the
operations of such Hotel. All costs and expenses incurred by Tenant and/or
Landlord in connection with any such cure of a Life Safety Event shall be paid
from the Reserve. Tenant and/or Landlord may exercise the foregoing rights
without waiving any other of its rights or releasing Manager from any of its
obligations under this Agreement.

 

9.04          Non-Recourse Provision. Notwithstanding anything herein to the
contrary, but subject to the balance of this Section 9.04, Manager’s obligations
pursuant to this Agreement and the Pooling Agreement are in all instances
non-recourse to Manager, and in the event of any claim, suit or cause of action
by Tenant against Manager pursuant to or in connection with this Agreement or
the Pooling Agreement or the transactions contemplated by either of them,
Tenant’s sole recourse against Manager shall be with respect to amounts held by
Marriott or Manager for the account of Tenant pursuant to this Agreement or the
Pooling Agreement, and to amounts available pursuant to the Marriott Guaranty
Agreement and to amounts available pursuant to the Security Deposit Agreement,
and Manager shall have no other liability beyond the extent thereof with respect
to any such claim, suit or cause of action. Notwithstanding the foregoing, this
Section 9.04 shall not be applicable with respect to (a) fraud committed by
Manager, (b) misapplication or misappropriation of funds committed by Manager,
(c) the willful misconduct of Manager, (d) the gross negligence of Manager, or
(e) losses against which Manager has elected to self-insure pursuant to Section
6.01 and Exhibit D hereof. This Section 9.04 shall not be construed to limit any
right of set-off to which Tenant may be entitled with respect to any amount to
which Manager or any Affiliate may be entitled pursuant to this Agreement, any
Other Management Agreement or the Pooling Agreement, and Tenant shall be
entitled to set-off against amounts owed by Tenant to Manager hereunder amounts
owed to Tenant under this Agreement or any Incidental Document, but excluding in
any event System Fees due to Manager hereunder or under any Other Management
Agreement and any fees due to Marriott pursuant to any Franchise Agreement.

 

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9.05          Good Faith Dispute by Manager. If Manager shall in good faith
dispute the occurrence of any Manager Default and Manager, before the expiration
of the applicable cure period, shall give notice thereof to Tenant, setting
forth, in reasonable detail, the basis therefor, no Manager Default shall be
deemed to have occurred and Manager shall have no obligation with respect
thereto until final adverse determination thereof; provided, however, that in
the event that such dispute is ultimately determined against Manager, then
Manager shall pay to Tenant interest on any disputed funds at the Overdue Rate,
from the date demand for such funds was made by Tenant until paid. If Tenant and
Manager shall fail, in good faith, to resolve any such dispute within ten (10)
days after Manager’s notice of dispute, either may submit the matter for
resolution by Arbitration. In the event that the determination in such
Arbitration is that a Manager Default, in fact, exists, Manager shall have the
applicable cure period from the date of such final determination to cure such
Manager Default.

 

9.06          Tenant Events of Default. Each of the following shall constitute a
“Tenant Event of Default” to the extent permitted by applicable law:

 

A.                The filing by Tenant or SVC of a voluntary petition in
bankruptcy or insolvency or a petition for reorganization under any bankruptcy
law, or the admission by Tenant that it is unable to pay its debts as they
become due, or the institution of any proceeding by Tenant for its dissolution
or termination. Upon the occurrence of any Tenant Event of Default as described
under this Section 9.06.A, said Tenant Event of Default shall be deemed a
“Tenant Default” under this Agreement.

 

B.                 The consent by Tenant or SVC 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 by Tenant. Upon the
occurrence of any Tenant Event of Default as described under this Section
9.06.B, said Tenant Event of Default shall be deemed a “Tenant Default” under
this Agreement.

 

C.                 The entering of an order, judgment or decree by any court of
competent jurisdiction, on the application of a creditor, adjudicating Tenant or
SVC as bankrupt or insolvent or approving a petition seeking reorganization or
appointing a receiver, trustee, or liquidator of all or a substantial part of
Tenant’s or SVC’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). Upon the occurrence of any Tenant Event of Default as described
under this Section 9.06.C, said Tenant Event of Default shall be deemed a
“Tenant Default” under this Agreement.

 

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D.                The failure of Tenant to make any payment (or cause to be made
any payment by any Affiliate of Tenant which is a party thereto) required to be
made in accordance with the terms of this Agreement or any Incidental Document
on or before the date due. Upon the occurrence of any Tenant Event of Default as
described under this Section 9.06.D, said Tenant Event of Default shall be
deemed a “Tenant Default” under this Agreement if Tenant fails to cure such
Tenant Event of Default (1) within any applicable notice and cure period, if
any, provided in the document pursuant to which such payment is to be made, or
(2) otherwise, eight (8) days after receipt of written notice from the other
party to such document demanding such cure.

 

E.                 The failure of Tenant, SVC or Landlord to perform, keep or
fulfill any of the other covenants, undertakings, obligations or conditions set
forth in this Agreement or any Incidental Document. Upon the occurrence of any
Tenant Event of Default as described under this Section 9.06.E, said Tenant
Event of Default shall be deemed a “Tenant Default” under this Agreement if
Tenant fails to cure the Tenant Event of Default within thirty (30) days after
receipt of written notice from Manager demanding such cure, or, if the Tenant
Event of Default is susceptible of cure, but such cure cannot be accomplished
within said thirty (30)-day period of time, if Tenant fails to commence the cure
of such Tenant Event of Default within fifteen (15) days of such notice or
thereafter fails to diligently pursue such efforts to completion.

 

F.                  The failure of Tenant to maintain insurance coverages
elected to be maintained by Tenant under Article VI hereof (excluding insurance
maintained by Manager pursuant thereto), and such failure shall constitute a
Tenant Default hereunder if it continues for eight (8) days after written notice
thereof from Manager (except that no notice shall be required if any such
insurance coverage shall have lapsed).

 

G.                Any material representation or warranty made by Tenant or any
Affiliate in this Agreement or in any Incidental Document proves to have been
false in any material respect on the date when made or deemed made, and the same
shall constitute a Tenant Default if Tenant fails to cure or change the fact or
event which caused such representation or warranty to have been false when made
within fifteen (15) Business Days of receiving notice of such falseness from
Manager; provided, however, that if such default is susceptible of cure but such
cure cannot reasonably be accomplished with the use of due diligence within such
period of time and if, in addition, Tenant commences to cure or cause to be
cured such default within fifteen (15) Business Days after receiving notice
thereof from Manager and thereafter prosecutes the cure of such default with due
diligence, such period of time shall be extended to such period of time as may
be reasonably necessary to cure such default with due diligence.

 

H.                The occurrence of an event of default beyond any applicable
notice and cure period under any obligation, agreement, instrument or document
which is secured in whole or in part by Tenant’s or Landlord’s interest in any
Hotel or should the holder of such security accelerate the indebtedness secured
thereby or commence a foreclosure thereof. Upon the occurrence of any Tenant
Event of Default as described under this Section 9.06.H, said Tenant Event of
Default shall be deemed a “Tenant Default” under this Agreement.

 

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9.07          Remedies for Tenant Defaults.

 

A.                In the event of a Tenant Default that has a material adverse
effect on Manager or its Affiliates, Manager shall have the right to:
(1) terminate this Agreement with respect to the applicable Hotel under which
such Tenant Default arose as expressly provided in this Agreement; (2) terminate
this Agreement as to all Hotels that are at such time subject to this Agreement
by written notice to Tenant, which Termination shall be effective as of the
effective date which is set forth in said notice, provided that said effective
date shall be at least sixty (60) days (or such longer period required by
applicable Legal Requirements concerning the termination of Hotel employees)
after the date of such notice; and (3) 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. In the event of a Termination
as described in this Section 9.07, Manager shall retain all of its rights under
the Owner Agreement. The parties agree that a Tenant Default under Sections
9.06.A, 9.06.B, 9.06.C, 9.06.D and/or 9.06.F will (x) be deemed to have a
material adverse effect on Manager or its Affiliates and (y) except as otherwise
expressly set forth herein, shall be the only provisions for which a Tenant
Default thereof shall give rise to Manager’s right to terminate this Agreement;
provided, however, that a Tenant Default under Section 9.06.D will only be
deemed to have a material adverse effect on Manager or its Affiliates to the
extent that such Tenant Default arises from Tenant’s failure to make any payment
(or cause to be made any payment by any Affiliate of Tenant which is party
thereto) required to be made under any Renovation-Related Agreement, Tenant’s
failure to provide sufficient Additional Working Capital in accordance with the
provisions of Section 4.05.A hereof or Tenant’s failure to provide sufficient
Reserve funds in accordance with the provisions of Sections 5.07.B, 5.07.D
and/or 5.08.E hereof. Notwithstanding the provisions of this Section 9.07.A, so
long as a Hotel is subject to a Qualified Mortgage or owned by a Person who
acquired such interest pursuant to a Qualified Mortgage (or a deed-in-lieu in
connection therewith), Manager shall not exercise the termination right provided
for in this Section 9.07.A if the Tenant Default described herein arises under
Section 9.06.A, 9.06.B or 9.06.C and is also a default pursuant to the terms of
such Qualified Mortgage so long as the mortgagee thereunder is diligently
pursuing its remedies to cure the event or circumstance which created such
Tenant Default as described in this Section 9.07.A and provides Manager with
written notice of the same.

 

B.                 Upon the occurrence of a Tenant Default which arises with
respect to a violation by Tenant of Section 10.02 hereof with respect to a Sale
of a Hotel in violation of such provision or by Landlord with respect to a
violation of Sections 8 and 9 of the Owner Agreement or Section 8.01.A(2) with
respect to the encumbering of a Hotel by Landlord or Tenant by a Mortgage which
is not a Qualified Mortgage, or by Landlord with respect to a violation of
Section 9 of the Owner Agreement, Manager shall have, in addition to all other
rights and remedies provided for herein, the right to effect a Termination of
this Agreement with respect to the applicable Hotel under which such Tenant
Default arose. Notwithstanding the foregoing sentence, so long as a Hotel is
subject to a Qualified Mortgage or owned by a Person who acquired such interest
pursuant to a Qualified Mortgage (or a deed-in-lieu in connection therewith),
Manager shall not exercise the termination right provided for in this Section
9.07.B if the Tenant Default described herein is also a default pursuant to the
terms of such Qualified Mortgage so long as the mortgagee thereunder is
diligently pursuing its remedies to cure the event or circumstance which created
such Tenant Default as described in this Section 9.07.B and provides Manager
with written notice of the same.

 

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C.                 Manager and/or any Affiliate shall be entitled, in case of
any breach of the covenants of Section 11.11.M by Tenant or others claiming
through it, to injunctive relief and to any other right or remedy available at
law or in equity. The provisions of this Section 9.07.C shall survive any
Termination.

 

D.                The rights granted under this Article IX shall not be in
substitution for, but shall be in addition, to, any and all rights and remedies
available to Manager or its Affiliates (including, without limitation,
injunctive relief and damages) by reason of applicable provisions of law or
equity.

 

E.                 For the avoidance of doubt, nothing contained in this
Agreement shall restrict or modify any of the rights or remedies to which
Manager and/or its Affiliates are entitled under the applicable
Renovation-Related Agreement(s) (including, without limitation, the right to
terminate this Agreement with respect to the applicable Hotel pursuant to
Section 2.06 of the applicable Renovation-Related Agreement(s)).

 

9.08          Good Faith Dispute by Tenant. If Tenant shall in good faith
dispute the occurrence of any Tenant Default and Tenant, before the expiration
of the applicable cure period, shall give notice thereof to Manager, setting
forth, in reasonable detail, the basis therefor, no Tenant Default shall be
deemed to have occurred and Tenant shall have no obligation with respect thereto
until final adverse determination thereof; provided, however, that in the event
that such dispute is ultimately determined against Tenant, then Tenant shall pay
to Manager interest of any disputed funds at the Overdue Rate from the date
demand for such funds was made by Manager until paid. If Manager and Tenant
shall fail, in good faith, to resolve any such dispute within ten (10) days
after Tenant’s notice of dispute, either may submit the matter for resolution by
Arbitration. In the event that the determination in such Arbitration is that a
Tenant Default, in fact, exists, Tenant shall have the applicable cure period
from the date of such final determination to cure such Tenant Default.

 

9.09          Landlord Defaults. Each of the following shall constitute a
“Landlord Default”: (1) the failure of Landlord to provide funds to any Reserve
on or before the date such funds are required to be paid under Section 5.07.B
hereof or under the Owner Agreement (after any Expert resolution pursuant to
Section 11.23.B, if applicable), (2) the failure of Landlord to make insurance
or condemnation proceeds available for repair, restoration or replacement
required under the Owner Agreement, (3) the imposition by Landlord of a Mortgage
against any Hotel which is not a Qualified Mortgage, (4) the permitting by
Landlord of a lien on Landlord’s interest in any Hotel in violation of the terms
hereof or of the Owner Agreement, or (5) a Landlord Sale of a Hotel occurs in
violation of the Owner Agreement.

 

If a Landlord Default occurs, Tenant shall have no remedies under this Agreement
with respect to such Landlord Default, but reserves its rights and remedies
under the applicable Lease. Notwithstanding anything herein to the contrary,
Manager shall be entitled to exercise any and all of the remedies of Manager
with respect to a Landlord Default under the Owner Agreement.

 

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9.10          Extraordinary Events. In all cases, if Tenant or Manager fails to
comply with any term of this Agreement (other than an obligation of a monetary
nature or as otherwise specifically provided herein), and the failure is caused
in whole or in part by one or more Extraordinary Events, the failure will not be
a default or Event of Default, and will be excused for as long as the failure is
caused in whole or in part by such Extraordinary Event.

 

ARTICLE X

 

ASSIGNMENT AND SALE

 

10.01      Assignment.

 

A.                Except as provided in Sections 10.01.B and 10.01.C, 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
use or operation of the Hotels by anyone other than Manager or Tenant. For
purposes of this Section 10.01.A, an assignment of this Agreement shall be
deemed to include the following (for purposes of this Section 10.01.A, a
“Corporate Transfer”): any direct or indirect transfer of any interest in
Manager such that Manager shall cease to be an Affiliate of Marriott or any
transaction pursuant to which Manager is merged or consolidated with another
entity which is not Marriott or an Affiliate of Marriott or pursuant to which
all or substantially all of Manager’s assets are transferred to any other
entity, but shall not include any involuntary liens or attachments contested by
Manager in good faith in accordance with Section 11.24 of this Agreement.

 

B.                 Notwithstanding the foregoing, if, after giving effect to a
Corporate Transfer, Manager, or all or substantially all of Manager’s assets,
would be owned or controlled by a Person who would, in connection therewith,
acquire all or substantially all of the Courtyard business of Marriott, provided
that (1) such Person ratifies in writing the obligations of Manager pursuant to
this Agreement, and (2) in Tenant’s reasonable determination, such Person and
its controlling parties (a) shall have sufficient expertise and financial
resources to carry on the such business consistent with historical practices,
(b) shall not be known in the community as being of bad moral character, or have
been convicted of a felony in any state or federal court, or be in control of or
controlled by Persons who have been convicted of felonies in any state or
federal court, (c) shall qualify as an “eligible independent contractor” under
Section 856(d)(9) of the Code and (d) shall otherwise satisfy the requirements
of Section 10.01.C hereunder, Tenant shall at Manager’s request, waive the
restrictions set forth in this Section 10.01 with respect to such Corporate
Transfer and no consent by Tenant shall be required with respect thereto. If
Tenant fails to give notice of such waiver (or the withholding thereof) within
twenty (20) Business Days after Manager’s written request therefor, such waiver
shall be deemed given.

 

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C.                 Notwithstanding the terms of Section 10.01.A, Manager shall
have the right, without Tenant’s consent, to (1) assign its interest in all or
part of this Agreement or its obligations to perform services hereunder to
Marriott or any Affiliate of Marriott, (2) sublease or grant concessions or
licenses to shops or any other space at a Hotel so long as the terms of any such
subleases or concessions do not exceed the Term of this Agreement, provided that
(a) such subleases or concessions are for newsstand, gift shop, parking garage,
health club, restaurant, bar or commissary purposes or similar concessions,
(b) such subleases do not have a term in excess of the lesser of five (5) years
and the remaining Term under this Agreement, (c) such subleases do not demise,
(i) in the aggregate, in excess of three thousand (3,000) 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 Landlord or any Affiliate of
Landlord shall seek to qualify as a real estate investment trust, 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 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 856(d) of the Internal Revenue Code
of 1986, as amended, or any similar or successor provision thereto, and (f) such
subleases or concessions will not violate or affect any Legal Requirement or
Insurance Requirement, and 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 Landlord and any Mortgagee under a Qualified Mortgage
may reasonably require, (3) assign its interest in this Agreement in connection
with a merger or consolidation or a sale of all or substantially all of the
assets of Manager or Marriott, and (4) assign its interest in this Agreement in
connection with a merger or consolidation or a sale of all or substantially all
of the System assets (including associated management agreements) owned by
Manager, Marriott or any Affiliate of Manager or Marriott.

 

D.                Tenant shall not assign or transfer its interest in this
Agreement without the prior written consent of Manager; provided, however, that
Tenant shall have the right, without such consent to (1) assign its interest in
this Agreement in connection with a Sale of a Hotel which complies with the
provisions of Section 10.02 of this Agreement, (2) assign its interest hereunder
to Landlord or an Affiliate of Landlord under the terms of the applicable Lease
or the Owner Agreement, (3) assign its interest hereunder to Manager or an
Affiliate of Manager, and (4) assign its interest hereunder to an Affiliate of
Tenant in a corporate restructuring of Tenant or any of its Affiliates, provided
such assignment complies with the provisions of Section 10.02 of this Agreement.

 

E.                 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
Tenant of its interest in this Agreement approved or permitted pursuant to the
terms hereof shall relieve Tenant from its obligations under this Agreement with
respect to the Hotel to which such assignment pertains arising from and after
the effective date of such assignment. An assignment by Manager of its interest
in this Agreement shall not relieve Manager from its obligations under this
Agreement with respect to the Hotel to which such assignment pertains unless
such assignment occurs in the context of a sale of all or substantially all of
the Courtyard business of Marriott and its Affiliates and which is otherwise
permitted or approved, if required, pursuant to this Agreement, in which event
Manager shall be so relieved from such obligations arising from and after the
effective date of such assignment.

 

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10.02      Sale of the Hotel.

 

A.                Tenant may enter into a Sale of a Hotel to any Person which
(1) is an Affiliate of Tenant, and (2) who assumes Tenant’s obligations with
respect to such Hotel under this Agreement, the Owner Agreement (to the extent
applicable to the Hotel being sold) and, to the extent applicable with respect
to the “deconsolidation” provisions thereof, the Pooling Agreement (or ratifies
each of such obligations if such Sale of a Hotel is pursuant to a transfer of a
Controlling Interest in Tenant). Tenant shall not enter into any Sale of a Hotel
to any Person (or any Affiliate of any Person) who (a) does not have sufficient
financial resources and liquidity to fulfill Tenant’s obligations with respect
to such Hotel under this Agreement, the Owner Agreement (to the extent
applicable to the Hotel) and, to the extent applicable as set forth in the
preceding sentence, the Pooling Agreement; (b) is known in the community as
being of bad moral character, or has been convicted of a felony in any state or
federal court, or is in control of or controlled by Persons who have been
convicted of felonies in any state or federal court; (c) is engaged in the
business of operating (as distinguished from owning) at least five (5) hotels or
other lodging facilities in competition with Manager, Marriott or any Affiliate
of either; (d) fails to expressly assume in writing the obligations of Tenant
hereunder and under the Owner Agreement (to the extent applicable to the Hotel);
or (e) is, or has an Affiliate that is, a Specially Designated National or
Blocked Person.

