EXHIBIT 10.59

 

SECOND AMENDMENT TO MANAGEMENT AGREEMENT

THIS SECOND AMENDMENT TO MANAGEMENT AGREEMENT (this “Amendment”) is made and
entered into as of February 11, 2016 by and among HPT TRS IHG-2, INC. (“Owner”),
a Maryland corporation (successor by merger to HPT TRS IHG-1, Inc. and HPT TRS
IHG-3, Inc.), and INTERCONTINENTAL HOTELS GROUP RESOURCES, INC. (“Resources”), a
Delaware corporation, IHG MANAGEMENT (MARYLAND) LLC (“Maryland”), a Maryland
limited liability company, and INTERCONTINENTAL HOTELS GROUP (CANADA), INC.
(“Canada”), a corporation under the laws of Ontario, Canada (Resources, Maryland
and Canada, collectively,  “Manager”).

W I T N E S S E T H

WHEREAS, Owner and Manager are parties to that certain Management Agreement,
dated as of July 1, 2011, as amended by that certain Amendment to Management
Agreement dated as of March 16, 2015 (as so amended, the “Management
Agreement”), pursuant to which Manager manages and operates certain hotels for
Owner’s account as provided therein; and

WHEREAS, Owner and Manager desire to amend certain terms of the Management
Agreement to address the potential addition of hotels under the Kimpton, Hotel
Monaco and Hotel Palomar brands; and

NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Owner and Manager, intending to be legally
bound, herby agree, effective from and after the date hereof, as follows:

1. Capitalized Terms. Capitalized terms used in this Amendment and not otherwise
defined herein shall have the meanings given such terms in the Management
Agreement.

2. Amendments to Management Agreement. The following provisions in the
Management Agreement are amended as follows:

a.Article 1: The following new definitions are inserted (but the

insertion of such new definitions shall not affect or change the section
references for any of the other definitions in Article 1):

“Kimpton Hotels”  shall mean the Hotels that are operated as of their Effective
Dates as Kimpton hotels.

“Hotel Monaco Hotels” shall mean the Hotels that are operated as of their
Effective Dates as Hotel Monaco hotels.

 

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“Hotel Palomar Hotels”  shall mean the Hotels that are operated as of their
Effective Dates as Hotel Palomar hotels.

b. Section 1.16: The definition of “Brand” is expanded to also include the
Kimpton, Hotel Monaco and Hotel Palomar hotel service marks, together with the
applicable Brand Standards, with all of the attributes and features customarily
associated with, as applicable, the Kimpton, Hotel Monaco and Hotel Palomar
hotels in North America from time to time.

c. Section 1.17: The definition of “Brand Standards” is expanded to also include
the standards of operation, as amended from time to time, in effect at
substantially all hotels that are operated under, as applicable, the Kimpton,
Hotel Monaco and Hotel Palomar names as may be specified in manuals and other
guidelines provided by the owner of the System Marks or its Affiliates. Owner
acknowledges that, as of the date of this Amendment, Kimpton, Hotel Monaco and
Hotel Palomar may not have Brand Standards in a form similar to those for other
Brands and Manager and its Affiliates reserve the right to modify the Brand
Standards for Kimpton, Hotel Monaco and Hotel Palomar to better conform them to
the Brand Standards for the other Brands. To the extent specific written brand
standards for such brands have not yet been established, the Brand Standard for
the Kimpton, Hotel Monaco and Hotel Palomar Brands shall be the standards
pursuant to which all of the other hotels under such specific Brands are
operated, including any policies and practices established therefor, except
that, as respects construction and furnishing and equipment for any applicable
Hotel, such standards shall refer to the standards of construction and
furnishing and equipment applicable to such Hotel as of the Effective Date for
such Hotel.

d. Section 1.97: The definition of  “Reservation System” is expanded to also
include the computerized network of high speed terrestrial and satellite-linked
hardware and data lines connecting hotels, central reservation centers, data
processing centers and travel agencies which provides reservation services to
the Kimpton Hotels, Hotel Monaco Hotels and Palomar Hotels, as applicable, in
North America.

e. Section 1.113: The definition of “System Marks” is expanded to also include
all service marks, trademarks, copyrights, trade names, logo types, commercial
symbols, patents or other similar rights or registrations now or hereafter held,
applied for or licensed by Manager or any Affiliate of Manager in connection
with the Kimpton, Hotel Monaco, and Hotel Palomar hotel brands, as applicable,
including without limitation those related to the naming of any restaurant, bar
or food and beverage facility operated by Manager not otherwise expressly
licensed in writing from a third party.

f. Section 6.1: The first sentence of Section 6.1 is deleted and the following
sentence is inserted in lieu thereof:

“Manager shall operate each Hotel as a Staybridge Suites, Crowne Plaza,
InterContinental, Holiday Inn, Candlewood Suites, Kimpton, Hotel Monaco or Hotel
Palomar hotel, as applicable, in accordance with the terms of this Agreement,
the applicable Brand Standards and the Operating Standards.”

g. Section 7.3(d): The following is inserted at the end of the list set forth in
Section 7.3(d) (Travel Related Expenses of Manager’s Senior Operational
Personnel):

Hotel TypeAmount

Kimpton, Hotel Palomar or Hotel Monaco Hotels$10,000

As clarification, the foregoing amount will be adjusted by the percentage change
in the Consumer Price Index as described in 7.3(d), running from January 1,
2012.

h. Section 7.5: The following sentence is inserted after the first sentence of
Section 7.5: “The Kimpton Hotels, Hotel Monaco Hotels and Hotel Palomar Hotels
shall also be included as participating hotels on the Reservation System
operated by Manager, its Affiliates or agent(s) for the benefit of all of the
Kimpton, Hotel Monaco and Hotel Palomar hotels as applicable.”

i. Section 9.2 (System Fees):

(a) Section 9.2(a) is expanded to include a reservation and marketing fee (or
services contribution, as it may be characterized from time to time) of 3% of
Rooms Revenue with respect to each of the Kimpton Hotels, Hotel Monaco Hotels
and Hotel Palomar Hotels. Owner and Manager acknowledge and agree that the
services contribution and other fees for the Kimpton, Hotel Monaco and Hotel
Palomar Brands are not currently incorporated into the “System Fees” associated
with such Brands and that other hotels under the Kimpton, Hotel Monaco and Hotel
Palomar Brands may utilize a different methodology to pay for system costs.

(b) Notwithstanding the terms of Section 9.2 and any other terms of the
Management Agreement, Owner recognizes that Kimpton, Hotel Monaco and Hotel
Palomar hotels are not, as of the date of this Amendment, integrated with
Manager’s and its Affiliates’ frequency program, currently known as IHG Rewards
Club. Unless Owner and Manager agree otherwise in writing, Manager and its
Affiliates will operate the Kimpton Hotels, Hotel Monaco Hotels and Hotel
Palomar Hotels under the Kimpton frequency program, subject to its terms and
conditions (including reasonable and customary fees and reimbursements
applicable to all hotels operated under such Brands which have yet not
transitioned to Manager’s integrated frequency program). When at least fifty
percent (50%) of the Kimpton, Hotel Monaco and/or Hotel Palomar branded hotels
managed by Manager or its Affiliate in the United States and Canada, as
applicable, are integrated into Manager’s and its Affiliates’ frequency program
currently known as IHG Rewards Club (such integrated hotels being the “Frequency
Program Integrated Hotels”), the Kimpton, Hotel Monaco and/or Hotel Palomar
Hotels operated under this Management Agreement will be transitioned to
Manager’s and its Affiliates’ frequency program and the frequency program fees
and reimbursements payable with respect to any such Hotels shall be on the same

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basis as such fees applicable to all of the Frequency Program Integrated Hotels
(as applicable for each such brand).

(c)The second to last paragraph of Section 9.2 shall not apply

to the Kimpton, Hotel Palomar and Hotel Monaco Hotels and the following shall
apply to such Hotels in lieu thereof:

“Not less frequently than annually, Manager shall provide to Owner financial
statements with respect to all fees comparable to the System Fees collected by
Manager and/or its Affiliates and the applications thereof. Manager covenants,
warrants and represents that (i) the amount paid by each Kimpton Hotel, Hotel
Monaco Hotel and Hotel Palomar Hotel as the services contribution under 9.2(a)
shall be in the same amount as the System Fee charged to all of the other
InterContinental Brand Hotels operated under this Agreement and shall cover the
same services provided for other Kimpton Hotels, Hotel Monaco Hotels and Hotel
Palomar Hotels, and (ii) the e-mail service fees and accounting fees being
charged under this Agreement for the Kimpton Hotels, Hotel Monaco Hotels and
Hotel Palomar Hotels shall not be higher than the e-mail service fees and
accounting fees being charged for the InterContinental Brand Hotels operated
under this Agreement.”