 

B.                 Tenant shall provide written notice of any proposed Sale of a
Hotel and shall provide to Manager such information concerning the proposed
transferee’s financial condition, ownership and business interests and as may be
reasonably necessary or appropriate in order for Manager to determine if such
transfer is consistent with the above provisions.

 

C.                 In connection with any Sale of a Hotel, Manager and the
purchaser or its tenant shall enter into a new management agreement with
Manager, which new management agreement will be on all of the terms and
conditions of this Agreement (with revisions as reasonably required to account
for the fact that such management agreement may be applicable to less than all
of the Hotels subject to this Agreement) except that the Initial Term and
Renewal Term(s) of any such new management agreement shall consist only of the
balance of the Initial Term and Renewal Term(s) remaining under this Agreement
at the time of execution of such new management agreement. Such new management
agreement shall be executed by Manager and such new tenant at the time of
closing of a Sale of the Hotel, and a memorandum of such new management
agreement shall be executed by the parties and recorded immediately following
recording of the deed or memorandum of lease or assignment and prior to
recordation of any other documents.

 

D.                Notwithstanding anything herein to the contrary, and in
addition to the foregoing, a sale (or deemed sale) of an Exit Hotel may be
consummated, in accordance with the terms and conditions of the Exit Hotel
Agreement.

 

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E.                 Notwithstanding anything herein to the contrary, including
the foregoing provisions of this Article X, other than in connection with the
sale (or deemed sale) of an Exit Hotel pursuant to Section 10.02.D above, (a) no
Sale of a Hotel by Tenant shall or can occur prior to the completion of the
Renovations pursuant to the Renovation-Related Agreements, and (b) following the
completion of the Renovations pursuant to the Renovation-Related Agreements,
Tenant may consummate a Sale of a Hotel, at no cost to Manager or Marriott,
provided that (i) the applicable Landlord or an Affiliate thereof or SVC shall
continue to own such Hotel, (ii) the permitted purchaser must meet and comply
with the requirements of this Section 10.02 and those set forth in the
applicable Lease, and (iii) the applicable Landlord, Tenant and the permitted
purchaser shall execute and deliver such documents as Manager may reasonably
require to reflect such assignment.

 

ARTICLE XI

 

MISCELLANEOUS

 

11.01      Right to Make Agreement. Each party warrants, with respect to itself,
that neither the execution of this Agreement nor the finalization of the
transactions contemplated hereby shall violate any provision of law or judgment,
writ, injunction, order or decree of any court or governmental authority having
jurisdiction over it; result in or constitute a breach or default under any
indenture, contract, other commitment or restriction to which it is a party or
by which it is bound; or require any consent, vote or approval which has not
been taken, or at the time of the transaction involved shall not have been given
or taken. Each party covenants that it has and will continue to have throughout
the Term (including any extensions thereof), the full right to enter into this
Agreement and perform its obligations hereunder.

 

11.02      Actions by Manager. Manager covenants and agrees that it shall not
take any action which would be binding upon Tenant or Landlord except to the
extent it is permitted to do so pursuant to the terms of this Agreement.

 

11.03      Relationship. In the performance of this Agreement, Manager shall act
solely as an independent contractor. Neither this Agreement nor any agreements,
instruments, documents or transactions contemplated hereby shall in any respect
be interpreted, deemed or construed as making Manager a partner, joint venturer
with, or agent of, Tenant. Tenant and Manager agree that neither party will make
any contrary assertion, claim or counterclaim in any action, suit, Expert
resolution pursuant to Section 11.23.B, arbitration or other legal proceedings
involving Tenant and Manager. Nothing contained herein is intended to, nor shall
be construed as, creating any landlord-tenant relationship between Manager and
Tenant or between Manager and Landlord. Each of Manager and Tenant shall prepare
and shall cause their Affiliates to prepare their financial statements and tax
returns consistent with the foregoing characterization.

 

11.04      Applicable Law. This Agreement shall be construed under and shall be
governed by the laws of the State of Maryland, without regard to its “choice of
law” rules. The provisions of this Section 11.04 survive any Termination.

 

11.05      Recordation. The terms and provisions of this Agreement shall run
with the parcels of land designated as the Sites, and with Tenant’s interest
therein, and shall be binding upon all successors to such interest. The parties
shall execute simultaneously with this Agreement sufficient copies of a
“Memorandum of Management Agreement” in recordable form satisfactory to both
parties, which Memorandum of Management Agreement shall, if legally permitted,
be recorded or registered (or such other steps shall be taken by the parties as
are necessary, to the extent legally permitted, to give official notice to all
third parties that this Agreement binds the Hotels) promptly following the
Effective Date of this Agreement in each jurisdiction in which a Hotel is
located. Any cost of such recordation shall be paid by Manager. Following any
Termination, Manager and Tenant shall execute a “Memorandum of Termination of
Management Agreement” or other similar document, which document shall be in a
recordable form reasonably agreed upon by both parties.

 

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11.06      Headings; Section References. The headings of Sections herein are
inserted for convenience only and are in no way intended to describe, interpret,
define or limit the scope or content of this Agreement or any provision hereto.
All references to Articles, Sections, paragraphs, clauses, exhibits, or addenda
shall refer to the corresponding Article, Section, paragraph, clause of, or
exhibit or addendum attached to, this Agreement unless otherwise specified.

 

11.07      Notices. Subject to the provisions of this Section 11.07, notices and
other communications under this Agreement must be (i) in writing; (ii) delivered
by hand against receipt, by certified or registered mail, postage prepaid,
return receipt requested or by a nationally recognized overnight delivery
service; and (iii) addressed as provided below or at any other address in the
United States designated in writing by the party receiving the notice. Any
notice will be deemed received when delivery is received or refused at the
address provided below or at the other address designated in writing.

 

To Tenant: HPT TRS MRP, Inc.   HPT CY TRS, Inc.   c/o Service Properties Trust  
Two Newton Place   255 Washington St   Newton, MA 02458   Attn: President  
Phone: (617) 964-8389   To Manager: Courtyard Management Corporation   c/o
Marriott International, Inc.   10400 Fernwood Road   Bethesda, Maryland 20817  
Attn: Law Department 52/923 - Hotel Operations   Phone: (301) 380-9555   with a
copy to: Courtyard Management Corporation   c/o Marriott International, Inc.  
10400 Fernwood Road   Bethesda, Maryland 20817   Attn: Senior Vice President,
Finance & Accounting    Dept. 51/918.04   Phone: (301) 380-6577

 

Notwithstanding the foregoing, Manager and/or any of its Affiliates may provide
Tenant and/or Landlord (as applicable) with electronic delivery of the reports
and other documents required to be provided by Manager and/or its Affiliates
under this Agreement, which reports and other documents shall be in a format
reasonably agreed upon by Manager and Tenant. Manager, Tenant and Landlord will
reasonably cooperate with one another to adapt to new technologies that may be
available for the transmission of such reports or such other documents.

 

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11.08      Environmental Matters.

 

A.                Subject to Section 11.08.D hereof and the sufficiency of funds
in each applicable Reserve, during the Term or at any other time while Manager
is in possession of the Hotels, (1) Manager shall not store, spill upon, dispose
of or transfer to or from any Hotel any Hazardous Substance, except in
compliance with all Legal Requirements, (2) Manager shall maintain the Hotels at
all times free of any Hazardous Substance (except in compliance with all Legal
Requirements), and (3) Manager (a) upon receipt of notice or knowledge shall
promptly notify Landlord and Tenant in writing of any material change in the
nature or extent of Hazardous Substances at any Hotel, (b) shall file and
transmit to Landlord and Tenant a copy of any Community Right to Know report
which is required to be filed by Manager with respect to any Hotel pursuant to
SARA Title III or any other Legal Requirements, (c) shall transmit to Landlord
and Tenant copies of any citations, orders, notices or other governmental
communications received by Manager with respect thereto (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 (an “Environmental Obligation”), (d) shall observe and comply with all
Legal Requirements relating to the use, maintenance and disposal of Hazardous
Substances and all orders or directives from any official, court or agency of
competent jurisdiction relating to the use or maintenance or requiring the
removal, treatment, containment or other disposition thereof, and (e) shall pay
or otherwise dispose of any fine, charge or Imposition related thereto, unless
Tenant or Manager shall contest the same in good faith and by appropriate
proceedings and the right to use and the value of any Hotel is not materially
and adversely affected thereby.

 

B.                 Subject to Sections 11.08.C and 11.08.D below and the
sufficiency of funds in each applicable Reserve, in the event of the discovery
of Hazardous Substances other than those maintained in accordance with Legal
Requirements on any portion of any Site or in any Hotel during the Term of this
Agreement, Manager shall promptly (i) clean up and remove from and about such
Hotel all Hazardous Substances thereon, (ii) contain and prevent any further
release or threat of release of Hazardous Substances on or about such Hotel,
(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 (1) the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq., as amended; (2) the regulations promulgated thereunder, from time to
time; (3) all federal, state and local laws, rules and regulations (now or
hereafter in effect) dealing with the use, generation, treatment, storage,
disposal or abatement of Hazardous Substances; and (4) the regulations
promulgated thereunder, from time to time (collectively referred to as
“Environmental Laws”).

 

C.                 The actual costs incurred or the estimated costs to be
incurred with respect to any costs that have been or are to be incurred under
Section 11.08.B above are herein collectively referred to as, the “Environmental
Costs.” Any costs incurred by Tenant with respect to any judgment or settlement
approved by Manager (such approval shall not be unreasonably withheld,
conditioned or delayed with respect to any third party claims including, without
limitation, claims by Landlord arising under the applicable Lease), including
reasonable attorney fees incurred with respect to such claims, as a result of
release or threat of release of Hazardous Substances on or about any of the
Hotels are herein referred to as the “Other Environmental Costs.” The
Environmental Costs and the Other Environmental Costs are collectively referred
to herein as the “Section 11.08 Costs.”

 

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D.                All Section 11.08 Costs with respect to each Hotel shall be
paid from the applicable Reserve for such Hotel; provided, however, that, if the
presence of any Hazardous Substances on or at such Hotel or the violation of any
Environmental Law in the course of operating such Hotel is caused by
(i) Manager’s willful misconduct, or (ii) the gross negligence of a member of
the Hotel’s executive committee or a Marriott executive more senior than a
member of the Hotel’s executive committee, then such Section 11.08 Costs shall
be paid by Manager at its sole cost and expense and not as a Deduction, and
Manager shall indemnify Tenant for any loss, cost, claim or expense (including
reasonable attorneys’ fees) incurred by Tenant in connection therewith, except
in all cases, to the extent that such loss, cost, claim or expense is caused, in
whole or in part, by Landlord or Tenant.

 

11.09      Confidentiality.

 

A.                The terms of this Agreement are confidential and Tenant and
Manager will each use reasonable efforts to prevent disclosure of the terms to
any Person not related to either party without the prior approval of the other
party, except (i) as required by Legal Requirements (including, without
limitation, the rules and regulations promulgated by the SEC or any stock
exchange applicable to Tenant or its Affiliates with respect to any report,
prospectus or other filing made by Tenant or its Affiliates with the SEC or any
such stock exchange); (ii) as may be necessary in any Dispute; (iii) to the
extent necessary to obtain licenses, permits and other public approvals;
(iv) for disclosure by Manager or its Affiliates in connection with any claim or
assertion related to the MI Trademarks; (v) in connection with a Transfer or a
financing of Tenant, its Affiliates or their corporate assets; (vi) in
connection with a financing or sale of Manager, its Affiliates or their
corporate assets; (vii) for disclosure by Manager or its Affiliates of
information customarily provided in the hotel industry to data gathering and
reporting services; (viii) as provided in Section 11.12; or (ix) to any
professional providing Tenant or Manager (or its Affiliates) with legal,
accounting or tax advice, provided that such professional is aware of the
confidentiality provision in this Section 11.09 and agrees in writing to be
bound thereby. The provisions of this Section 11.09 survive any Termination.

 

B.                 No reference to Manager or to any Affiliate will be made in
any prospectus, private placement memorandum, offering circular or offering
documentation related thereto (collectively referred to as the “Prospectus”),
issued by Tenant or an Affiliate, 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 Affiliate 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 MI Trademark or
other trademarks, symbols, logos or designs of Manager or any Affiliates. Tenant
shall indemnify, defend and hold Manager harmless from and against all loss,
costs, liability and damage (including attorneys’ fees and expenses, and the
cost of litigation) arising out of any Prospectus or the offering described
therein, and this obligation of Tenant shall survive any Termination of this
Agreement.

 

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11.10      Projections. Tenant acknowledges that any written or oral
projections, pro formas, or other similar information that has been, prior to
execution of this Agreement, or will, during the Term of this Agreement, be
provided by Manager, Marriott, or any Affiliate to Tenant is for information
purposes only and that Manager, Marriott, and any such Affiliate do not
guarantee that the Hotels will achieve the results set forth in any such
projections, pro formas, or other similar information. Any such projections, pro
formas, or other similar information are based on assumptions and estimates, and
unanticipated events may occur subsequent to the date of preparation of such
projections, pro formas, and other similar information. Therefore, the actual
results achieved by the Hotels are likely to vary from the estimates contained
in any such projections, pro formas, or other similar information and such
variations might be material.

 

11.11      Actions to be Taken Upon Termination. Upon a Termination of this
Agreement with respect to any Hotel, the following shall be applicable:

 

A.                 Manager shall, within ninety (90) days after Termination of
this Agreement with respect to one or more Hotels, prepare and deliver to Tenant
a final accounting statement with respect to the applicable Hotels, as more
particularly described in Section 4.01 hereof, along with a statement of any
sums due from Tenant to Manager pursuant hereto, dated as of the date of
Termination. Within thirty (30) days of the receipt by Tenant of such final
accounting statement, the parties will make whatever cash adjustments are
necessary pursuant to such final statement. If any dispute shall arise with
respect to the final accounting statement which cannot be resolved by the
parties within the thirty (30)-day period provided for making any cash
adjustments, it shall be settled by the Expert in accordance with Section
11.23.B; provided, however, that any cash adjustments relating to items which
are not in dispute shall be made within the original thirty (30)-day period. The
cost of preparing such final accounting statement shall be a Deduction, unless
the Termination occurs as a result of a default by either party, in which case
the defaulting party shall pay such cost. Manager and Tenant acknowledge that
there may be certain adjustments for which the information will not be available
at the time of the final accounting and the parties agree to readjust such
amounts and make the necessary cash adjustments when such information becomes
available; provided, however, that all accounts shall be deemed final as of the
second (2nd) anniversary of the effective date of Termination.

 

B.                 Manager shall release and transfer to Tenant, or cause
Marriott under the Pooling Agreement to release and transfer to Tenant, any of
Tenant’s funds which are held or controlled by Manager or Marriott with respect
to the applicable Hotels, with the exception of funds of Tenant to be held in
escrow pursuant to Section 6.01.B(2)(e) of Exhibit D and Section 11.11.I and
otherwise in accordance herewith. All amounts in the applicable Reserves shall
be applied to any amounts payable from such Reserves hereunder or under the
Owner Agreement and the balance shall be paid to Landlord.

 

C.                 Manager shall make available to Tenant such books and records
respecting the applicable Hotels (including those from prior years, subject to
Manager’s reasonable records retention policies) as will be needed by Tenant to
prepare the accounting statements, in accordance with the Uniform System of
Accounts, for the applicable Hotels for the year in which the Termination occurs
and for any subsequent year.

 

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D.                Manager shall (to the extent permitted by law) assign to
Tenant or to the new manager all operating licenses and permits for the
applicable Hotels which have been issued in Manager’s name (including liquor and
restaurant licenses, if any).

 

E.                 Manager shall have the option, to be exercised within thirty
(30) days after Termination, to purchase, at their then-book value, any items of
the applicable Hotels’ Inventories and Fixed Asset Supplies as may be marked
with any MI Trademark. In the event Manager does not exercise such option,
Tenant agrees that it will use any such items not so purchased exclusively in
connection with the applicable Hotels until they are consumed.

 

F.                  Manager shall, at Tenant’s sole cost and expense, use good
faith commercially reasonable efforts to transfer to and cooperate with Tenant
or Tenant’s designee in connection with the processing of all applications for
licenses, operating permits and other governmental authorizations and all
contracts entered into by Manager, including contracts with governmental or
quasi-governmental entities, which Manager has entered into with respect to the
use and operation of the applicable Hotels as then operated (and Tenant shall
assume responsibility for all of the same), but excluding (i) all insurance
contracts and multi-property contracts not limited in scope to the applicable
Hotels or other Portfolio Properties (if applicable), (ii) all contracts and
leases with Affiliates of Manager, (iii) utility deposits, and (iv) telephone
numbers for the applicable Hotels (which telephone numbers Manager shall be
required to convey to Tenant only if this Agreement is terminated as the result
of a Manager Event of Default). Tenant shall indemnify and hold Manager harmless
for all claims, costs and expenses (including reasonable attorneys’ fees)
arising from acts or omissions by Tenant or Tenant’s designee under such
contracts subsequent to the earlier of the date of Termination or the date of
transfer thereof to Tenant or Tenant’s designee.

 

G.                Tenant shall have the right to operate the improvements on the
applicable Sites without modifying the architectural design of the same,
notwithstanding the fact that such design or certain features thereof may be
proprietary to Manager 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.

 

H.                Any computer software (including upgrades and replacements) at
the applicable Hotels owned by Manager, Marriott, an Affiliate, or the licensor
of any of them is proprietary to Manager, Marriott, such Affiliate, or the
licensor of any of them and shall in all events remain the exclusive property of
Manager, Marriott, the Affiliate or the licensor of any of them, as the case may
be, and nothing contained in this Agreement shall confer on Tenant the right to
use any of such software. Subject to the terms and conditions of any applicable
Franchise Agreement, Manager shall have the right to remove from the applicable
Hotels without compensation to Tenant any computer software (including upgrades
and replacements), including, without limitation, the System software, owned by
Manager, Marriott, any Affiliate or the licensor of any of them. Furthermore,
upon Termination, Manager shall be entitled to remove from the applicable Hotels
without compensation to Tenant any computer equipment utilized as part of a
Reservation System or owned by a party other than Tenant, unless a Franchise
Agreement is in place and such equipment is to be provided pursuant to the
Franchise Agreement.

 

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I.                    Before any Termination, Manager will set up a reserve to
pay all costs that may accrue after Termination, but that relate to the
operation of the Hotel before Termination, including costs relating to
litigation and tax liabilities (including sales, use and occupancy taxes).
Notwithstanding the foregoing, Tenant shall pay, at its own cost and expense,
any and all costs and expenses incurred by Manager or its Affiliate in
connection with the transfer or termination of Hotel employees (including,
without limitation, severance pay, unemployment compensation, employment
relocation, legal costs and other employee liability costs), and any such costs
and expenses shall not be Deductions and shall be paid or reimbursed to Manager
or its Affiliate within ten (10) Business Days after Manager’s or such
Affiliate’s written request therefor. The reserve will be funded first, from
Gross Revenues; second, if Gross Revenues are insufficient, then by Tenant
within ten (10) days after receipt of Manager’s notice of the necessary amounts;
and, third, if Tenant does not pay any of the above amounts within the ten
(10)-day period, then by withdrawals by Manager from the applicable Hotel’s
operating account(s), the Reserves, Working Capital funds or any other Tenant
funds under Manager’s control. The reserve described in this Section 11.11.I is
in addition to the reserve described in Section 6.01.B(2)(e) of Exhibit D. For
the avoidance of doubt, for so long as the Pooling Agreement is in effect, any
reserve funding under this Section 11.11.I that is made from Gross Revenues
shall be accounted for on a pooled basis and treated as a Deduction.

 

J.                   Various other actions shall be taken, as described in this
Agreement, including, but not limited to, the actions described in Section 4.05
and Section 6.01.B(2)(e) of Exhibit D.

 

K.                Manager shall peacefully vacate and surrender the applicable
Hotels to Tenant.

 

L.                 Tenant shall cause the successor operator of the Hotel to
hire a sufficient number of existing Hotel employees to avoid the possibility of
a “plant closing” or “mass layoff” under the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. 2101 et seq. or a similar occurrence under any other
Legal Requirement, in connection with the Termination.

 

M.               All use of the MI Trademarks at or in connection with the Hotel
will stop as of Termination. Tenant shall make arrangements to remove any signs
and similar identification with a MI Trademark at least ten (10) days before
Termination. If Tenant does not timely make such arrangements, then Manager and
its Affiliates may cover or remove the signs and similar identification not more
than two days before Termination at Tenant’s cost. Tenant shall remove all
Inventories, Fixed Asset Supplies and other items with an MI Trademark, or
remove the MI Trademarks from such Inventories, Fixed Asset Supplies or other
items as of the Termination date. If Tenant does not timely remove these items,
then Manager and its Affiliates may do so at Tenant’s cost. Tenant shall
reimburse all costs incurred by Manager and its Affiliates for covering or
removing any items bearing MI Trademarks within ten (10) days after notice from
Manager. If Tenant fails to do so, then Manager may reimburse itself for these
costs from the applicable Hotel’s operating account(s), the Reserves, Working
Capital funds or any other Tenant funds under Manager’s control without
affecting Manager’s other rights and remedies under this Agreement.

 

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N.                Upon Termination, Tenant shall immediately stop processing and
upon request of Manager, promptly return to Manager or securely destroy, any
Personal Data processed in connection with this Agreement or as required by
Legal Requirements. However, Manager will provide to Tenant (i) all Guest
Personal Data in Manager’s control necessary for Tenant to process exiting
booking for the time after Termination, and (ii) all Hotel Employee Personal
Data in Manager’s control necessary for Tenant or a third-party manager to meet
Legal Requirements as the employer of Hotel employees after Termination.

 

O.                Upon expiration of the entire Term of this Agreement in
accordance with its terms (and not as a result of an Event of Default) and
following the completion of the final accounting provided for in Section 11.11.A
hereof and the distributions provided for thereunder, Tenant shall have no
further liability for repayment of any accrued Management Fees or any Additional
Manager Advances, Additional Marriott Advances and any other advances made by
Marriott or Manager pursuant to this Agreement or the Pooling Agreement.

 

The provisions of this Section 11.11 shall survive any Termination.

 

11.12      Trademarks, Trade Names and Service Marks. The MI Trademarks, when
used alone or in connection with another word or words, and the Marriott
trademark, service marks, other trade names, symbols, logos and designs shall in
all events remain the exclusive property of Marriott and its Affiliates (as
applicable) and nothing contained in this Agreement shall confer on Tenant the
right to use any of the MI Trademarks otherwise than in strict accordance with
the terms of this Agreement. Nothing in this Agreement will be construed to
grant Tenant any right of ownership in or right to use or license others to use
the MI Trademarks. Except as otherwise expressly provided for in this Agreement,
Tenant shall not use the MI Trademarks without Manager’s prior approval, which
can be withheld in Manager’s sole discretion. Except as provided in Section
11.11.E, upon termination of this Agreement with respect to any Hotel, any use
of or right to use any of the MI Trademarks by Tenant shall cease forthwith and
Tenant shall promptly remove from such Hotel any signs or similar items which
contain any of said MI Trademarks in accordance with this Agreement. The right
to use the MI Trademarks belongs exclusively to Marriott and/or its Affiliates
(as applicable), and the use thereof inures to the benefit of Marriott whether
or not the same are registered and regardless of the source of the same. The
provisions of this Section 11.12 shall survive any Termination.

 

11.13      Data Protection.

 

A.                Manager and its Affiliates will collect, use and disclose
Guest Personal Data in the course of operating the Hotels. Tenant may use Guest
Personal Data to comply with Legal Requirements applicable to Tenant. Tenant
shall not have access to or use Guest Preferences.

 

B.                 Tenant shall take such actions and execute such documents as
requested by Manager or its Affiliates that are necessary for compliance with
Legal Requirements applicable to Personal Data related to the Hotels, such as
data transfer agreements.

 

C.                 Tenant shall promptly inform Manager if Tenant: (i) discovers
or reasonably suspects a Security Incident; (ii) has been contacted by any
Person seeking to exercise any right under Legal Requirements pertaining to
Personal Data; or (iii) has been contacted by a data protection authority about
the processing of Personal Data (in which case Manager and any of its Affiliates
may conduct the proceedings and Tenant shall reasonably cooperate with Manager
and its Affiliates).

 

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D.                The following provisions apply to Personal Data received by
Tenant (to the extent Tenant acts as data controller) from Manager or its
Affiliates that is subject to Privacy Shield:

 

1.                  Tenant and any other Person acting under its authority will
protect Privacy Shield Data at the same level of privacy protection as required
by the Privacy Shield Principles and will collect, use and share Privacy Shield
Data solely for the purposes consistent with this Agreement and any applicable
notice to the relevant individual provided by Manager or its Affiliates.

 

2.                  If Tenant no longer meets its obligation to provide the same
level of protection as required by Privacy Shield, it will immediately (i)
notify Manager; and (ii) in consultation with Manager, either cease all
processing of Privacy Shield Data or take other reasonable and appropriate steps
to remediate the issue.

 

3.                  Tenant shall institute measures for reporting, investigating
and remediating any Privacy Shield related complaints.

 

E.                 The provisions of this Section 11.13 survive any Termination.

 

11.14      Waiver. The failure of either party to insist upon a strict
performance of any of the terms or provisions of this Agreement, or to exercise
any option, right or remedy contained in this Agreement, shall not be construed
as a waiver or as a relinquishment for the future of such term, provision,
option, right or remedy, but the same shall continue and remain in full force
and effect. No waiver by either party of any term or provision hereof shall be
deemed to have been made unless expressed in writing and signed by such party.

 

11.15      Partial Invalidity. If any portion of this Agreement shall be
declared invalid by order, decree or judgment of a court, or otherwise, this
Agreement shall be construed as if such portion had not been so inserted except
when such construction would operate as an undue hardship on Manager or Tenant
or constitute a substantial deviation from the general intent and purpose of
said parties as reflected in this Agreement.

 

11.16      Survival. Except as otherwise specifically provided herein, the
rights and obligations of the parties herein shall not survive any Termination.

 

11.17      Negotiation of Agreement. Tenant and Manager are business entities
having substantial experience with the matters addressed in this Agreement.
Tenant and Manager have each fully participated in the negotiation and drafting
of this Agreement, and this Agreement is to be interpreted without regard to any
rule or principle that may require ambiguities in a provision to be construed
against the drafter of the provision. No inferences will be drawn from the fact
that the final executed version of this Agreement differs from previous drafts.

 

11.18      Intentionally Deleted.

 

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11.19      Entire Agreement; Recitals. Subject to Section 11.45, this Agreement
and the Incidental Documents, together with any other writings signed by the
parties expressly stated to be supplemental hereto and together with any
instruments to be executed and delivered pursuant to this Agreement, constitutes
the entire agreement among the parties and supersedes all prior understandings
and writings, and may be changed only by a writing signed by the parties hereto.
The Recitals hereto are incorporated herein by reference and made a part hereof.

 

11.20      Affiliates. Manager shall be entitled to contract with companies that
are Affiliates (or companies in which Manager has an ownership interest if such
interest is not sufficient to make such a company an Affiliate) to provide goods
and/or services to the Hotels; provided that the prices and/or terms for such
goods and/or services are competitive. Additionally, Manager may contract for
the purchase of goods and services for the Hotels with third parties that have
other contractual relationships with Manager, Marriott and their Affiliates, so
long as the prices and terms are competitive. In determining, pursuant to the
foregoing, whether such prices and/or terms are competitive, they will be
compared to the prices and/or terms which would be available from reputable and
qualified parties for goods and/or services of similar quality, and the goods
and/or services which are being purchased shall be grouped in reasonable
categories, rather than being compared item by item. Any dispute as to whether
prices and/or terms are competitive in the market will be resolved by the
Expert. The prices paid may include overhead and the allowance of a reasonable
return to Manager’s Affiliates (or companies in which Manager has an ownership
interest if such interest is not sufficient to make such a company an
Affiliate), provided that such prices are competitive as provided for herein.
Tenant acknowledges and agrees that, with respect to any purchases of goods or
services pursuant to this Section 11.20, and subject to the foregoing
qualification that prices and/or terms are competitive, Manager’s Affiliates may
retain for their own benefit any allowances, credits, rebates, commissions and
discounts received with respect to any such purchases.

 

11.21      Competing Facilities. Neither this Agreement nor anything implied by
the relationship between Manager and Tenant shall prohibit any of the Marriott
Companies from constructing, operating, promoting, and/or authorizing others to
construct, operate, or promote one or more Other Marriott Products, or any other
lodging concepts, Vacation Club Products, residential units, restaurants, or
other business operations of any type, at any location, including a location
proximate to the Sites. Tenant acknowledges, accepts and agrees further that the
Marriott Companies retain the right, from time to time, to construct or operate,
or both, or promote or acquire, or authorize or otherwise license others to
construct or operate, or both, or promote or acquire any hotels, lodging
concepts or products, Vacation Club Products, restaurants or other business
operations of any type whatsoever, including, but not by way of limitation,
those listed above, at any location including one or more sites that may be
adjacent, adjoining or proximate to the Sites, which business operations may be
in direct competition with the Hotels and that any such exercise may adversely
affect the operation of the Hotels.

 

11.22      Intentionally Deleted.

 

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11.23      Dispute Resolution; Arbitration and Expert Resolution.

 

A.                Arbitration. Except with respect to those disputes, claims or
controversies which pursuant to the terms of this Agreement are to be settled by
an Expert pursuant to Section 11.23.B, all other disputes, claims or
controversies between or among the parties hereto arising out of or relating to
this Agreement or the transactions contemplated hereby, including disputes,
claims or controversies relating to the meaning, interpretation, effect,
validity, performance or enforcement of this Agreement (each, a “Dispute” and
collectively, the “Disputes”), or relating in any way to such a Dispute or
Disputes, shall on demand of any party to such Dispute be resolved through
binding and final Arbitration administered by the American Arbitration
Association (“AAA”) under its Commercial Arbitration Rules then in effect (the
“Rules”), except as modified herein. For the avoidance of doubt, a Dispute shall
include a Dispute made derivatively on behalf of one party against another.

 

1.                  Notwithstanding any provision of the Rules to the contrary,
there shall be three (3) arbitrators, who shall be appointed as provided in this
Section 11.23.A. Each party shall appoint one arbitrator within fifteen (15)
days after receipt by respondent of a copy of the demand for arbitration.
Affiliate claimants on the one hand, or Affiliate respondents on the other hand,
shall be treated as one party, respectively, for purposes of determining the
number of arbitrators and the means by which they are selected. Pursuant to the
Rules, the party-appointed arbitrators need not be impartial or independent and
shall not be subject to disqualification for partiality or lack of independence.
If the claimants or respondents, as the case may be, fail to appoint their
respective party-appointed arbitrator within fifteen (15) days, the party which
has selected an arbitrator shall request the AAA to provide a list of three (3)
arbitrators from the National Roster (as defined in the Rules) (or from the
Large, Complex Commercial Case Panel thereof, if the Procedures for Large,
Complex Commercial Disputes apply to the dispute), each of whom shall be
neutral, impartial and unaffiliated with any party and the party that failed to
timely appoint an arbitrator shall have ten (10) days to select one (1) of the
three (3) as the second arbitrator; if such party shall again fail to timely
select an arbitrator, the AAA shall make the appointment. The two (2)
arbitrators so appointed shall attempt to agree upon a third arbitrator, who
shall chair the arbitration. Such chairperson as may be agreed to by the
party-appointed arbitrators need not be selected from the National Roster, but
must meet the standards of the Rules and shall be neutral, impartial and
unaffiliated with any party. If the party-appointed arbitrators fail to agree
upon a chairperson within fifteen (15) days of the appointment of the second
arbitrator, the chairperson shall be selected from the National Roster (or, if
the Procedures for Large, Complex Commercial Disputes apply to the dispute, from
the Large, Complex Commercial Case Panel thereof) in the manner provided in the
Rules and who shall be neutral, impartial and unaffiliated with any party.

 

2.                  The place of Arbitration shall be Washington, D.C., unless
otherwise agreed by the parties.

 

3.                  Any document discovery otherwise permissible within the
Rules shall be limited to the documents bearing directly on the parties’ claims
and defenses or otherwise necessary to the determination of the matter. Unless
the parties otherwise agree, no more than three (3) depositions of individuals
affiliated with the claimant(s) or respondent(s), respectively, may be
undertaken at the discretion of the chairperson in accordance with the Rules.
The discretion and/or authority committed by the Rules to the “arbitrator” or
“arbitrator(s)” shall be vested in the chairperson, who may act individually or
in consultation with the party-appointed arbitrators at the chairperson’s
discretion.

 

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4.                  Any question regarding the enforceability of this Section
11.23.A or the demand for arbitration shall be determined in accordance with the
Federal Arbitration Act, 9 U.S.C. §1 et seq. and the body of law interpreting
such Act. The Arbitration Award shall be in writing and may, but shall not be
required to, briefly state the findings of fact and conclusions of law on which
it is based.

 

5.                  Unless, and then only to the extent the arbitrators in the
award assess costs and expenses or any part thereof against any specified party
or parties (a) each party involved in a Dispute shall bear its own costs and
expenses (including attorneys’ fees); and (b) each party (or, if there are more
than two (2) parties to the Dispute, all claimants, on the one hand, and all
respondents, on the other hand, respectively) shall bear the costs and expenses
of its (or their) selected arbitrator and the parties (or, if there are more
than two (2) parties to the Dispute, all claimants, on the one hand, and all
respondents, on the other hand) shall equally bear the costs and expenses of the
third appointed arbitrator.

 

6.                  The Arbitration Award shall be final and binding upon the
parties thereto and shall be the sole and exclusive remedy between or among such
parties relating to the Dispute, including any claims, counterclaims, issues or
accounting presented to the arbitrators. Judgment upon the Arbitration Award may
be entered in any court having jurisdiction. To the fullest extent permitted by
law, no application or appeal to any court of competent jurisdiction may be made
in connection with any question of law arising in the course of Arbitration or
with respect to any award made except for actions relating to enforcement of
this Section 11.23.A to arbitrate or any arbitral award issued hereunder and
except for actions seeking interim or other provisional relief in aid of
arbitration proceedings in any court of competent jurisdiction.

 

7.                  Any monetary award shall be made and payable in U.S. dollars
free of any tax, deduction or offset. The party against which the Arbitration
Award assesses a monetary obligation shall pay that obligation on or before the
30th day following the date of the Arbitration Award or such other date as the
Arbitration Award may provide.

 

B.                 Expert Resolution. Notwithstanding the terms and provisions
of Section 11.23.A above, when this Agreement expressly calls for a matter or
dispute to be decided or resolved by the Expert, the following terms apply:

 

1.                  Tenant or Manager may by notice to the other request that a
matter or dispute be submitted to the Expert in accordance with this Agreement.
Tenant and Manager will each select an Expert within ten (10) days after the
non-requesting party’s receipt of the notice. If Tenant or Manager fails to
select an Expert within the ten (10)-day period above, the Expert selected by
the other party will be the sole Expert. Within ten (10) days after the parties
have each selected an Expert, the two (2) Experts will select a third Expert. If
the two (2) Experts fail to select a third Expert, then the third Expert will be
selected by JAMS (“JAMS”). If there is more than one (1) Expert, then the
decision of the Expert will be made by a majority vote.

 

2.                  An Expert must be an independent, nationally recognized
consulting firm or individual with at least ten (10) years of experience in the
lodging industry and must be qualified to resolve the issue in question. An
individual or consulting firm cannot be an Expert if Tenant, Manager or their
Affiliates have, directly or indirectly, employed or retained such individual or
consulting firm within two (2) years before the date of selection. The
engagement terms for the Expert will obligate the Expert to (i) notify Tenant
and Manager in writing of the Expert’s decision within forty-five (45) days
after the date on which the last Expert was selected, or such other period as
Tenant and Manager may agree; and (ii) establish a timetable for making
submissions and replies.

 

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3.                  Tenant and Manager may each make written submissions to the
Expert and will provide a copy to the other party. The other party may comment
on such submission within the time periods established under Section 11.23.B(2).
Until an Expert decision is rendered, neither party may communicate with any
Expert about the subject matter submitted for decision without disclosing the
content of any such communication to the other party. The costs of the Expert
and the proceedings will be paid as directed by the Expert, unless otherwise
provided in this Agreement, and the Expert may direct that these costs be
treated as Deductions.

 

4.                  The Expert will decide the matter by applying the standards
specified in the relevant provisions of this Agreement. If this Agreement does
not contain a standard for the matter, then the Expert will apply the standards
for upper-moderate-price-sector, select-service hotels comparable to the Hotel
in overall quality, and size and quality of guest rooms, facilities and
amenities, considering the long term profitability of the Hotel and the
operation of the Hotel in accordance with System Standards.

 

5.                  The use of the Expert is the exclusive remedy and neither
Tenant nor Manager may attempt to adjudicate the matter in any other manner or
forum. The Expert’s decision will be final and binding on the parties and cannot
be challenged, whether by arbitration, in court or otherwise.

 

6.                  The provisions of this Section 11.23.B survive any
Termination.

 

11.24      Permitted Contests. Manager shall have the right to contest the
amount or validity of any Imposition, Legal Requirement, Insurance Requirement,
lien, attachment, levy, encumbrance, charge or claim (collectively, “Claims”) as
to any Hotel, by appropriate legal proceedings, conducted in good faith and with
due diligence, provided that (a) such contest shall not cause Landlord or Tenant
to be in default under any Qualified Mortgage or reasonably be expected to
result in a lien attaching to such Hotel, unless such lien is fully bonded or
otherwise secured to the reasonable satisfaction of Landlord, (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) Manager shall indemnify and hold
harmless Tenant and Landlord from and against any cost, claim, damage, penalty
or reasonable expense, including reasonable attorneys’ fees, incurred by Tenant
or Landlord in connection therewith or as a result thereof. Tenant agrees to
sign all required applications and otherwise cooperate with Manager in
expediting the matter, provided that Tenant shall not thereby be subjected to
any liability therefor (including, without limitation, for the payment of any
costs or expenses in connection therewith), and any such costs or expenses
incurred in connection therewith shall be paid as a Deduction with respect to
the applicable Hotel. Landlord shall, in the Owner Agreement, agree to join in
any such proceedings if required legally to prosecute such contest, provided
that Landlord shall not thereby be subjected to any liability therefor
(including, without limitation, for the payment of any costs or expenses in
connection therewith) and Manager agrees by agreement in form and substance
reasonably satisfactory to Landlord, to assume and indemnify Landlord with
respect to the same. Any amounts paid under any such indemnity of Manager to
Tenant or Landlord shall be a Deduction with respect to such Hotel. Any refund
of any Claims and such charges and penalties or interest thereon which amount
shall be paid to Manager and included in Gross Revenues of such Hotel.