j. Section 12.2: The following sentences are inserted after the fourth sentence:

“Additionally, it is understood and agreed by Owner that the names Kimpton,
Hotel Monaco and Hotel Palomar and all System Marks related thereto are the
exclusive property of Manager or its Affiliates. Except for any rights expressly
granted to Owner in this Agreement, in the event of termination or cancellation
of this Agreement, whether as a result of a default by Manager or otherwise,
Owner shall not hold itself out as, or operate the Hotels as Kimpton, Hotel
Monaco and/or Hotel Palomar hotels, as applicable, and will immediately cease
using such names and all other System Marks in connection with the name or
operation of each applicable Hotel as of the Expiration Date.”

k. Section 17.2: As clarification, the reference to Section 10.3 (Owner’s First
Priority) in the second sentence of Section 17.2 of the Management Agreement
shall also refer to Section 10.3A (Owner’s Pool B Priority).

l. Section 17.5(k): The fee for management of Kimpton Hotels, Hotel Monaco
Hotels and/or Hotel Palomar Hotel under the circumstances set forth in Section
17.5(k) shall be three percent (3%) of Gross Revenues.

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3. Integration of Systems. Owner acknowledges that as of the date of this
Amendment, the systems associated with Kimpton Hotels, Hotel Monaco Hotels and
Hotel Palomar Hotels, including without limitation the Reservations System,
frequency programs, insurance program, information technology, sales and
marketing, payroll and accounting systems, and financial reporting forms may not
be fully integrated with Manager’s and its Affiliates’ other systems. Owner
agrees that notwithstanding anything stated to the contrary in the Management
Agreement, until such integration occurs, any Kimpton Hotel, Hotel Monaco Hotel
and Hotel Palomar Hotel may continue to be operated through separate systems
provided that all Kimpton hotels, Hotel Monaco hotels and Hotel Palomar hotels
are generally being operated through the same separate systems (subject to the
timing of transition of hotels between the systems), that Manager and its
Affiliates reserve the right to integrate such systems in the future and that
Owner will reasonably cooperate (without additional cost) with such efforts. For
the avoidance of doubt, Manager acknowledges and agrees that the Kimpton Hotels,
Hotel Monaco Hotels and Hotel Palomar Hotels shall only be operated through the
separate systems described hereinabove or through the IHG integrated systems.

4. Subcontracting for Kimpton-Related Brands. Owner agrees that Manager may, in
its discretion, elect to subcontract the operation of some or all of the Kimpton
Hotels, Hotel Monaco Hotels and/or Hotel Palomar Hotels to Manager’s Affiliates
that operate such hotels, including without limitation Kimpton Hotel and
Restaurant Group, LLC; provided that, notwithstanding any such subcontracting:
(a) Owner shall not have any liability or obligation to any Manager’s Affiliate
in connection with or as a result of any such subcontracting arrangement, (b)
Manager shall remain primarily liable and responsible to Owner for the
performance of all of Manager’s obligations to Owner under the terms of the
Management Agreement notwithstanding such subcontracting arrangement and no such
subcontracting arrangement shall impair, modify or otherwise release Manager
from any such liability or responsibility under the Management Agreement and (c)
any such subcontracting arrangement shall be subject and subordinate to the
Management Agreement and such subcontracting arrangement shall terminate upon
the expiration or earlier termination of the Management Agreement unless Owner
elects otherwise.

5. Ratification. As amended hereby, the Management Agreement remains in full
force and effect and is ratified and confirmed.

6. Counterparts. This Amendment may be executed in two or more counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute one agreement. Any such counterpart may be delivered
by facsimile or e-mail (in .pdf format), and any signature so delivered shall be
deemed an original signature for all purposes.