 

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11.25      Indemnification. Subject to the provisions of Section 9.04 hereof,
Manager shall protect, indemnify and hold harmless Tenant and Landlord for, from
and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and reasonable expenses (including, without limitation, reasonable
attorneys’ fees), to the maximum extent permitted by law, imposed upon or
incurred by or asserted against Tenant or Landlord by reason of: (a) Manager’s
failure to pay any Impositions that are the obligations of Manager to pay
pursuant to the applicable provisions of this Agreement, and (b) infringement
and other claims by third parties relating to the proprietary marks of Marriott
or Manager with respect to any Hotel; provided, however, that Manager’s
obligations hereunder shall not apply to any liability, obligation, claim,
damage, penalty, cause of action, cost or expense to the extent the same arises
from any negligence or willful misconduct of Tenant and/or Landlord, or their
respective Affiliates, employees, agents or invitees. Manager, at its expense,
shall contest, resist and defend any such claim, action or proceeding asserted
or instituted against Tenant or Landlord (and shall not be responsible for any
duplicative attorneys’ fees incurred by Tenant or Landlord) or may compromise or
otherwise dispose of the same, with Tenant’s or Landlord’s (as applicable) prior
written consent (which consent may not be unreasonably withheld or delayed). In
the event Tenant or Landlord shall unreasonably withhold or delay its consent,
Manager shall not be liable pursuant to this Section 11.25 for any incremental
increase in costs or expenses resulting therefrom. The obligations of Manager
under this Section 11.25 are in addition to the obligations set forth in Section
11.08.D and shall survive a Termination of this Agreement. The indemnification
provided for in this Section 11.25 shall not be applicable to Section 11.08
Costs, with respect to which a specific indemnity is provided in Section 11.08
hereof, to the extent addressed therein.

 

11.26      Estoppel Certificates. Each party to this Agreement shall at any time
and from time to time, upon not less than thirty (30) 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, 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 Profit 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 lenders and any
prospective purchaser or mortgagee of any Hotel or the leasehold estate created
by the applicable Lease. The obligations set forth in this Section 11.26 shall
survive any Termination (that is, each party shall, on request, within the time
period described above, execute and deliver to the non-certifying party and to
any such third party a statement certifying that this Agreement has been
terminated).

 

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11.27      Intentionally Deleted.

 

11.28      Intentionally Deleted.

 

11.29      Remedies Cumulative. To the maximum extent permitted by law, each
legal, equitable or contractual right, power and remedy of Tenant or Manager,
now or hereafter provided either in this Agreement or by statute or otherwise,
shall be cumulative and concurrent and shall be in addition to every other
right, power and remedy and the exercise or beginning of the exercise by Tenant
or Manager (as applicable) of any one or more of such rights, powers and
remedies shall not preclude the simultaneous or subsequent exercise by Tenant of
any or all of such rights, powers and remedies.

 

11.30      Amendments and Modifications. This Agreement shall not be modified or
amended except in writing signed by both parties.

 

11.31      Construction; Nonrecourse. Anything contained in this Agreement to
the contrary notwithstanding, all claims against, and liabilities of, Manager or
Tenant arising prior to any date of termination or expiration of this Agreement
with respect to any Hotel shall survive such termination or expiration. Neither
this Agreement nor any provision hereof may be changed, waived, discharged or
terminated except by an instrument in writing signed by all the parties thereto.
All the terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns. Each term or provision of this Agreement to be performed by Manager
shall be construed as an independent covenant and condition. Time is of the
essence with respect to the exercise of any rights of Manager or Tenant under
this Agreement. Except as otherwise set forth in this Agreement, any obligations
arising prior to the expiration or sooner termination of this Agreement of
Manager (including without limitation, any monetary, repair and indemnification
obligations) and Tenant shall survive the expiration or sooner termination of
this Agreement. Nothing contained in this Agreement shall be construed to create
or impose any liabilities or obligations and no such liabilities or obligations
shall be imposed on any of the shareholders, beneficial owners, direct or
indirect, officers, directors, trustees, employees or agents of Tenant or its
Affiliates or Manager or its Affiliates for the payment or performance of the
obligations or liabilities of Tenant or Manager, as applicable, hereunder.

 

11.32      Counterparts; Headings. This Agreement may be executed in one or more
counterparts (including by means of facsimile or via email in electronic or
portable document format (.pdf) signature pages), each of which shall be deemed
an original but all of which together will constitute one and the same
instrument. Headings in this Agreement are for purposes of reference only and
shall not limit or affect the meaning of the provisions hereof.

 

11.33      No Political Contributions. Notwithstanding any provision in this
Agreement to the contrary, no money or property of the Hotels shall be paid or
used or offered, nor shall Tenant 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.

 

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11.34      Single Agreement. The parties hereto acknowledge and agree that this
Agreement and the Other Management Agreements are intended to constitute, and
shall constitute, a single transaction.

 

11.35      REIT Qualification. Manager shall not take any action which would
cause Landlord’s rental income from Tenant under the applicable Lease for the
Hotels to fail to qualify as “rents from real property” pursuant to Sections
856(d)(8)(B) and 856(d)(9) of the Code.

 

11.36     Further Compliance With Section 856(d) of the Code. Manager represents
that, as of the Effective Date, it is an “eligible independent contractor” as
defined under Section 856(d)(9)(A) of the Code, and further agrees that it shall
maintain such status except to the extent events outside of Manager’s control
may affect Manager’s independent contractor status. Landlord, Manager and Tenant
agree to cooperate in good faith to the purpose and effect that Manager retain
such status. This covenant shall apply for so long as one or more of the Hotels
are owned by Landlord (or a successor or permitted assignee) and leased to
Tenant (or a successor or a permitted assignee) as part of an ownership
structure that is subject to REIT tax requirements. Without limiting the
foregoing, Manager shall do each of the foregoing:

 

A.                 Manager shall exercise its powers, privileges,
responsibilities and obligations under this Agreement (and related documents) so
as to cause each Hotel to qualify as a “qualified lodging facility” pursuant to
Section 856(d)(9)(D) of the Code. In furtherance of the foregoing, Manager shall
comply with any regulations or other administrative guidance now or hereafter
existing with respect to qualification as an “eligible independent contractor”
under said Section 856(d)(9)(A). Without limiting any of the foregoing, Manager
shall not authorize any wagering activities to be conducted at or in connection
with any Hotel and Manager shall ensure that at least one-half of the guest
rooms in each such Hotel are used on a transient basis and that no Hotel will
include amenities and facilities which are not customary for similarly situated
properties.

 

B.                 None of Manager or any of its Affiliates (either individually
or collectively) shall own, within the meaning of Section 856(d)(5) of the Code,
either directly or indirectly, more than thirty-five percent (35%) of the shares
of SVC (whether by vote, value or number of shares).

 

C.                 To the extent within the reasonable control of Manager and
each Affiliate, neither Manager nor any Affiliate shall permit more than
thirty-five percent (35%) of the total combined voting power of Manager’s or
such Affiliates outstanding stock (or thirty-five percent (35%) of the total
shares of all classes of its outstanding stock) to be owned, within the meaning
of Section 856(d)(5) of the Code, directly or indirectly, by one or more persons
owning thirty-five percent (35%) or more of the outstanding stock of SVC and
Manager and its Affiliates shall otherwise comply with any regulations or other
administrative guidance now or hereafter existing under said Section 856(d)(5)
of the Code with respect to such ownership limits.

 

D.                Manager, or a person who is a “related person” within the
meaning of Section 856(d)(9)(F) of the Code (a “Related Person”), shall be
actively engaged in the trade or business of operating or managing “qualified
lodging facilities” for one or more persons who are not Related Persons with
respect to SVC or Tenant (“Unrelated Persons”). Manager or such Related Person
shall derive at least ten percent (10%) of each of its revenue and profit from
operating or managing “qualified operating facilities” within the meaning of
Section 856(d)(9)(D) of the Code for Unrelated Persons and shall comply with any
regulations or other administrative guidance now or hereafter existing under
Section 856(d)(9) of the Code with respect to the amount of hotel management
business that needs to be conducted with Unrelated Persons in order for Manager
to qualify as an “eligible independent contractor” under said Section 856(d)(9).

 

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11.37      Adverse Regulatory Event. In the event of an Adverse Regulatory Event
arising from or in connection with this Agreement, Tenant and Manager shall work
together in good faith to amend this Agreement to eliminate the impact of such
Adverse Regulatory Effect. For purposes of this Agreement, the term “Adverse
Regulatory Effect” means any time that a law, statute, ordinance, code, rule or
regulation imposes upon Tenant (or could imposes upon Tenant in Tenant’s
reasonable opinion), any material threat to either Landlord’s or Landlord’s
Affiliate’s status as a “real estate investment trust” under the Code or to the
treatment of amounts paid to Landlord as “rents from real property” under
Section 856(d) of the Code. Each of Manager and Tenant shall inform the other 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.

 

11.38      Commercial Leases. For so long as one or more of the Hotels are owned
by Landlord and leased to Tenant as part of an ownership structure that is
subject to REIT tax requirements, Manager agrees that Manager shall not enter
into any sublease with respect to any Hotel (or any part thereof) without first
providing Landlord with a copy thereof. Landlord shall have twenty (20) days
from the date of its receipt of such proposed sublease to give written notice to
Manager indicating whether such sublease would, in Landlord’s reasonable
judgment, provide for a rental to be paid by the sublessee thereunder based (or
considered to be based), in whole or in part, on the income or profits derived
by the business activities of the sublessee, or any other formula, such that any
portion of the rent payable under the sublease would fail to qualify as “rents
from real property” within the meaning of Section 856(d) of the Code, or any
similar or successor provisions thereto. If Landlord provides timely notice of
its determination that such proposed sublease would provide for such a rental
then Manager will not enter into such proposed sublease. If Landlord shall fail
to give Manager such written notice within such twenty (20) day period, Landlord
shall be estopped from claiming that such sublease violates the terms of this
Section 11.38.

 

11.39      Waiver of Jury Trial. In the event there occurs a Dispute, or an
aspect of a Dispute, which under the Rules must be referred to a court for
determination, each of Tenant and Manager hereby absolutely, irrevocably and
unconditionally waive trial by jury in connection with any litigation, action,
suit or proceeding relating to the resolution of such Dispute. With respect to
any Hotel located in the State of California, the foregoing provisions of this
Section 11.39 constitute the written consent of Tenant and Manager to waive
their right to a jury trial, as contemplated by CCP 631(d)(2) and either party
may submit the provisions of this Section 11.39 to the applicable court or
judicial body to evidence such consent of the parties.

 

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11.40      Waiver of Consequential, Incidental, Special & Punitive Damages.
Tenant and Manager each absolutely, irrevocably and unconditionally waives the
right to claim or receive consequential, incidental, special or punitive damages
in any litigation arising out of or in connection with this Agreement or any
other agreement or document, the relationships of the parties or any actions or
omissions in connection with any of the foregoing. The provisions of this
Section 11.40 survive any Termination.

 

11.41      Equity Interests in Tenant. Tenant represents and warrants that
Exhibit E contains a list of all of the direct and indirect owners of Tenant,
excluding any public shareholders of SVC. Tenant represents, warrants, and will
ensure throughout the Term, that neither Tenant nor any of its Affiliates nor
any other Person that directly or indirectly owns, has an ownership interest in,
or controls Tenant or any of its Affiliates, is a Restricted Person; provided,
however, that nothing in this sentence shall apply to any public shareholder of
SVC.

 

11.42      No Rights of Third Parties. This Agreement does not give any rights
or benefits to any Person that is not a party to this Agreement, except as
provided in this Agreement. To the extent that any Affiliate of Manager or other
Person is expressly identified as having particular rights or benefits under
this Agreement, such Person is entitled to enforce those rights and enjoy those
benefits in accordance with this Agreement. The provisions of this Section 11.42
survive any Termination.

 

11.43      Intentionally Deleted.

 

11.44      Non-Hotel Marketing Activities by Tenant. The performance of each
Hotel depends on an exclusive brand affiliation with Manager and its Affiliates,
and Manager has no obligation to allow Tenant or any third party to use any
portion of such Hotel for any activities relating to the marketing, sale or
operation of any Vacation Club Products developed, marketed, sold or operated by
Tenant or any third party except, if approved by Manager, Vacation Club Products
operated under the “Marriott Vacation Club,” “Grand Residences by Marriott,”
“Pulse,” or Ritz Carlton brands or such other brands as Manager or its
Affiliates may license in the future to Marriott Vacations Worldwide or its
Affiliates (or their permitted successors or assigns).

 

11.45      Single Agreement; Integration. It is expressly acknowledged and
agreed by Manager and Tenant that the underlying terms and conditions of this
Agreement, the Pooling Agreement, the Marriott Guaranty Agreement and each and
every other document and agreement entered into in connection herewith or
therewith and/or contemplated hereby or thereby have been negotiated by the
parties as a single integrated transaction.

 

11.46      Prior Management Agreement. For the avoidance of doubt, the Prior
Management Agreement shall continue to govern the rights and obligations of the
parties with respect to any period prior to the Effective Date, and this
Agreement shall govern the rights and obligations of the parties with respect to
any period from and after the Effective Date.

 

11.47      References to Tenant and Landlord. For purposes of this Agreement,
unless the context otherwise requires, any reference to Tenant or Landlord
(including, but not limited to, any right or obligation of a Tenant or
Landlord), shall mean or relate to, as the case may be, the Tenant or Landlord
of the particular Portfolio Property in question, as applicable. Unless the
context otherwise requires, any reference to “Landlord” in the context of any
Legacy CY53 Hotel shall mean or relate to either or both of HPTCY Landlord
and/or SVC, as the case may be.

 

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11.48      Distributions and Reports. Notwithstanding any provision to the
contrary contained in this Agreement, (i) all distributions and other amounts
payable to Tenant hereunder shall be distributed or paid by Manager to MRP
Tenant for the benefit of MRP Tenant and CY Tenant and such amounts shall be
allocated between MRP Tenant and CY Tenant as determined by Tenants in their
sole discretion, and Marriott, Managers and their Affiliates shall have no
responsibility or liability in connection with any such allocation or the
distribution thereof between MRP Tenant and CY Tenant and (ii) all Accounting
Period Statements and other reports, statements and officer’s certificates shall
be delivered to MRP Tenant for the benefit of MRP Tenant and CY Tenant.

 

ARTICLE XII

 

DEFINITION OF TERMS

 

12.01      Definition of Terms. The following terms when used in this Agreement
and the Addenda attached hereto shall have the meanings indicated:

 

“AAA” shall have the meaning ascribed to such term in Section 11.23.A hereof.

 

“Above-Property Programs & Services” shall have the meaning ascribed to such
term in Section 1.03.B hereof.

 

“Accounting Period” shall mean a calendar month. Manager, in its discretion, may
change the Accounting Period to such other period that Manager implements for
the System.

 

“Accounting Period Statement” shall have the meaning ascribed to such term in
Section 4.01.A hereof.

 

“Addenda” or “Addendum” shall mean any addendum attached hereto from time to
time.

 

“Additional Manager Advances” shall mean advances by Manager under Sections
3.02.C, 4.01.E, 4.03.D, 4.05.A and 5.07.D hereof.

 

“Additional Marketing Programs” shall have the meaning ascribed to such term in
Section 1.03.D hereof.

 

“Additional Marriott Advances” shall mean Additional Marriott Advances under the
Pooling Agreement, and if the Pooling Agreement does not apply to any Hotel,
then the portion of such Additional Marriott Advances determined to be allocable
to such Hotel in accordance with the Pooling Agreement.

 

“Additional Working Capital” shall have the meaning ascribed to such term in
Section 4.05.A hereof.

 

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“Adverse Regulatory Effect” shall have the meaning ascribed to such term in
Section 11.37 hereof.

 

“Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person. For purposes of this definition, the term “control” (including the terms
“controlling,” “controlled by” and “under common control with”) of a Person
means the possession, directly or indirectly, of the power: (i) to vote fifty
percent (50%) or more of the voting stock or equity interests of such Person; or
(ii) to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting stock or equity interests, by
contract or otherwise.

 

“Aggregate Amount Funded” shall have the meaning set forth in the Marriott
Guaranty Agreement.

 

“Aggregate Tenant’s Priority” shall have the meaning set forth in the Pooling
Agreement.

 

“Agreement” shall have the meaning ascribed to such term in the Preamble, as the
same may be amended, modified or supplemented from time to time.

 

“Annual Operating Projection” shall have the meaning ascribed to such term in
Section 4.04 hereof.

 

“Annual Operating Statement” shall have the meaning ascribed to such term in
Section 4.01.C.

 

“Arbitration” shall mean the process described in Section 11.23.A hereof.

 

“Arbitration Award” shall have the meaning ascribed to such term in Section
11.23.A hereof.

 

“Available Funds” shall have the meaning ascribed to such term in Section
3.02.B(4) hereof.

 

“Award” shall have the meaning ascribed to such term in the applicable Lease.

 

“Base Management Fee” shall mean, with respect to each Fiscal Year or portion
thereof, an amount equal to two percent (2%) of Gross Revenues for such Fiscal
Year or portion thereof.

 

“Buildings” shall have the meaning ascribed to such term in Section A of the
Recitals.

 

“Business Day” shall mean any day other than Saturday, Sunday, or any other day
on which banking institutions in the Commonwealth of Massachusetts or the State
of Maryland are authorized by law or executive action to close.

 

“Capital Addition” shall have the meaning ascribed to such term in Section
5.08.A hereof.

 

“Central Office Services” shall have the meaning ascribed to such term in
Exhibit B.

 

“Chain Services” shall have the meaning ascribed to such term in Section 1.03.C.

 

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“Claims” shall have the meaning ascribed to such term in Section 11.24 hereof.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Condemnation” shall mean, with respect to any Hotel, (a) the exercise of any
governmental power with respect to such Hotel or any interest therein, whether
by legal proceedings or otherwise, by a Condemnor of its power of condemnation,
(b) a voluntary sale or transfer of any Hotel or any interest therein, to any
Condemnor, either under threat of condemnation or while legal proceedings for
condemnation are pending, or (c) a taking or voluntary conveyance of any Hotel
or any interest therein, or right accruing thereto or use thereof, as the result
or in settlement of any Condemnation or other eminent domain proceeding
affecting any Hotel or any interest therein, whether or not the same shall have
actually been commenced.

 

“Condemnor” shall mean any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.

 

“Controlling Interest” shall mean (i) if the Person is a corporation, the right
to exercise, directly or indirectly, more than fifty percent (50%) of the voting
rights attributable to the shares of such Person (through ownership of such
shares or by contract), or (ii) if the Person is not a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the business, management or policies of such Person.

 

“Corporate Transfer” shall have the meaning ascribed to such term in Section
10.01.A hereof.

 

“CY Tenant” shall have the meaning ascribed to such term in the Preamble.

 

“Deduction” shall have the meaning ascribed to such term in the definition of
Operating Profit. Deductions shall not include (i) payments with respect to
items for which Manager has given an indemnity, to the extent of such indemnity,
(ii) payments with respect to items for which Manager has agreed to be liable at
its own cost and expense herein, (iii) any item specifically stated not to be a
Deduction herein, and (iv) any item for which Manager or any Affiliate has
agreed to be liable (other than at the cost and expense of Tenant or any
Affiliate) under the terms of any Incidental Document or any other agreement
between Manager or any Affiliate and Tenant or any Affiliate.

 

“Disbursement Rate” shall mean nine percent (9%) per annum.

 

“Disputes” shall have the meaning ascribed to such term in Section 11.23.A
hereof.

 

“Effective Date” shall have the meaning ascribed to such term in the Preamble.

 

“Emergency Funding” shall have the meaning ascribed to such term in Section
5.07.D hereof.

 

“Employee Claims” shall mean any claims by any Hotel employee or governmental or
quasi governmental entity against Tenant or Manager with respect to the
employment of Hotel employees, including claims that (i) are resolved by
litigation or by settlement; (ii) involve allegations that any employment
related contracts affecting the Hotel employees have been breached; or
(iii) involve allegations that one or more Employment Laws has been violated.
“Employee Claims” exclude claims for workers’ compensation benefits or for
unemployment benefits.

 

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“Employment Laws” shall mean any Legal Requirements relating to employment,
conditions of employment, benefits, compensation or termination of employment,
including Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Workers Adjustment and Retraining Act, the Occupational
Safety and Health Act, the Immigration Reform and Control Act of 1986, the
Polygraph Protection Act of 1988 and the Americans With Disabilities Act of
1990.

 

“Environmental Costs” shall have the meaning ascribed to such term in Section
11.08.C hereof.

 

“Environmental Laws” shall have the meaning ascribed to such term in Section
11.08.B hereof.

 

“Environmental Notice” shall have the meaning ascribed to such term in Section
11.08.A hereof.

 

“Environmental Obligation” shall have the meaning ascribed to such term in
Section 11.08.A hereof.

 

“Essex House” shall mean Essex House Condominium Corporation, a Delaware
corporation.

 

“Event of Default” shall mean any Tenant Event of Default or Manager Event of
Default, as the context may require.

 

“Execution Date” shall have the meaning ascribed to such term in the Preamble.

 

“Existing CC&Rs” shall have the meaning ascribed to such term in Section 8.04.A
hereof.

 

“Exit Hotel” shall mean a Hotel designated as a property to be sold in
accordance with the terms of the Exit Hotel Agreement.

 

“Exit Hotel Agreement” shall mean that certain Amended and Restated Exit Hotel
Agreement, dated as of the Execution Date but to be effective as of the
Effective Date, by and among, inter alia, HPTMI Landlord, HPTCY Landlord, SVC,
MRP Tenant, CY Tenant, Manager and Marriott, as the same may be amended,
modified or supplemented from time to time.

 

“Expert” means the expert or experts selected in accordance with Section 11.23.B
hereof.

 

“Extraordinary Event” shall mean any of the following events, regardless of the
location or duration of the events: acts of nature; fires and explosions; acts
of war, armed conflict or other hostile action; civil war, rebellion,
revolution, insurrection or usurpation of sovereign power; riots or other civil
unrest; terrorism; sabotage; chemical or biological events; nuclear events;
epidemics and disease related events; bombing; strikes, lockouts or other labor
disturbances; embargoes or blockades; shortage of critical materials or
supplies; action or inaction of governmental authorities that has a material
adverse effect on Marriott, Landlord, Tenant or Manager; or any other events
beyond the reasonable control of Marriott, Landlord, Tenant or Manager,
excluding general economic or market conditions that are not caused by any of
the events described in this definition.

 

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“FF&E” shall mean furniture, fixtures and equipment, including without
limitation: furnishings, fixtures, decorative items, signage, audio-visual
equipment, kitchen equipment and appliances, cabinetry, laundry equipment,
housekeeping equipment, telecommunications systems, security systems and front
desk and back-of-the house computer equipment; provided, however, that the term
“FF&E” shall not include Fixed Asset Supplies or Software.

 

“FF&E Termination” shall have the meaning ascribed to such term in Section
5.07.D hereof.

 

“Finance Date” shall mean the date of the closing of any proposed Mortgage.

 

“First Incentive Management Fee” shall mean, with respect to each Fiscal Year or
portion thereof, an amount equal to forty percent (40%) of Operating Profit
remaining after deducting amounts paid or payable in respect of Sections
3.02.B(1) through (5) for such Fiscal Year or portion thereof.

 

“Fiscal Year” shall mean (i) a calendar year (which is sometimes called a “full”
Fiscal Year in this Agreement); (ii) any partial Fiscal Year between the
Effective Date and the first full Fiscal Year; and (iii) the partial Fiscal
Year, if any, in which a Termination occurs. Manager may modify the meaning of
“Fiscal Year” if it changes its fiscal year, and if so will adjust the reporting
and accounting procedures under this Agreement, but the adjustment will not
alter the Term or reduce the distributions of Operating Profit or other payments
due under this Agreement; provided, however, that for so long as the Pooling
Agreement is in effect, Manager’s Fiscal Year shall not change unless conforming
changes are made to the Fiscal Year applicable to all Portfolio Properties then
subject to the Pooling Agreement.

 

“Fixed Asset Supplies” shall mean items included within “Operating Equipment”
under the Uniform System of Accounts that may be consumed in the operation of
the Hotels or are not capitalized, including, but not limited to, linen, china,
glassware, tableware, uniforms, and similar items used in the operation of the
Hotels.

 

“Foreclosure” shall mean any exercise of remedies available to a Mortgagee upon
a default under a Mortgage that results or may result in a transfer of title to,
control of, or possession of the applicable Hotel, including (i) transfer by
judicial foreclosure; (ii) transfer by deed in lieu of foreclosure;
(iii) appointment of an administrator, receiver, trustee or liquidator;
(iv) transfer of ownership or control of Tenant (for example, by exercise of a
stock pledge); (v) transfer resulting from an order given in a bankruptcy,
reorganization, insolvency or similar proceeding; (vi) if Tenant leases such
Hotel, an assignment, novation or termination of Tenant’s interest in the lease;
or (vii) transfer through any other judicial or non-judicial exercise of
Mortgagee’s remedies.

 

“Franchise Agreement” means, with respect to each Hotel, any franchise agreement
entered into with respect to such Hotel by and between Marriott and Tenant, from
and after the date hereof, and in accordance with the terms hereof, as the same
may be amended, modified or supplemented from time to time.

 

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“Franchise Conversion” shall have the meaning ascribed to such term in Section
5.07.D hereof.

 

“Franchisor” shall have the meaning ascribed to such term in the applicable
Franchise Agreement.

 

“Future CC&Rs” shall have the meaning ascribed to such term in Section 8.04.A
hereof.

 

“GAAP” shall mean generally accepted accounting principles, consistently
applied.

 

“Government Agencies” shall mean any court, agency, authority, board (including,
without limitation, environmental protection, planning and zoning), bureau,
commission, department, office or instrumentality of any nature whatsoever of
any governmental or quasi-governmental unit of the United States or the State or
any county or any political subdivision of any of the foregoing, whether now or
hereafter in existence, having jurisdiction over Tenant or the Hotels operated
thereon.

 

“Gross Revenues” shall mean for any period with respect to each Hotel, all
revenues and receipts of every kind derived from operating such Hotel and all
departments and parts thereof during such period, including, but not limited to:
income (from both cash and credit transactions) after deductions for bad debts
and discounts for prompt cash payments and refunds from rental of Guest Rooms
and other spaces at the Hotels, telephone charges, stores, offices, exhibit or
sales space of every kind; license, lease and concession fees and rentals (not
including gross receipts of licensees, lessees and concessionaires); income from
vending machines; income from parking; health club membership fees; food and
beverage sales; wholesale and retail sales of merchandise; service charges; and
proceeds, if any, from business interruption or other loss of income insurance;
provided, however, that Gross Revenues shall not include the following:
gratuities to employees of the Hotels; federal, state or municipal excise, sales
or use taxes or any other taxes collected directly from patrons or guests or
included as part of the sales price of any goods or services; proceeds from the
sale of FF&E; interest received or accrued with respect to the funds in the
Reserves or 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); or any proceeds from
any Sale of a Hotel or from the refinancing of any debt encumbering any Hotel.

 

“Gross Room Revenues” shall include with respect to each Hotel, all gross
revenues attributable to or payable for rental of guest rooms at such Hotel,
after deductions for bad debts and discounts for prompt cash payments and
refunds from Rental of Guest Rooms, including, without limitation, all credit
transactions, whether or not collected, but excluding (i) any sales or room
taxes collected by Manager for transmittal to the appropriate taxing authority,
and (ii) any revenues from sales or rentals of ancillary goods, such as
entertainment rentals, telephone income and fireplace log sales and sales from
in-room service bars. Gross Room Revenues shall also include the proceeds from
any business interruption insurance applicable to loss of revenues due to the
non-availability of guest rooms and for guaranteed no-show revenue which is
collected. Gross Room Revenues shall be accounted for in accordance with the
Uniform System of Accounts.

 

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“Ground Lease Rent” shall have the meaning ascribed to such term in Section
3.02.B(2) hereof.

 

“Guaranty Term” shall have the meaning given such term in the Marriott Guaranty
Agreement.

 

“Guaranty Termination Event” means the expiration of the Guaranty Term or the
termination of Marriott’s obligation to advance funds under the Marriott
Guaranty Agreement pursuant to the terms of the Marriott Guaranty Agreement.

 

“Guest Personal Data” means any information relating to identified or
identifiable actual or potential guests or customers of the Hotels or Other
Marriott Products, including contact information (such as addresses, phone
numbers, email and SMS addresses), Guest Preferences, and any other information
collected from or about actual or potential guests or customers of the Hotels or
Other Marriott Products operated or licensed by Manager or its Affiliates.

 

“Guest Preferences” means guest histories, preferences, loyalty program activity
and any other related information collected from actual or potential guests or
customers of the Hotels or Other Marriott Products operated or licensed by
Manager or its Affiliates through the Loyalty Programs or other means.

 

“Guest Room” shall mean with respect to each Hotel, a lodging unit in such
Hotel.

 

“Hazardous Substance” shall mean any substance:

 

·the presence of which requires or may hereafter require notification,
investigation or remediation under any federal, state or local statute,
regulation, rule, ordinance, order, action or policy; or

 

·which is or becomes defined as a “hazardous waste,” “hazardous material” or
“hazardous substance” or “pollutant” or “contaminant” under any present or
future federal, state or local statute, regulation, rule or ordinance or
amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. et seq.) and
the Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.) and
the regulations promulgated thereunder; or

 

·which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by
any governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, any state of the United States, or any
political subdivision thereof; or

 

·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 on or about such Hotel; or

 

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·without limitation, which contains gasoline, diesel fuel or other petroleum
hydrocarbons or volatile organic compounds; or

 

·without limitation, which contains polychlorinated biphenyls (PCBs) or asbestos
or urea formaldehyde foam insulation; or

 

·without limitation, which contains or emits radioactive particles, waves or
material; or

 

·without limitation, constitutes materials which are now or may hereafter be
subject to regulation pursuant to the Material Waste Tracking Act of 1988, or
any applicable laws promulgated by any Government Agencies.

 

“Hotel” shall mean each Site together with the Buildings and all other
improvements constructed or to be constructed on such Site pursuant to this
Agreement, and all FF&E installed or located on such Site or in the Buildings,
and all easements or other appurtenant rights thereto owned by Landlord together
with, for purposes of this Agreement, all office equipment, telephone equipment,
motor vehicles, and other equipment leased by Tenant as permitted hereunder and
Fixed Asset Supplies at such Hotel, in each of the foregoing instances as and
when the same hereunder is subject to the terms of this Agreement.

 

“Hotel Employee Personal Data” shall mean Personal Data relating to any Hotel
employee, job applicant or temporary worker about whom the Hotels or any Other
Marriott Products operated or licensed by Manager or any of its Affiliates
collect Personal Data, including name, address, date of birth, compensation,
national ID number, passport number, driver’s license number, social security
number, tax ID number or other ID number.

 

“Hotel Improvements” means the building or buildings containing guest rooms, a
lobby, restaurants, meeting rooms, administrative facilities, parking (if
located on the Site), other amenities and related facilities, and all other
improvements constructed or to be constructed on the Site under this Agreement.

 

“Hotel Systems” means all audio visual systems, computer hardware and computer
equipment, Software and connectivity and information resources systems installed
at the Hotels or used by Manager or its Affiliates in connection with providing
Above-Property Programs & Services to the Hotels, all of which may be upgraded
or changed by Manager or its Affiliates from time to time in their sole
discretion. Examples of Hotel Systems as of the Effective Date are any property
management system, point of sale system, front office, back office and
accounting management system, sales and reservations systems, timekeeping and
Manager’s automated payroll systems, telecommunications systems and food and
beverage inventory systems, engineering software, and word processing and other
personal computer applications.

 

“HPTCY Landlord” shall mean HPTCY Properties Trust, a Maryland real estate
investment trust.

 

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“HPTMI Hawaii” shall mean HPTMI Hawaii, Inc., a Delaware corporation.

 

“HPTMI Landlord” shall mean HPTMI Properties Trust, a Maryland real estate
investment trust.

 

“Impositions” shall have the meaning ascribed to such term in the applicable
Lease with the exclusions set forth in Section 7.01.B hereof.

 

“Incidental Documents” shall mean the Portfolio Agreements and all other
documents entered into by Marriott, Manager, MRP Tenant, CY Tenant, HPTMI
Landlord, HPTCY Landlord, SVC, and/or the managers under the Other Management
Agreements in connection with the transactions contemplated, inter alia, by this
Agreement, the Pooling Agreement, the Renovation-Related Agreements and the
Marriott Guaranty Agreement.

 

“Index” shall mean the Consumer Price Index for Urban Wage Earners and Clerical
Workers, All-Cities, All Items 1982–1984 = 100, as published by the Bureau of
Labor Statistics or, in the event publication thereof ceases, by reference to
whatever index then published by the United States Department of Labor at that
time is most nearly comparable as a measure of general changes in price levels
for urban areas, as reasonably determined by Manager and Tenant.

 

“Inflation Index” shall mean the “Gross Domestic Product Implicit Price
Deflator” issued by the United States Bureau of Economic Analysis of the
Department of Commerce, or if the Inflation Index is no longer published, any
comparable substitute index mutually agreed by Tenant and Manager published by
an agency of the United States government. Any dispute about the selection of
the substitute index will be resolved by the Expert. Whenever an amount is to be
“adjusted by the Inflation Index,” or similar terminology, the adjustment will
be equal to the percentage change in the Inflation Index for the month in which
the adjustment is to be made (or if the Inflation Index for that month is not
available, the Inflation Index for the most recent month that is available) as
compared to the Inflation Index which was issued for the month in which the
Effective Date occurred, unless otherwise provided in this Agreement.

 

“Initial Term” shall have the meaning ascribed to such term in Section 2.01.A
hereof.

 

“Institutional Lender” shall mean a commercial bank, investment bank, trust
company, savings bank, savings and loan association, commercial credit
corporation, life insurance company, real estate investment trust, pension
trust, pension plan or pension fund, a public or privately held fund engaged in
real estate or corporate lending or both, or any other financial institution
commonly known as an institutional lender (or any Affiliate of such institution)
in each case having a minimum paid up capital (or net assets in the case of a
pension fund) of $200,000,000, as adjusted by the Inflation Index for the month
in which the Finance Date occurs. A Person is not an “Institutional Lender” if
the Person, any of its Affiliates or any other Person that directly or
indirectly owns, has an ownership interest in, or controls the Person or any of
its Affiliates is a Restricted Person.

 

“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.

 

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“Insurance Retentions” shall have the meaning ascribed to such term in Exhibit D
hereof.

 

“Inventories” shall mean “Inventories” as defined in the Uniform System of
Accounts, such as, but not limited to, provisions in storerooms, refrigerators,
pantries and kitchens; beverages in wine cellars and bars; other merchandise
intended for sale; fuel; mechanical supplies; stationery; and other expensed
supplies and similar items.

 

“JAMS” shall have the meaning ascribed to such term in Section 11.23.B(1)
hereof.

 

“Landlord” shall mean as of any date the landlord(s) under the applicable Lease
as of such date.

 

“Landlord Default” shall have the meaning ascribed to such term in Section 9.09
hereof.

 

“Landlord Sale of a Hotel” shall be as described in the Owner Agreement.

 

“Lease” shall mean (i) with respect to the Legacy T234 Hotels, the Amended,
Restated and Consolidated Master Lease Agreement between HPTMI Landlord and MRP
Tenant in effect from time to time relating to the Legacy T234 Hotels and other
Portfolio Properties and any replacement leases of the T234 Legacy Hotels and
other Portfolio Properties by the fee owner thereof to the MRP Tenant which
provides for HPTMI Landlord to fund additional capital investment as provided
for under such Lease, and/or (ii) with respect to the Legacy CY53 Hotels, the
Master Lease Agreement among SVC, HPTCY Landlord and CY Tenant in effect from
time to time relating to the Legacy CY53 Hotels and other Portfolio Properties
and any replacement leases of the Legacy CY53 Hotels and other Portfolio
Properties by the fee owner thereof to CY Tenant which provides for the HPTCY
Landlord and/or SVC to fund additional capital investment as provided for under
such Lease, in each case as such Lease may be amended from time to time, without
Manager’s consent, provided the same does not (a) impose any material cost,
expense or obligation upon Manager, or (b) reduce any amounts that would
otherwise be payable to Manager hereunder, or (c) otherwise be expected to
interfere with the operation and maintenance of the Hotels subject to such Lease
or Manager’s obligations hereunder. Tenant shall provide Manager a copy of any
amendment following execution.

 

“Lease Term” shall have the meaning ascribed to “Term” under the applicable
Lease.

 

“Lease Year” shall mean each Fiscal Year with the initial Lease Year commencing
on the commencement of the applicable Lease term and ending on the Friday
closest to December 31.

 

“Legacy CY53 Capital Expenditure” shall have the meaning ascribed to such term
in Section 5.08.E hereof.

 

“Legacy CY53 Hotel” shall mean each Hotel designated on Exhibit A as “CY53”
under the column “Legacy Portfolio.”

 

“Legacy CY53 System Fee” shall mean, with respect to each Legacy CY53 Hotel,
during any Fiscal Year, an amount equal to three percent (3%) of Gross Revenues
of such Legacy CY53 Hotel.

 

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“Legacy T234 Hotel” shall mean each Hotel designated on Exhibit A as “T234”
under the column “Legacy Portfolio.”

 

“Legacy T234 System Fee” shall mean, with respect to each Legacy T234 Hotel,
during any Fiscal Year, an amount equal to five and one-half percent (5.5%) of
Gross Room Revenues of such Legacy T234 Hotel.

 

“Legal Requirements” shall mean, with respect to each Hotel, all federal, state,
county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions affecting such Hotel
or the maintenance, construction, alteration 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 such Hotels, and (b) all covenants, agreements, restrictions and
encumbrances contained in any instruments at any time in force affecting such
Hotels which either (i) do not require the approval of Manager, or (ii) have
been approved by Manager as required hereby, including those which may
(A) require material repairs, modifications or alterations in or to such Hotels
or (B) in any way materially and adversely affect the use and enjoyment thereof,
but excluding any requirements arising as a result of Landlord’s status as a
real estate investment trust, and (c) all valid and lawful requirements of
courts and other government agencies or authorities pertaining to reporting,
licensing, permitting, investigation, remediation and removal of underground
improvements (including, without limitation, treatment or storage tanks, or
water, gas or oil wells), or emissions, discharges, releases or threatened
releases of Hazardous Substances, chemical substances, pesticides, petroleum or
petroleum products, pollutants, contaminants or hazardous or toxic substances,
materials or wastes whether solid, liquid or gaseous in nature, into the
environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances,
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or
toxic substances, materials or wastes, whether solid, liquid of gaseous in
nature.

 

“License” shall mean any license, permit, decree, act, order, authorization or
other approval or instrument which is necessary in order to operate each Hotel
in accordance with Legal Requirements and pursuant to System Standards and
otherwise in accordance with this Agreement.

 

“Life Safety Event” shall mean the occurrence of one or more of the following at
a Hotel: (a) an event that presents an imminent threat to the health and/or
safety of persons or property on or about such Hotel; or (b) any other event
that materially or adversely impacts such Hotel and for which the failure to
take timely and appropriate remedial action may subject Manager, Landlord,
Tenant, their Affiliates or any of their respective directors, managers,
officers or employees to civil or criminal liability (other than de minimis
civil fines or fees).

 

“Loyalty Programs” shall mean loyalty, recognition, affinity and other programs
designed to promote stays at, or usage of, the Hotels and other hotels operated
or franchised by Manager or its Affiliates, and any similar, complementary or
successor programs, as they may exist from time to time. As of the Effective
Date, the Loyalty Programs include the “Marriott Bonvoy” program, and various
programs sponsored by airlines, credit card and other companies.