7. Closing Condition. If that certain Purchase and Sale Agreement, dated as of
January 6, 2016, between Fifth/Alder Associates, L.P. and Hospitality Properties
Trust, as amended from time to time, with respect to the hotel commonly known as
the Hotel Monaco Portland, located at 506 S.W. Washington Street, Portland,
Oregon, is terminated or if HPT IHG-2 Properties Trust (the “HPT Acquiror”) does
not acquire such hotel on or 

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before April 15, 2016, then this Amendment shall be automatically rescinded and
terminated and it shall no longer have any force or effect; provided that
Manager may elect to reinstate this Amendment if the HPT Acquiror thereafter
acquires such hotel during calendar year 2016.

[Remainder of page intentionally left blank; Signature pages follow]

 

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

 

 

 

 

 

 

OWNER:

 

 

 

HPT TRS IHG-2, INC.

 

 

 

 

 

By:

/s/ John G. Murray

 

 

John G. Murray

 

Vice  

Vice President

 

 

 

 

 

MANAGER:

 

 

 

INTERCONTINENTAL HOTELS GROUP RESOURCES, INC.

 

 

 

 

 

By:

/s/ Homero M. Torres

 

 

Homero M. Torres, as its Vice-President

 

 

 

 

 

 

 

MANAGER:

 

 

 

INTERCONTINENTAL HOTELS GROUP (CANADA), INC.

 

 

 

 

 

By:

/s/ Homero M. Torres

 

 

Homero M. Torres, as its Vice-President

 

 

 

 

IHG

IHG MANAGEMENT (MARYLAND) LLC

 

 

 

 

 

By:

/s/ Homero M. Torres

 

 

Homero M. Torres, as its Vice-President

 

 

 

 

[First Signature Page to Second Amendment to Management Agreement]

 

Each of the parties comprising Landlord joins in the foregoing Amendment to
evidence its continued agreement to be bound by the terms of Sections 4.1
through 4.7 and Articles 15 and 16 of the Management Agreement, as may be
amended by the foregoing Amendment, in each case to the extent applicable to it,
subject to the terms of Sections 24.18.

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LANDLORD:

 

 

 

HPT CW MA REALTY TRUST

 

 

 

 

 

By:

/s/ John G. Murray

 

 

John G. Murray

 

Vice  

Trustee and not individually

 

 

 

 

 

HPT IHG CANADA PROPERTIES TRUST 

 

 

 

 

 

By:

/s/ John G. Murray

 

 

President

 

 

 

 

 

 

 

HPT IHG GA PROPERTIES LLC

 

 

 

 

 

By:

/s/ John G. Murray

 

 

President

 

 

 

 

IHG

HPT IHG-2 PROPERTIES TRUST

 

 

 

 

 

By:

/s/ John G. Murray

 

 

President

 

 

 

 

 

IHG

HPT IHG-3 PROPERTIES LLC

 

 

 

 

 

By:

/s/ John G. Murray

 

 

President

 

[Second Signature Page to Second Amendment to Management Agreement]

 

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AGREEMENT BY

INTERCONTINENTAL HOTELS (PUERTO RICO) INC.

Reference is made to that certain Guaranty Agreement, dated as of July 1, 2011,
by Intercontinental Hotels (Puerto Rico) Inc. ("PR Tenant") for the benefit of
HPT TRS IHG-1, Inc., HPT TRS IHG-2, Inc., HPT TRS IHG-3, Inc., HPT IHG PR, Inc.
and Hospitality Properties Trust (the "PR Guaranty").

PR Tenant acknowledges receipt of the foregoing Second Amendment to Management
Agreement by and among HPT TRS IHG-2, Inc., Intercontinental Hotels Group
Resources, Inc., IHG Management (Maryland) LLC and Intercontinental Hotels Group
(Canada), Inc. (the "Amendment").

PR Tenant acknowledges and agrees to be bound by Section 2(k) of the Amendment.

PR Tenant also confirms that all references to the "Management Agreement" to the
PR Guaranty shall refer to the Management Agreement (as defined in the
Amendment) as amended by the Amendment and that the PR Guaranty remains in full
force and effect.

 

PR TENANT:

 

INTERCONTINENTAL HOTELS (PUERTO RICO) INC.,

A Puerto Rico corporation 

 

 

By:

/s/ Homero M. Torres

 

Homero M. Torres, as its Vice-President

 

 

 

 

 

 

[Third Signature Page to Second Amendment to Management Agreement]

 

 

 
 

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