 

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“Management Fees” shall mean, collectively, the Base Management Fee, the First
Incentive Management Fee and the Second Incentive Management Fee.

 

“Manager” shall have the meaning ascribed to such term in the Preamble hereto or
shall mean any successor or permitted assign, as applicable.

 

“Manager Default” shall have the meaning ascribed to such term in Section 9.01
hereof.

 

“Manager Event of Default” shall have the meaning ascribed to such term in
Section 9.01 hereof.

 

“Manager Funding Termination Event” shall have the meaning ascribed to such term
in Section 3.02.C hereof.

 

“Marketing Fund Activities” shall have the meaning ascribed to such term in
Section 1.04.A hereof.

 

“Marketing Fund Contribution” shall have the meaning ascribed to such term in
Section 1.04.B hereof.

 

“Marriott” shall mean Marriott International, Inc., a Delaware corporation, and
its permitted successors and assigns.

 

“Marriott Companies” shall mean Manager, Marriott, and any Affiliate of Manager
or Marriott.

 

“Marriott Guaranty Advances” shall mean advances under the Marriott Guaranty
Agreement allocated to pay a portion of Tenant’s Priority (as more particularly
set forth in the Marriott Guaranty Agreement and subject to any applicable cap
stated therein) with respect to the Hotels.

 

“Marriott Guaranty Agreement” shall mean that certain Marriott Guaranty
Agreement, dated as of the Execution Date but to be effective as of the
Effective Date, by and among Marriott, MRP Tenant and CY Tenant, as the same may
be supplemented, amended or modified from time to time, which such guaranty is
personal to Tenant and to any Affiliate of SVC or Tenant that may succeed Tenant
under this Agreement.

 

“MBS Systems” shall have the meaning ascribed to such term in Section 1.03.E
hereof.

 

“MI Trademark” means (i) the names and marks “Courtyard” and “Courtyard by
Marriott”; (ii) the “Courtyard” logo; (iii) any word, name, device, symbol,
logo, slogan, design, brand, service mark, Trade Name, other distinctive
feature, or indicia of origin (including marks, program names, property-specific
hotel name, property-specific logo, and restaurant, spa and other outlet names),
in each case used at or in connection with any Hotel; (iv) all local language
versions of the foregoing; and (v) any combination of the foregoing; in each
case, whether registered or unregistered, and whether or not such term contains
the “Courtyard” or “Courtyard by Marriott” mark, that is used or registered by
Manager or its Affiliates, or by reason of extent of usage is associated with
hotels in the System. The MI Trademarks may be changed or supplemented from time
to time.

 

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“Minimum Rent” shall, for each Hotel, for any period, mean the amount of Minimum
Rent allocable to such Hotel which accrues under the applicable Lease for such
period.

 

“Mortgage” shall mean any mortgage, deed of trust or security document
encumbering a Hotel, the Hotel Improvements or the Site.

 

“Mortgagee” shall mean the holder of any Mortgage.

 

“MRP Tenant” shall have the meaning ascribed to such term in the Preamble.

 

“Officer’s Certificate” shall mean a certificate executed by a vice president of
Manager which certifies that with respect to the Annual Operating Statement
delivered under Section 4.01.C(2) and the annual accounting delivered under
Section 4.01.D(1) hereof, that the accompanying statement or accounting has been
properly prepared in accordance with GAAP and fairly presents the financial
operations of the Hotels.

 

“Operating Loss” shall mean, with respect to each Hotel, a negative Operating
Profit for such Hotel.

 

“Operating Profit” shall mean, with respect to each Hotel, the excess of Gross
Revenues over the following deductions, but excluding (i) payments with respect
to items for which Manager has given an indemnity, to the extent of such
indemnity, (ii) payments with respect to items for which Manager has agreed to
be liable at its own cost and expense herein, (iii) any item specifically stated
not to be a Deduction herein, and (iv) any item for which Manager or any
Affiliate has agreed to be liable (other than at the cost and expense of Tenant
or any Affiliate) under the terms of any Incidental Document or any other
agreement between Manager or any Affiliate and Tenant or any Affiliate
(“Deductions”) incurred by Manager in accordance with the terms of this
Agreement, on behalf of Tenant, in operating the Hotel:

 

1.                  the cost of sales, including, without limitation,
compensation, fringe benefits, payroll taxes and other costs related to Hotel
employees (the foregoing costs shall not include salaries and other employee
costs of executive personnel of Manager who do not work at the Hotel on a
regular basis; except that the foregoing costs shall include the allocable
portion of the salary and other employee costs of any general manager or other
supervisory personnel assigned to a “cluster” of hotels which includes the
Hotel);

 

2.                  departmental expenses incurred at departments within the
Hotel; administrative and general expenses; the cost of marketing incurred by
the Hotel; advertising and business promotion incurred by the Hotel; heat,
light, and power; computer line charges; and routine repairs, maintenance and
minor alterations treated as Deductions under Section 5.02;

 

3       the cost of Inventories and Fixed Asset Supplies consumed in the
operation of the Hotel;

 

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4.                  a reasonable reserve for uncollectible accounts receivable
as determined by Manager;

 

5.                  all costs and fees of independent professionals or other
third parties who are retained by Manager to perform services required or
permitted hereunder;

 

6.                  all costs and fees of technical consultants and operational
experts who are retained or employed by Manager and/or Affiliates of Manager for
specialized services (including, without limitation, quality assurance
inspectors) and the cost of attendance by employees of the Hotel at training and
manpower development programs sponsored by Manager;

 

7.                  the System Fee;

 

8.                  insurance costs and expenses as provided in Section 6.01 and
Exhibit D hereof;

 

9.                  taxes, if any, payable by or assessed against Manager
related to this Agreement or to Manager’s operation of the Hotel (exclusive of
Manager’s income taxes) and all Impositions;

 

10.              transfers to the Hotel’s Reserves required pursuant to Section
5.03.C hereof;

 

11.              the Hotel’s share of the charges for Above-Property Programs &
Services as more fully set forth in Section 1.03 hereof;

 

12.              the costs of commercially reasonable efforts of causing the
Hotel to be in compliance with each and every provision of the applicable Lease
(regardless of whether or not such compliance is a requirement of this
Agreement);

 

13.              such other costs and expenses incurred by Manager as are
specifically provided for elsewhere in this Agreement or are otherwise
reasonably necessary for the proper and efficient operation of the Hotel; and

 

14.              such other costs and expenses paid to Landlord or Tenant
pursuant to the applicable Lease or this Agreement, if such costs and expenses
would have been a Deduction if paid directly by Manager to a third person in
respect of the Hotel.

 

The term “Deductions” shall not include (a) debt service payments pursuant to
any Mortgage, and (b) payments pursuant to equipment leases or other forms of
financing obtained by Tenant for the FF&E located in or connected with a Hotel,
both of which shall be paid or caused to be paid by Tenant from its own funds,
the Reserve to the extent permitted hereunder, or from funds provided by
Landlord under the applicable Lease.

 

The term “Deductions” shall not include (a) Rent payable under the applicable
Lease, (b) any reimbursement to Manager for advances Manager makes with respect
to a Hotel as permitted hereunder, and (c) the Management Fees for any Hotel.

 

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“Other Environmental Costs” shall have the meaning ascribed to such term in
Section 11.08.C hereof.

 

“Other Management Agreements” shall mean those certain Second Amended and
Restated Management Agreements and/or Management Agreement(s) (as applicable),
dated as of the Execution Date but to be effective as of the Effective Date, by
and between Manager or an Affiliate and Tenant or an Affiliate with respect to
the Portfolio Properties other than the Hotels, as the same may be supplemented,
amended or modified from time to time.

 

“Other Marriott Products” means any lodging products, Vacation Club Products,
residential products (such as single family homes or multi-unit apartment
buildings or individual units within such buildings), restaurants, and other
products and business operations of any type, using any brand name available to
Manager or its Affiliates (including any brand listed in Exhibit F and any
future brands owned or developed by Manager or its Affiliates) or not using any
brand name.

 

“Overdue Rate” shall mean on any date, a per annum rate of interest equal to the
lesser of twelve percent (12%) and the maximum rate then permitted under
applicable law.

 

“Owner Agreement” shall mean that certain (i) Second Amended and Restated Owner
Agreement, dated as of the Execution Date but to be effective as of the
Effective Date, by and among, inter alia, HPTMI Landlord, MRP Tenant and
Manager, (ii) Owner Agreement, dated as of the Execution Date but to be
effective as of the Effective Date, by and among SVC, HPTCY Landlord, CY Tenant
and Manager, and/or (iii) Owner Agreement, dated as of the Execution Date but to
be effective as of the Effective Date, by and among HPTMI Hawaii, MRP Tenant and
Essex House, and as the same may be supplemented, amended or modified from time
to time.

 

“Person” shall mean any individual or entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such individual
or entity where the context so admits.

 

“Personal Data” shall mean any information relating to an identified or
identifiable natural person, and includes Guest Personal Data and Hotel Employee
Personal Data, but excludes any Personal Data that is unrelated to the Hotels,
the Portfolio Agreements, any Other Marriott Products operated or licensed by
Manager or its Affiliates, or Manager or its Affiliates.

 

“PIP” shall mean Property Improvement Plan.

 

“Pooling Agreement” shall mean that certain Amended and Restated Pooling
Agreement, dated as of the Execution Date but to be effective as of the
Effective Date, by and among, inter alia, Manager, Marriott, MRP Tenant and CY
Tenant, under which the Gross Revenues, Working Capital, and Reserves of the
Hotels are pooled with Gross Revenues, Working Capital and Reserves of the other
Portfolio Properties, as the same may be supplemented, amended, or modified from
time to time.

 

“Portfolio Agreements” shall mean, collectively, all of the agreements effective
as of the Effective Date by and among, inter alia, Marriott, HPTMI Landlord,
HPTCY Landlord, SVC, Manager, MRP Tenant and CY Tenant, as applicable,
pertaining to the operation of the Portfolio Properties, including without
limitation, this Agreement, the Other Management Agreements, the Owner
Agreement, the Exit Hotel Agreement, the Pooling Agreement, the Marriott
Guaranty Agreement and the Security Deposit Agreement.

 

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“Portfolio Properties” shall mean, as of any date, the Hotels subject to the
Pooling Agreement together with the other properties whose Gross Revenues,
Working Capital and Reserves are as of such date pooled with the Gross Revenues,
Working Capital and Reserves of the Hotels under the Pooling Agreement.

 

“Post-Guaranty Termination Threshold” shall mean, with respect to a Hotel and
only after the occurrence of a Guaranty Termination Event, an amount equal to
eighty percent (80%) of Tenant’s Priority with respect to such Hotel for any
Accounting Period.

 

“Prime Rate” shall mean the “prime rate” of interest announced from time to time
in the “Money Rates” section of the Wall Street Journal (Eastern Edition).

 

“Prior Management Agreement” shall have the meaning ascribed to such term in
Section B of the Recitals.

 

“Privacy Shield” shall mean the “EU U.S. and Swiss U.S. Privacy Shield
Frameworks” developed by the U.S. Department of Commerce, the European
Commission and the Swiss Confederation, including the “Privacy Shield Principles
and Supplemental Principles” (the “Privacy Shield Principles”) available at
https://www.privacyshield.gov/EU-US-Framework.

 

“Privacy Shield Data” shall mean data in any form about an identified or
identifiable individual received by the Marriott US Entities in the United
States of America from a Person in the European Economic Area or Switzerland
pursuant to the Marriott US Entities’ Privacy Shield certification.

 

“Privacy Shield Principles” shall have the meaning ascribed to such term in the
definition of Privacy Shield.

 

“Program Services” shall have the meaning ascribed to such term in Section
1.04.D hereof.

 

“Program Services Contribution” shall mean the amount charged by Manager to the
Hotels for Program Services.

 

“Property Insurance Premiums” shall have the meaning ascribed to such term in
Exhibit D hereof.

 

“Proprietary Information” shall mean (a) all computer software and accompanying
documentation (including all future upgrades, enhancements, additions,
substitutions and modifications thereof), other than computer software which is
commercially available, which are used by Tenant or Manager in connection with
the property management system, any Reservation System and all future electronic
systems developed by Tenant or Manager for use in any Hotel, (b) all manuals,
brochures and directives used by Tenant or Manager at any Hotel regarding the
procedures and techniques to be used in operating any such Hotel, (c) customer
lists, and (d) employee records which must remain confidential either under
Legal Requirements or under reasonable corporate policies of Tenant or Manager;
provided, however, that “Proprietary Information” shall not include any
software, manuals, brochures or directives issued by Marriott, as Franchisor to
Tenant, as franchisee, under any Franchise Agreement.

 

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“Prorated Portions” shall have the meaning ascribed to such term in Section
4.01.A hereof.

 

“Prospectus” shall have the meaning ascribed to such term in Section 11.09.B
hereof.

 

“PSF” shall have the meaning ascribed to such term in Section 1.04.D hereof.

 

“Qualified Mortgage” shall have the meaning ascribed to such term in Section
8.02.A hereof.

 

“Reimburseable Advances” shall mean the amounts paid or payable with respect to
Section 3.02.B(4) hereof.

 

“Related Person” shall have the meaning ascribed to such term in Section 11.36.D
hereof.

 

“Renewal Term” shall have the meaning ascribed to such term in Section 2.01.A
hereof.

 

“Renovations” shall mean the renovation and improvement work to certain
Portfolio Properties pursuant to the Renovation-Related Agreements.

 

“Renovation-Related Agreements” shall mean that certain (i) Portfolio Renovation
Agreement, dated as of the Execution Date but to be effective as of the
Effective Date, among, inter alia, Manager, HPTMI Landlord, HPTCY Landlord, SVC,
MRP Tenant and CY Tenant, and/or (ii) Kauai Marriott Resort Hotel & Marriott’s
Kauai Resort and Beach Club Renovation Agreement, dated as of the Execution Date
but to be effective as of the Effective Date, among Essex House, HPTMI Hawaii
and MRP Tenant, as the same may be supplemented, amended or modified from time
to time.

 

“Rent” shall mean, for any period, for each Hotel, Minimum Rent and any
additional rent allocated to such Hotel and accrued under the applicable Lease
for such Hotel for such period, provided the same does not exceed, in each
instance, the corresponding amount of Tenant’s Priority with respect to each
such Hotel.

 

“Reservation System” means the worldwide central reservations for the System. As
of the Effective Date, the Reservation System includes systems and services that
capture and process hotel reservations from central sources such as toll-free
telephone networks, the Marriott.com internet site, global distribution systems,
and participation in international reservations associations in which Manager or
its Affiliates is a member.

 

“Reserve” shall have the meaning ascribed to such term in Section 5.03.B hereof.

 

“Reserve Estimate” shall have the meaning ascribed to such term in Section 5.04
hereof.

 

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“Restricted Person” shall mean a Person identified by any government or legal
authority as a Person with whom or which Manager or its Affiliates are
prohibited or restricted from transacting business, including any Person (i) on
the US Treasury Department’s Office of Foreign Assets Control List of Specially
Designated Nationals and Blocked Persons, under resolutions or sanctions related
lists maintained by the United Nations Security Council, or under the EU
Consolidated Financial Sanctions; (ii) directly or indirectly 10% or more owned
by any Person identified in clause (i); or (iii) ordinarily resident,
incorporated, or located in any country or territory subject to comprehensive US
or EU sanctions, or owned or controlled by, or acting on behalf of, the
government of any such country or territory.

 

“Rules” shall have the meaning ascribed to such term in Section 11.23.A hereof.

 

“Sale of a Hotel” shall mean any sale, assignment, transfer or other
disposition, for value or otherwise, voluntary or involuntary, of Tenant’s
leasehold title to a Hotel and related property. For purposes of this Agreement,
a Sale of a Hotel shall also include a lease (or sublease) of all or
substantially all of Tenant’s leasehold interest in a Hotel and any sale,
assignment, transfer or other disposition, for value or otherwise, voluntary or
involuntary, in a single transaction or a series of transactions, of the
Controlling Interest in Tenant, but shall not include any conveyance which
results in SVC or an SVC Affiliate holding a Controlling Interest in such
Tenant, Landlord or immediate parent of such Tenant.

 

“SEC” shall mean the United States Securities Exchange Commission.

 

“Second Incentive Management Fee” shall mean, with respect to each Fiscal Year
or portion thereof, an amount equal to forty percent (40%) of Operating Profit
remaining after deducting amounts paid or payable in respect of Sections
3.02.B(1) through (7) hereof.

 

“Section 11.08 Costs” shall have the meaning ascribed to such term in Section
11.08.C hereof.

 

“Security Deposit” shall mean the security deposit in the aggregate original
amount of Sixty-Four Million Seven Hundred Thousand Dollars ($64,700,000), held
by Tenant pursuant to the terms of the Security Deposit Agreement.

 

“Security Deposit Advances” shall mean advances made pursuant to the terms of
the Security Deposit Agreement.

 

“Security Deposit Agreement” shall mean that certain Amended and Restated
Security Deposit Agreement, dated as of the Execution Date but to be effective
as of the Effective Date, by and among, inter alia, Marriott, Manager, MRP
Tenant and CY Tenant, as the same may be supplemented, amended or modified from
time to time.

 

“Security Deposit Replenishment” shall mean the amounts paid or payable in
respect of Section 3.02.B(7) to the replenishment of the Security Deposit to the
original amount of Sixty-Four Million Seven Hundred Thousand Dollars
($64,700,000), as such amount may be adjusted from time to time pursuant to the
Security Deposit Agreement.

 

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“Security Incident” means any incident leading to the accidental or unlawful
destruction, loss, alteration, unauthorized disclosure of, or access to,
Personal Data transmitted, stored or otherwise processed.

 

“Site” shall have the meaning ascribed to such term in Section A of the
Recitals.

 

“SNDA” shall have the meaning ascribed to such term in Section 8.03.A hereof.

 

“Software” means all computer software and accompanying documentation (including
all future upgrades, enhancements, additions, substitutions and modifications),
other than computer software that is generally commercially available, used by
Manager or its Affiliates in connection with the services, systems and programs
provided to the Hotels or the System.

 

“Specially Designated National or Blocked Person” shall mean (a) a person
designated by the U.S. Department of Treasury’s Office of Foreign Assets
Control, or other governmental entity, from time to time as a “specially
designated national or blocked person” or similar status, (b) a person described
in Section 1 of U.S. Executive Order 13224 issued on September 23, 2001, or
(c) a person otherwise identified by government or legal authority as a person
with whom Manager or its Affiliates are prohibited from transacting business.
Currently, a listing of such designations and the text of the Executive Order
are published under the internet website address
www.ustreas.gov/offices/enforcement/ofac.

 

“State” shall mean, with respect to each Hotel, the state in which such Hotel is
located.

 

“Subsequent Tenant” shall mean any Person that acquires title to, control of, or
possession of a Hotel at or through a Foreclosure (together with any successors
or assigns), including any (i) Mortgagee; (ii) purchaser or lessee of a Hotel
from Mortgagee; or (iii) purchaser of a Hotel at Foreclosure.

 

“Sum Due Marriott” shall have the meaning ascribed to such term in Section
3.02.B(4) hereof.

 

“Sum Due Tenant” shall have the meaning ascribed to such term in Section
3.02.B(4) hereof.

 

“SVC” shall mean Service Properties Trust, a Maryland real estate investment
trust, and its successors and permitted assigns.

 

“System” shall mean all hotels located in the United States and Canada which are
operated by Manager or its Affiliate(s) under the Trade Name(s) listed on the
Addenda.

 

“System Fee” shall mean (i) with respect to each Legacy T234 Hotel, the Legacy
T234 System Fee and (ii) with respect to each Legacy CY53 Hotel, the Legacy CY53
System Fee.

 

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“System Standards” shall mean one or more (as the context requires) of the
following: (i) operational standards (for example, services to guests, quality
of food and beverages, cleanliness, staffing and employee compensation and
benefits, compliance policies and procedures, Chain Services, Loyalty Programs
and other similar programs); (ii) physical standards (for example, quality of
the Hotel Improvements, FF&E and Fixed Asset Supplies, and frequency of FF&E
replacements); and (iii) technology standards (for example, those relating to
the Hotel Systems and other information technology). These standards include
(x) those generally prevailing or in the process of being implemented at other
hotels in the System on a fair and consistent basis with other hotels in the
System, including all services and facilities in connection therewith that are
customary and usual at comparable hotels in the System; provided, however, that
if the market area or the physical peculiarities of the Hotels warrant(s) it, in
the reasonable judgment of Manager, then a deviation from such standards shall
be permitted; and (y) those standards Manager may specify for certain System
hotel types (for example, resort, convention or casino) on a consistent basis
for all System hotels of such hotel type.

 

“Tenant” shall have the meaning ascribed to such term in the Preamble or shall
mean any successor or permitted assignee, as applicable.

 

“Tenant Advances” shall have the meaning ascribed to such term in Section
3.02.B(4) hereof.

 

“Tenant Default” shall have the meaning ascribed to such term in Sections 9.06
and 9.09 hereof.

 

“Tenant Event of Default” shall have the meaning ascribed to such term in
Section 9.06 hereof.

 

“Tenant Operating Loss Advance” shall have the meaning ascribed to such term in
Section 4.01.E hereof.

 

“Tenant Working Capital Advances” shall mean the aggregate of all funds remitted
by Tenant to Manager in order to fund Additional Working Capital under Section
4.05 hereof, or pursuant to the Pooling Agreement to the extent allocable to the
Hotels.

 

“Tenant’s Priority” shall mean, for each Hotel, for each full Fiscal Year, an
amount equal to the amount set forth on the applicable Addenda, or a pro rata
portion thereof in any partial Fiscal Year; provided, however, effective on the
date of (i) each disbursement by the applicable Landlord or its Affiliate
pursuant to Sections 5.1.3(b), 10.2 or 11.2 of the Lease applicable to each
Legacy T234 Hotel, or each disbursement by the applicable Landlord or its
Affiliate pursuant to Sections 5.1.2(b), 10.2 or 11.2 of the Lease applicable to
each Legacy CY53 Hotel, in each instance at the request of or with the approval
of such Landlord, or (ii) Landlord’s or Tenant’s deposit into the Reserve
pursuant to Section 5.07 hereof with respect to such Hotel (including, without
limitation, any such deposit made in accordance with Section 2.05.B of the
applicable Renovation-Related Agreement(s)), Tenant’s Priority payable with
respect to each Accounting Period for the applicable Hotel shall be increased by
an amount equal to the quotient obtained by dividing (a) eight percent (8%)
times the amounts so disbursed or deposited, by (b) twelve (12). If any
disbursement or deposit is made during any Accounting Period on a day other than
the first day of an Accounting Period, the Tenant’s Priority payable for such
Hotel for the immediately following Accounting Period (after having been so
increased) shall be further increased (but only for such instant Accounting
Period) by the amount by which Tenant’s Priority for the preceding Accounting
Period, as adjusted for disbursement or deposit on a per diem basis, exceeded
the amount of Tenant’s Priority actually paid to Tenant for such preceding
Accounting Period. Effective on the date this Agreement is terminated with
respect to a Hotel for any reason, Tenant’s Priority payable with respect to
each Accounting Period for the remaining Hotels shall be decreased by the amount
of the Tenant’s Priority of such terminated Hotel calculated as of the date such
terminated Hotel is no longer subject to this Agreement. If such termination
occurs on a day other than the first day of an Accounting Period, then the
Tenant’s Priority payable for the remaining Hotels for the immediately following
Accounting Period (after having been so decreased) shall be further decreased
(but only for such instant Accounting Period) by the amount by which Tenant’s
Priority for the preceding Accounting Period, as adjusted for reduction on a per
diem basis, is less than the amount of Tenant’s Priority actually paid to Tenant
for such preceding Accounting Period.

 

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“Tenant’s Priority Shortfall” shall have the meaning ascribed to such term in
Section 3.02.C hereof.

 

“Tenant’s Personal Property” shall mean all motor vehicles, consumable
inventories and supplies, furniture, furnishings, movable walls and partitions,
equipment and machinery and all other tangible personal property of Tenant, if
any, acquired by Tenant on and after the Effective Date and located at a Hotel
or used in Tenant’s business at a Hotel, and all modifications, replacements,
alterations and additions to such personal property.

 

“Tenant’s Termination Threshold” shall mean, with respect to a Hotel, an amount
equal to eighty-five percent (85%) of Tenant’s Priority with respect to such
Hotel for any Accounting Period.

 

“Term” shall have the meaning ascribed to such term in Section 2.01.A hereof.

 

“Termination” shall mean, with respect to each Hotel, the expiration or sooner
cessation of the Term with respect to such Hotel.

 

“Trade Names” shall mean any name, whether informal (such as a fictitious or
“doing business as” name) or formal (such as the full legal name of a
corporation or partnership), used to identify an entity or business.

 

“Transfer” shall mean any sale, assignment, transfer or other disposition, for
value or otherwise, voluntary or involuntary, of (i) Tenant’s interest in the
Site, Hotel Improvements or a Hotel; (ii) a lease or sublease of all or
substantially all of the Site, Hotel Improvements or a Hotel; or (iii) in a
single transaction or a series of transactions, (x) the right to exercise,
directly or indirectly, more than 50% of the voting rights attributable to the
ownership interests of Tenant (through ownership of such interests or by
contract); or (y) the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of Tenant.

 

“Uniform System of Accounts” shall mean the Uniform System of Accounts for the
Lodging Industry, Tenth Revised Edition, 2006, as published by the American
Hotel & Lodging Educational Institute, as revised from time to time to the
extent such revision has been or is in the process of being generally
implemented within the System.

 

“Uninsured Costs” shall have the meaning ascribed to such term in Section 6.02.E
hereof.

 

85

 

 

“Unrelated Persons” shall have the meaning ascribed to such term in Section
11.36.D hereof.

 

“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 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
Section 6.02.D hereof, within nine (9) months following such damage or
destruction or such shorter period of time as to which business interruption
insurance is available to cover Rent and other costs related to the Hotel
following such damage or destruction, or (b) as the result of a partial taking
by Condemnation, such Hotel cannot be operated, in the good faith judgment of
Manager on a commercially practicable basis in light of then existing
circumstances.

 

“Vacation Club Products” shall mean timeshare, fractional, interval, vacation
club, destination club, vacation membership, private membership club, private
residence club, and points club products, programs and services and shall be
broadly construed to include other forms of products, programs and services
wherein purchasers acquire an ownership interest, use right or other entitlement
to use certain determinable holiday villa or apartment units and associated
facilities on a periodic basis and pay for such ownership interest, use right or
other entitlement in advance.

 

“Working Capital” shall mean, with respect to each Hotel, funds that are used in
the day-to-day operation of the business of such Hotel, including, without
limitation, amounts sufficient for the maintenance of change and petty cash
funds, amounts deposited, in operating bank accounts, receivables, amounts
deposited in payroll accounts, prepaid expenses and funds required to maintain
Inventories, less accounts payable and accrued current liabilities.

 

[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

 

86

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal as of the Execution Date.

 

    MRP TENANT:       WITNESS:   HPT TRS MRP, Inc., a Maryland corporation      
/s/ John M. Steiner    By: /s/ John G. Murray  Print Name: John M. Steiner  
Name:   John G. Murray     Title: President

 

    CY TENANT:       WITNESS:   HPT CY TRS, Inc., a Maryland corporation      
/s/ John M. Steiner   By: /s/ John G. Murray  Print Name: John M. Steiner  
Name:    John G. Murray     Title: President

 

[Signature Page to Second Amended and Restated Management Agreement – Courtyard]

 

 

 

  MANAGER:       WITNESS:   Courtyard Management Corporation, a Delaware
corporation       /s/ Tara Jackson    By: /s/ Julie Bowen Print Name: Tara
Jackson   Name:    Julie Bowen     Title: Authorized Signatory

 

[Signature Page to Second Amended and Restated Management Agreement – Courtyard]

 

 

 

 

EXHIBIT A

 

THE SITES

 

Unit

Number

Brand Hotel State

Legacy

Portfolio

31-1JP CY Courtyard Oakland Emeryville CA T234 31-1MD CY Courtyard Houston Hobby
TX T234 31-1NF CY Courtyard Dallas Richardson TX T234 31-1Q1 CY Courtyard
Phoenix Tempe AZ T234 31-1Q2 CY Courtyard Ft. Worth Fossil Creek TX T234 31-1Q3
CY Courtyard Pleasant Hill CA T234 31-1Q7 CY Courtyard Birmingham Colonnade AL
T234 31-1Q8 CY Courtyard Allentown Bethlehem PA T234 31-1QB CY Courtyard San
Ramon CA T234 31-1QC CY Courtyard Richmond NW VA T234 31-1QD CY Courtyard
Oklahoma City NW OK T234 31-1QE CY Courtyard Chicago W. Dundee IL T234 31-1QH CY
Courtyard Charleston North SC T234 31-1QJ CY Courtyard Durham NC T234 31-1QM CY
Courtyard Detroit Novi MI T234 31-1QN CY Courtyard Las Vegas NV T234 31-1QW CY
Courtyard Phoenix Chandler AZ T234 31-1QX CY Courtyard San Francisco Oyster
Point CA T234 31-1AD CY Courtyard Atlanta Airport North GA CY53

 

 

 

 

Unit

Number

Brand Hotel State

Legacy

Portfolio

    31-1R7 CY Courtyard Atlanta Cumberland GA CY53 31-1P9 CY Courtyard
Atlanta/Jimmy Carter Blvd. GA CY53 31-1AH CY Courtyard Atlanta/Midtown GA CY53
31-1DG CY Courtyard Boston/Danvers MA CY53 31-1F7 CY Courtyard Boston/Foxborough
MA CY53 31-1DH CY Courtyard Boston/Lowell MA CY53 31-1W8 CY Courtyard
Boston/Milford MA CY53 31-1W6 CY Courtyard Boston/Stoughton MA CY53 31-1V2 CY
Courtyard Detroit/Auburn Hills MI CY53 31-1W2 CY Courtyard Dulles/Fairfax VA
CY53 31-1V1 CY Courtyard Indianapolis/Carmel IN CY53 31-1GB CY Courtyard Kansas
City South MO CY53 31-1DF CY Courtyard Mahwah NJ NJ CY53 31-1T9 CY Courtyard
Minneapolis MN CY53 31-1DN CY Courtyard Philadelphia Airport PA CY53 31-1JF CY
Courtyard Phoenix Camelback AZ CY53 31-1R5 CY Courtyard Raleigh-Durham
Airport/Morrisville NC CY53 31-1L2 CY Courtyard Scottsdale/Mayo AZ CY53 31-1JG
CY Courtyard Seattle/Bellevue WA CY53 31-1R9 CY Courtyard Spartanburg SC CY53
31-1AJ CY Courtyard Chattanooga TN CY53 31-1AF CY Courtyard Macon GA CY53 31-1JE
CY Courtyard Camarillo CA CY53

 

 

 

 

Unit

Number

Brand Hotel State

Legacy

Portfolio

31-1JD CY Courtyard San Jose Airport CA CY53 31-1DK CY Courtyard Columbia, MD MD
CY53 31-1V9 CY Courtyard Kansas City Airport MO CY53 31-1DB CY Courtyard
Wilmington DE CY53 31-1AG CY Courtyard Fayetteville AR CY53 31-1N9 CY Courtyard
Dallas Northpark TX CY53 31-1JH CY Courtyard Fountain Valley CA CY53 31-1DA CY
Courtyard Boston/Norwood MA CY53 31-1J6 CY Courtyard Los Angeles Airport CA CY53
31-1AC CY Courtyard Charlotte Research Park NC CY53 31-1GH CY Courtyard
Milwaukee/Brookfield WI CY53 31-1DE CY Courtyard Boston/Woburn MA CY53 31-1AK CY
Courtyard Boca Raton FL CY53 31-1W3 CY Courtyard Williamsburg VA CY53 31-1W5 CY
Courtyard Hanover NJ CY53 31-1AE CY Courtyard Miami Lakes FL CY53 31-1GD CY
Courtyard Quad Cities IA CY53 31-1DL CY Courtyard Greenbelt MD CY53 31-1JC CY
Courtyard Torrance/Business Center CA CY53 31-1B3 CY Courtyard Jacksonville/Mayo
FL CY53 31-1F9 CY Courtyard Willow Grove PA CY53 31-1F3 CY Courtyard Syracuse NY
CY53 31-1JB CY Courtyard Laguna Hills CA CY53 31-1V8 CY Courtyard
Chicago/Arlington IL CY53 31-1DM CY Courtyard Fishkill NY CY53

 

 

 

 

Unit

Number

Brand Hotel State

Legacy

Portfolio

31-1W9 CY Courtyard Newport/Middletown RI CY53 31-1W4 CY Courtyard Pittsburgh
Airport PA CY53 31-1DJ CY Courtyard Tinton Falls NJ CY53 31-1DC CY Courtyard
Arlington/Rosslyn VA CY53

 

 

 

 

EXHIBIT B

 

Central Office Services

 

“Central Office Services” means the following activities (other than Chain
Services) that are provided on a central or regional basis to hotels in the
System:

 

1.       Executive Supervision. Executive supervision is currently done by
individuals holding the title of “Executive Vice President” or above, and at the
continental division level by individuals holding a title of “Chief Operating
Officer” or above. In the future executive supervision may be done by
individuals holding comparable positions of authority but with different titles.

 

2.       Corporate Planning & Policy. Policy making and planning for Marriott
International, Inc. and its Affiliates as a whole or at the continental division
level, including development of operating procedures, but excluding any policy
making or planning function related to an area that is a Chain Service or direct
Deduction.

 

3.       Corporate Finance. Corporate finance, including corporate treasury,
financial planning and analysis and corporate accounting, excluding accounting
services provided to the hotels as part of Chain Services or the MBS Systems.

 

4.       Corporate Human Resources. Corporate personnel providing strategic and
executive supervision for human resources activities applicable to Marriott
International, Inc. and its Affiliates as a whole.

 

5.       Certain Legal Services. Legal services performed either in-house or by
outside counsel to (i) draft manuals, policies or guidelines to be used for the
System; and (ii) represent Manager and its Affiliates on issues relating to the
relationship between Tenant and Manager and its Affiliates, unless the Expert
directs Tenant to pay the costs of any legal services.

 

6.       Trademarks. Trademark protection relating to the MI Trademarks, which
are used generally by the System.

 

7.       Product Research & Development. Product research and development and
the development of brand standards, excluding product research and development
related to an area that is reimbursable as a Chain Service or a direct Deduction
such as product research and development for sales and marketing.

 

 

 

 

EXHIBIT C

 

FRANCHISE REQUIREMENTS

 

To obtain a franchise for the applicable Hotel, Tenant must:

 

1.deliver to the applicable Franchisor a franchise application, together with
the then-current application fee being charged to System franchisees at least
ninety (90) days prior to the proposed date of the Franchise Conversion (if such
Franchisor does not agree to grant the franchise to Tenant, then Franchisor will
refund the application fee, less $10,000);

 

2.execute the then-current form of franchise and related agreements, which
franchise agreement will (a) contain the standard forms for new franchised
System hotels as of the date of the Franchise Conversion, including the
then-current fees and charges, except that the term of such franchise agreement
may be adjusted in Franchisor’s sole discretion to the remaining Initial Term or
remaining Renewal Term (as the case may be), and (b) include a PIP to address
any renovation necessary to comply with Franchisor’s then-current Standards;

 

3.meet the then-current criteria for a franchisee of the hotel brand to which
the Franchise Conversion pertains, as determined by Franchisor in its sole
discretion;

 

4.deliver to Franchisor all requested information and representations regarding
Tenant’s corporate organization, authority, and ownership as well as the
financial information of the proposed guarantor of the franchise agreement
obligations;

 

5.retain a management company consented to by Franchisor if Franchisor
determines that Tenant is not qualified to operate the Hotel;

 

6.pay Franchisor’s reasonable outside counsel costs related to the Franchise
Conversion and the franchise agreement;

 

7.make, or cause the applicable management company to make, offers of employment
to sufficient numbers of employees at the Hotel to avoid the occurrence of a
“closing” under the WARN Act or similar state law and provide Manager with all
other information requested by Manager regarding offers and conditions of
employment to such employees; and

 

8.agree to be bound by, or pay any breakage fees for, all ancillary agreements
between Manager and any other parties with respect to the Hotel or executed in
connection with this Agreement, including any licensing agreements, cost sharing
agreements, and cluster revenue agreements.

 

 

 

 

EXHIBIT D

 

INSURANCE

 

6.01       Insurance.

 

A.                Property Insurance.

 

1.                  Required Coverages. Tenant will procure and maintain the
following insurance from the Effective Date:

 

(a)               Property insurance (and, if applicable, builders risk
insurance), including boiler and machinery coverage, on the Hotel buildings and
contents against loss or damage by risks covered by an “all risk of physical
loss” form. This coverage, to the extent available at commercially reasonable
rates and terms, will be for not less than 100% of the replacement cost of the
Hotel, less a reasonable deductible and subject to commercially reasonable
sub-limits, including a waiver of coinsurance provision, and landscape
improvements coverage for not less than 100% of the replacement cost or
$5,000,000, whichever is greater;

 

(b)               Earthquake insurance and windstorm insurance, to the extent
excluded or sub-limited from the insurance under Section 6.01.A(1)(a) and if the
Hotel is located in whole or in part in an earthquake or windstorm prone zone,
as applicable, as determined by the appropriate government authority or insurer.
Coverage for these hazards, to the extent available at commercially reasonable
rates and terms, will be for not less than the probable maximum loss of the
Hotel (or the aggregate probable maximum loss if insured under a blanket
program) less a reasonable deductible;

 

(c)               Flood insurance, to the extent excluded or sub-limited from
the insurance under Section 6.01.A(1)(a) and if the Hotel is located in whole or
in part within an area identified by the insurer as having a special flood
hazard. Coverage for this hazard, to the extent available at commercially
reasonable rates and terms, will be for not less than twenty-five percent (25%)
of the replacement cost of the Hotel, less a reasonable deductible. In no event
will flood insurance coverage be less than the maximum amount available under
the National Flood Insurance Program (or successor program) for this coverage;

 

(d)              Terrorism insurance, to the extent excluded or sub-limited from
the insurance under Section 6.01.A(1)(a). Coverage for this hazard, to the
extent available at commercially reasonable rates and terms, will be for not
less than one hundred percent (100%) of the replacement cost of the Hotel, less
a reasonable deductible;

 

(e)               Business interruption insurance caused by any occurrence
covered by the insurance described in Sections 6.01.A(1)(a) through (d). This
coverage will include, to the extent available at commercially reasonable rates
and terms:

 

   (i)         at least two years’ loss of profits, rental income, necessary
continuing expenses and any amounts that would be payable to Manager as the

 

 

 

 

Management Fee or any other amounts payable to Manager under this Agreement if
the loss had not occurred;

 

(ii)           at least ninety (90) days ordinary payroll expenses;

 

(iii)          at least three hundred sixty-five (365) days of an extended
period of indemnity; and

 

(iv)          at least one hundred eighty (180) days contingent business
interruption.

 

 Manager may make claims directly to the insurer for any management fees or
other amounts payable to Manager under this Agreement. Tenant and Manager agree
that the amount to be paid to Manager for any claim covered by the insurance
described in this Section 6.01.A(1)(e) with respect to this Agreement will be
calculated using the figures for Gross Revenues, and Operating Profit accepted
by the insurance company or an independent third-party business interruption
accounting expert selected by Tenant and Manager. If Tenant procures the
business interruption insurance, Tenant will consult with Manager regarding the
submission of this claim and Tenant will not settle this claim without Manager’s
approval; and

 

(f)                Such other property insurance as is customarily required by
Manager at similar hotels.

 

Manager will procure and maintain the insurance in Sections 6.01.A(1)(a) through
(f) only if (i) Tenant makes a written request to Manager at least 60 days
before either the Effective Date or the next renewal date of Manager’s property
insurance program; (ii) the Hotel meets the then-current insurability criteria
under Manager’s insurance program; and (iii) Manager approves the request in its
sole discretion.

 

2.                  Insurer & Other Requirements; Waiver; & Participation in
Manager’s Program.

 

(a)            All insurance procured under Section 6.01.A(1) will be obtained
from insurance companies of recognized financial standing reasonably acceptable
to Manager. All premiums and deductibles under these policies are subject to
Manager’s approval. All premiums (net of any credits, rebates and discounts) and
deductibles for insurance under these policies will be Deductions.

 

(b)             If Tenant procures the insurance described in Section 6.01.A(1),
all policies will be in the name of Tenant, with Manager and its Affiliates
named as additional insureds. If Manager procures this insurance, all policies
of such insurance will be in the name of Manager, with Tenant named as an
additional insured. Any property losses will be payable to the respective
parties as their interests may appear. The documentation for each Mortgage will
include a provision that proceeds of the insurance described in
Section 6.01.A(1) will be available for repair and restoration of the Hotel.

 

 

 

 

(c)              If Tenant procures the insurance described in
Section 6.01.A(1), Tenant will deliver to Manager certificates of insurance, or
at Manager’s request a copy of the policies, and certificates of renewal for
insurance policies about to expire. All certificates will state that the
insurance will not be canceled, non-renewed or reduced without at least 30 days’
prior written notice to the certificate holder.

 

(d)             Tenant and Manager each waives their rights of recovery, and
will cause their insurer to waive its rights of subrogation from the other party
or any of such party’s Affiliates, directors, officers, shareholders, agents and
employees for loss or damage to the Hotel, and any related interruption of
business, regardless of the cause of the property or business interruption loss.
If any policy of insurance requires an endorsement to effect a waiver of
subrogation, Tenant or Manager, as applicable, will cause them to be endorsed.

 

(e)              If Tenant is eligible to participate in Manager’s property
insurance program but Tenant elects to procure the insurance under
Section 6.01.A(1), and the costs of the premiums and deductibles for coverage
under Tenant’s property insurance program are more than 10% higher than the
costs of the premiums and deductibles that would have been payable under
Manager’s property insurance program, then Tenant will pay from its own funds
and not as Deductions the entire amount by which such costs under Tenant’s
program exceed such costs under Manager’s program.

 

(f)              If Manager approves Tenant’s request to have the Hotel
participate in Manager’s property insurance program, the Hotel will do so until
Tenant or Manager notifies the other party of its intent to discontinue this
participation in accordance with the following:

 

(i)            If Tenant chooses to exit Manager’s property insurance program
and procure its own property insurance, Tenant will notify Manager at least 90
days before the next renewal date under Manager’s property insurance program
(which is currently April 1st of each year). If Tenant does not notify Manager
in time and subsequently procures its own property insurance, Tenant will pay
Manager 10% of the annual premium under Manager’s property insurance program to
cover the fixed costs incurred by Manager for the placement of these coverages.
If Tenant chooses to exit Manager’s property insurance program before the end of
a coverage year Tenant will pay Manager (i) the 10% charge; and (ii) the
prorated portion of the premiums of Manager’s property insurance program
relating to the period before the date on which Manager approves Tenant’s
replacement property insurance coverage. For the policies under Sections
6.01.A(1)(b) through (f), if the premium is fully earned then no portion of the
premium will be refunded to Tenant. If the premium is not fully earned, any paid
but unearned portion of the premium will be prorated as of the date on which
Manager receives from Tenant certificates of insurance evidencing insurance
coverage that complies with this Section 6.01. Tenant will pay all amounts under
this Section 6.01.A(2)(f)(i) from its own funds and not as Deductions within 10
days after Manager’s request. If Tenant fails to do so, Manager may deduct such
amounts from amounts otherwise to be distributed to Tenant without affecting
Manager’s other rights and remedies under this Agreement. If Tenant exits
Manager’s property insurance program and later wishes to participate again, the
Hotel will again be included if Tenant makes a written request at least 60 days
before the next renewal date of Manager’s property insurance program and Manager
approves the request in its sole discretion.

 

 

 

 

(ii)          If Tenant procures the property insurance for the Hotel, Manager
will pay Tenant the amount of all reasonable insurance premiums as Deductions at
the same time that Manager makes interim payments to Tenant under Section 4.01
(collectively, the “Property Insurance Premiums”). These payments will be
calculated by prorating the full Fiscal Year budgeted amount (or the actual
amount, if available) of Property Insurance Premiums equally over twelve (12)
Accounting Periods. Tenant will provide Manager with evidence of Tenant’s
payment of the Property Insurance Premiums, and the receipt of any credits,
rebates and discounts, within five days after Manager’s request. For each Fiscal
Year, Manager will reconcile interim Property Insurance Premium payments with
the actual amount for the entire Fiscal Year, and Tenant and Manager will make
any necessary adjustments following Tenant’s receipt of each Accounting Period
Statement or Annual Operating Statement, as applicable. Manager will only be
required to pay Property Insurance Premiums to the extent of available Gross
Revenues. Tenant will pay all premiums under insurance policies that it procures
before any fine, penalty or interest is incurred.

 

(iii)          If Manager chooses to remove the Hotel from Manager’s property
insurance program, Manager will notify Tenant at least 90 days before the next
renewal date and Tenant will procure insurance for the Hotel as required under
Section 6.01 effective as of the expiration date of the then-current coverage.
Tenant may later participate in Manager’s property insurance program again if
Tenant makes a request at least 60 days before Tenant desires the new policy to
become effective and Manager approves the request in its sole discretion.

 

3.                  Claims. If the Hotel is damaged by any casualty and the
Hotel participates in Manager’s property insurance program under this
Section 6.01, Manager will process, adjust and settle the property damage claim
with the insurance carriers. Tenant will sign, promptly and without condition,
all documents necessary for Manager to process, adjust and settle the claim. If
the Hotel does not participate in Manager’s property insurance program, Tenant
will process, adjust and settle the property damage claim with the insurance
carriers, subject to Section 6.01.A(1)(e), and Tenant will sign promptly and
without condition all documents necessary for Manager to process, adjust and
settle Manager’s and its Affiliates’ portion of the claim attributable to their
business interruption interests.

 

B.                 Operational Insurance.

 

1.              Coverages. Manager will procure and maintain the following
insurance from the Effective Date:

 

 

(a)               Commercial general liability insurance against claims for
bodily injury, death and property damage occurring in conjunction with Hotel
operations, and automobile liability insurance on vehicles operated in
conjunction with the Hotel, with a combined single limit for each occurrence of
at least $50,000,000;

 

(b)               Workers’ compensation coverage at least as may be required
under Legal Requirements and employer’s liability insurance of at least
$1,000,000 per accident/disease, in each case covering Manager’s employees at
the Hotel;

 

 

 

 

(c)               Fidelity coverage of at least $2,000,000 covering Manager’s
employees at the Hotel;

 

(d)              Employment practices liability insurance for claims against
Manager and, if Tenant is named as a co-defendant with Manager, for claims
against Tenant, in each case arising out of Manager’s employment practices, to
the extent available at commercially reasonable rates and terms, of at least
$1,000,000; and

 

(e)               Such other insurance as, and in amounts that, Manager
reasonably determines for protection against claims, liabilities and losses
relating to the operation of the Hotel.

 

2.                  Insurance Retentions, Requirements, Costs & Reserve.

 

(a)               Insurance procured under Section 6.01.B(1) may include
Insurance Retentions. “Insurance Retentions” means deductibles or risk retention
levels that are not in excess of the per occurrence limit for any loss or
reserve established by Manager for the Hotel. This limit will be substantially
similar to the limits for similar hotels participating in the blanket insurance
programs.

 

(b)               All insurance procured under Section 6.01.B(1) will be in the
name of Manager. The insurance procured in accordance with Section 6.01.B(1)
will name Tenant, and any Mortgagees specified by Tenant in writing, as
additional insureds.

 

(c)               At Tenant’s request, Manager will deliver to Tenant
certificates of insurance evidencing the insurance coverages under
Section 6.01.B(1)(a) and any renewals. All certificates will, to the extent
obtainable, state that the insurance will not be canceled or reduced without at
least 30 days’ prior written notice to the certificate holder.

 

(d)               All premiums and costs for insurance procured and administered
by Manager or its Affiliates under this Section 6.01.B will be Deductions,
including any Insurance Retentions. All charges under the blanket programs will
be allocated to the Hotel and other similar participating hotels on a reasonable
basis. Any losses and associated costs that are uninsured will be Deductions.

 

(e)               Upon Termination or a Transfer, Manager will set up a reserve
from Gross Revenues, in an amount determined by Manager based on loss
projections, to cover the amount of any Insurance Retentions and all other costs
that may eventually have to be paid by Tenant or Manager for pending or
contingent claims, including those that arise after Termination for causes
arising during the Term. If Gross Revenues are insufficient to fund the reserve,
Tenant will pay the shortfall to Manager within 10 days after receipt of
Manager’s notice. If Tenant fails to do so, Manager may withdraw the amounts
from the applicable Hotel’s operating account(s), the Reserve, Working Capital
funds or any other Tenant funds under Manager’s control without affecting
Manager’s other rights and remedies under this Agreement.

 

 

 

 

C.                 General Conditions of Manager’s Insurance Program. Manager
may obtain all insurance procured under Section 6.01.A (if Manager procures such
insurance) and Section 6.01.B through blanket insurance programs, with shared
aggregate coverage levels, sub-limits, deductibles, conditions and exclusions
based on industry conditions and availability at commercially reasonable rates
and terms. The blanket program may apply to multiple insured locations, these
locations may incur losses for the same insured event and these losses may
exhaust the coverage before all claims are resolved. Industry conditions may
also lead to policy terms, conditions, sub-limits or exclusions resulting in
coverage levels below the amounts required in Section 6.01.A and Section 6.01.B.
These conditions and limitations are not a breach of Manager’s obligations.

 

 

 

 

EXHIBIT E

 

Equity INterests in Tenant

 

 As of the Effective Date and the Execution Date, (a) the equity interests in
MRP Tenant are and will be owned 100% by HPT TRS Inc., a Maryland corporation;
(b) the equity interests in HPT TRS Inc. are and will be owned 100% by Service
Properties Trust, a Maryland real estate investment trust; and (c) the equity
interests in Service Properties Trust are and will be publicly traded.

 

As of the Effective Date and the Execution Date, (a) the equity interests in CY
Tenant are and will be owned 100% by HPT TRS Inc., a Maryland corporation; (b)
the equity interests in HPT TRS Inc. are and will be owned 100% by Service
Properties Trust, a Maryland real estate investment trust; and (c) the equity
interests in Service Properties Trust are and will be publicly traded.

 

 

 

 

EXHIBIT F

 

Brands

 

AC Hotels by Marriott

African Pride Hotels

Aloft Hotels

Autograph Collection Hotels

Autograph Collection Residences

Bulgari Hotels & Resorts

Conference Center by Marriott

Courtyard by Marriott Hotels

Delta Hotels & Resorts

EDITION Hotels

EDITION Residences

Element Hotels

Fairfield by Marriott

Fairfield Inn by Marriott

Fairfield Inn & Suites by Marriott

Four Points by Sheraton Hotels

Gaylord Hotels

Grand Residences by Marriott

Horizons by Marriott Club

JW Marriott Hotels

JW Marriott Hotels & Resorts

JW Marriott Marquis Hotels

JW Marriott Residences

Le Méridien Hotels & Resorts

Le Méridien Residences

The Luxury Collection Hotels, Resorts & Suites

The Luxury Collection Residence Club

The Luxury Collection Residences

Marriott Executive Apartments

Marriott Hotels

Marriott Hotels & Conference Centers

Marriott Hotels & Resorts

Marriott Marquis Hotels

Marriott Residences

Marriott Resorts

Marriott Suites Hotels

Marriott Vacation Club

Moxy Hotels

Protea Hotel Fire & Ice!

Protea Hotels

Renaissance ClubSport Hotels

Renaissance Hotels

 

 

 

 

Renaissance Residences

Residence Inn by Marriott Hotels

The Residences at The Ritz-Carlton

The Ritz-Carlton Destination Club

The Ritz-Carlton Hotels & Resorts

The Ritz-Carlton Reserve

The Ritz-Carlton Residences

Sheraton Grand Hotels & Resorts

Sheraton Hotels & Resorts

Sheraton Residences

SpringHill Suites by Marriott Hotels

St. Regis Hotels, Resorts & Suites

St. Regis Residence Club

St. Regis Residences

TownePlace Suites by Marriott Hotels

Tribute Portfolio Hotels & Resorts

W Escape

W Hotels

W Residences

Westin Hotels

Westin Hotels & Resorts

Westin Residences

 

 

 

 

ADDENDA

 

Hotel/Location

Courtyard Emeryville (Unit 31-1JP)

5555 Shellmound Street

Emeryville, CA 94608

9190 Gulf Freeway (Unit 31-1MD)

Houston, TX 77017

2191 Greenville Avenue (Unit 31-1NF)

Richardson, TX 75082

601 South Ash Avenue (Unit 31-1Q1)

Tempe, AZ 85281

3751 Northeast Loop 820 (Unit 31-1Q2)

Ft. Worth, TX 76137

2250 Conta Costa Blvd. (Unit 31-1Q3)

Pleasant Hill, CA 94523

4300 Colonnade Parkway (Unit 31-1Q7)

Birmingham, AL 35243

2160 Motel Drive (Unit 31-1Q8)

Bethlehem, PA 18018

18090 San Ramon Valley Road (Unit 31-1QB)

San Ramon, CA 94583

3950 Westerre Parkway (Unit 31-1QC)

Richmond, VA 23233

1515 N.W. Expressway (Unit 31-1QD)

Oklahoma City, OK 73118

2175 Marriott Drive (Unit 31-1QE)

West Dundee, IL 60118

2415 Mall Drive (Unit 31-1QH)

North Charleston, SC 29406

301 Residence Inn Boulevard (Unit 31-1QJ)

Durham, NC 22713

42700 Eleven Mile Road (Unit 31-1QM)

Novi, MI 48375

1901 N. Rainbow Boulevard (Unit 31-1QN)

Las Vegas, NV 89108

920 North 54th Street (Unit 31-1QW)

Chandler, AZ 85226

1300 Veterans Blvd. (Unit 31-1QX)

South San Francisco, CA 94080

333 West W.T. Harris Boulevard (Unit 31-1AC)

Charlotte, NC 28213

3399 International Boulevard (Unit 31-1AD)

Hapeville, GA 30354-1346

15700 NW 77th Court (Unit 31-1AE)

Miami, FL 33016-3439

 

 

 

 

3990 Sheraton Drive (Unit 31-1AF)

Macon, GA 31210-1762

4192 Sycamore Dairy Road (Unit 31-1AG)

Fayetteville, NC 28303-3487

1132 Techwood Drive NW (Unit 31-1AH)

Atlanta, GA 30318-7814

2210 Bams Drive (Unit 31-1AJ)

Chattanooga, TN 37421-6047

2000 Executive Center Court NW (Unit 31-1AK)

Boca Raton, FL 33431-7375

4600 San Pablo Road South (Unit 31-1B3)

Jacksonville, FL 32224

300 River Ridge Drive (Unit 31-1DA)

Norwood, MA 02062-5058

48 Geoffrey Drive (Unit 31-1DB)

Newark, DE 19713

1533 Clarendon Boulevard (Unit 31-1DC)

Arlington, VA 22209-2701

240 Mishawum Road (Unit 31-1DE)

Woburn, MA 01801-2018

140 Route 17 South (Unit 31-1DF)

Mahwah, NJ 07430

275 Independence Way (Unit 31-1DG)

Danvers, MA 01923-3652

30 Industrial Avenue East (Unit 31-1DH)

Lowell, MA 01852

600 Hope Road (Unit 31-1DJ)

Eatontown, NJ 07724-1275

8910 Stanford Boulevard (Unit 31-1DK)

Columbia, MD 21045-5806

6301 Golden Triangle Drive (Unit 31-1DL)

Greenbelt, MD 20770

17 Westgate Drive/Route 9 & I-84 (Unit 31-1DM)

Fishkill, NY 12524

8900 Bartram Avenue (Unit 31-1DN)

Philadelphia, PA 19153

6415 Yorktown Circle (Unit 31-1F3)

Syracuse, NY 13057

35 Foxborough Boulevard (Unit 31-1F7)

Foxborough, MA 02035

2350 Easton Drive (Unit 31-1F9)

Willow Grove, PA 19090-1105

500 East 105th Street (Unit 31-1GB)

Kansas City, MO 64131

895 Golden Valley Drive (Unit 31-1GD)

Bettendorf, IA 52722

16865 West Bluemound Road (Unit 31-1GH)

Brookfield, WI 53005-5909

2000 East Mariposa Avenue (Unit 31-1J6)

El Segundo, CA 90245

 

 

 

 

23175 Ave de la Carlota (Unit 31-1JB)

Laguna Hills, CA 92653

1925 West 190th Street (Unit 31-1JC)

Torrance, CA 90504-6202

1727 Technology Drive (Unit 31-1JD)

San Jose, CA 95110-1310

4994 Verdugo Way (Unit 31-1JE)

Camarillo, CA 93012-8637

2101 East Camelback Road (Unit 31-1JF)

Phoenix, AZ 85016-4712

14615 NE 29th Place (Unit 31-1JG)

Bellevue, WA 98007-3694

9950 Slater Avenue (Unit 31-1JH)

Fountain Valley, CA 92708-3500

13444 East Shea Boulevard (Unit 31-1L2)

Scottsdale, AZ 85259

10325 North Central Expressway (Unit 31-1N9)

Dallas, TX 75231-2237

6235 McDonough Drive (Unit 31-1P9)

Norcross, GA 30093-1206

2001 Hospitality Court (Unit 31-1R5)

Morrisville, NC 27560

3000 Cumberland Boulevard (Unit 31-1R7)

Atlanta, GA 30339-3146

110 Mobile Drive (Unit 31-1R9)

Spartanburg, SC 29303

11391 Viking Drive (Unit 31-1T9)

Eden Prairie, MN 55344

37 W 103rd Street (Unit 31-1V1)

Indianapolis, IN 46290

2550 Aimee Lane (Unit 31-1V2)

Auburn Hills, MI 48326-2677

3700 North Wilke Road (Unit 31-1V8)

Arlington Heights, IL 60004-1200

7901 N. Tiffany Springs Parkway (Unit 31-1V9)

Kansas City, MO 64153

3935 Centerview Drive (Unit 31-1W2)

Chantilly, VA 20151

470 McLaws Circle (Unit 31-1W3)

Williamsburg, VA 23185-5646

450 Cherrington Parkway (Unit 31-1W4)

Coraopolis, PA 15108-3192

157 State Route 10 East (Unit 31-1W5)

Whippany, NJ 07981

200 Technology Center Drive (Unit 31-1W6)

Stoughton, MA 02072-4705

10 Fortune Boulevard (Unit 31-1W8)

Milford, MA 01757-1745

9 Commerce Drive (Unit 31-1W9)

Middletown, RI 2842