**Exhibit10.17**

 

**MANAGEMENTAGREEMENTBY AND**

** **

**BETWEEN**

** **

**HPTTRS IHG-1, INC.**

** **

**AND**

** **

**INTERCONTINENTALHOTELS GROUP RESOURCES, INC.**

 

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Table of Contents

 
| ** **            | **Page**                                                  |
|-----------------------|-----------------------------------------------------------|
| ARTICLE 1 DEFINITIONS | 1                                                         |
|                  | 1.1  8.1(c) Statement                                | 1 |
|                  | 1.2  Accounting Principles                           | 1 |
|                  | 1.3  Affiliate                                       | 1 |
|                  | 1.4  Agreed Upon Procedure Letter                    | 1 |
|                  | 1.5  Authorized Mortgage                             | 2 |
|                  | 1.6  Arbitration                                     | 2 |
|                  | 1.7  Award                                           | 2 |
|                  | 1.8  Bank Accounts                                   | 2 |
|                  | 1.9  Base Management Fee                             | 2 |
|                  | 1.10  Base Year                                      | 2 |
|                  | 1.11  Brand                                          | 3 |
|                  | 1.12  Brand Standards                                | 3 |
|                  | 1.13  Buildings                                      | 3 |
|                  | 1.14  Business Day                                   | 3 |
|                  | 1.15  Capital Replacements                           | 3 |
|                  | 1.16  Capital Replacements Budget                    | 3 |
|                  | 1.17  Code                                           | 3 |
|                  | 1.18  Collateral Agency Agreement                    | 3 |
|                  | 1.19  Collateral Agent                               | 3 |
|                  | 1.20  Competitor                                     | 4 |
|                  | 1.21  Condemnation                                   | 4 |
|                  | 1.22  Condemnor                                      | 4 |
|                  | 1.23  Consolidated Financials                        | 4 |
|                  | 1.24  Consumer Price Index                           | 4 |
|                  | 1.25  Controlling Interest                           | 4 |
|                  | 1.26  Debt Service Coverage Ratio                    | 4 |
|                  | 1.27  Deposit                                        | 4 |
|                  | 1.28  Disbursement Rate                              | 4 |
|                  | 1.29  Effective Date                                 | 4 |
|                  | 1.30  Environmental Laws                             | 4 |
|                  | 1.31  Environmental Notice                           | 4 |
|                  | 1.32  Expiration Date                                | 4 |
|                  | 1.33  Fiscal Month                                   | 5 |
|                  | 1.34  Fiscal Year                                    | 5 |
|                  | 1.35  Furniture, Fixtures and Equipment or  FF&E | 5 |
|                  | 1.36  Government Agencies                            | 5 |
|                  | 1.37  Gross Revenues                                 | 5 |
|                  | 1.38  Guarantor                                      | 6 |
|                  | 1.39  Guaranty                                       | 6 |
|                  | 1.40  Hazardous Substances                           | 6 |
|                  | 1.41  Hotel                                          | 6 |
|                  | 1.42  HPT                                            | 7 |
|                  | 1.43  IHG                                            | 7 |
|                  | 1.44  Incentive Management Fee                       | 7 |
|                  | 1.45  Initial Term                                   | 7 |
|                  | 1.46  Initial Working Capital                        | 7 |

 

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|   | 1.47  Insurance Requirements            | 7  |
|--------|----------------------------------------------|----|
|   | 1.48  Interest Rate                     | 7  |
|   | 1.49  Lease                             | 7  |
|   | 1.50  Legal Requirements                | 7  |
|   | 1.51  Management Fees                   | 7  |
|   | 1.52  Manager                           | 8  |
|   | 1.53  Manager Default                   | 8  |
|   | 1.54  Manager Event of Default          | 8  |
|   | 1.55  Material Repair                   | 8  |
|   | 1.56  New Management Agreement          | 8  |
|   | 1.57  NOI                               | 8  |
|   | 1.58  Officer’s Certificate        | 8  |
|   | 1.59  Opening Date                      | 8  |
|   | 1.60  Operating Cost(s)                 | 8  |
|   | 1.61  Operating Equipment               | 9  |
|   | 1.62  Operating Profit                  | 9  |
|   | 1.63  Operating Standards               | 9  |
|   | 1.64  Operating Supplies                | 9  |
|   | 1.65  Owner                             | 9  |
|   | 1.66  Owner’s  Percentage Priority | 10 |
|   | 1.67  Owner’s Priority             | 10 |
|   | 1.68  Parent                            | 10 |
|   | 1.69  Person                            | 10 |
|   | 1.70  Pledged Hotels                    | 10 |
|   | 1.71  Priority Coverage Ratio           | 10 |
|   | 1.72  Purchase Agreement                | 10 |
|   | 1.73  Purchaser                         | 10 |
|   | 1.74  Renewal Terms                     | 10 |
|   | 1.75  Repairs                           | 10 |
|   | 1.76  Replacement Property              | 11 |
|   | 1.77  Reservation System                | 11 |
|   | 1.78  Reserve Account                   | 11 |
|   | 1.79  Reserve Percentage                | 11 |
|   | 1.80  Residual Distribution             | 11 |
|   | 1.81  Restricted Area                   | 11 |
|   | 1.82  Restricted Period                 | 11 |
|   | 1.83  Rooms Revenue                     | 11 |
|   | 1.84  SARA                              | 11 |
|   | 1.85  Secured Obligations               | 11 |
|   | 1.86  Services Fees                     | 11 |
|   | 1.87  Sites                             | 11 |
|   | 1.88  Subsidiary                        | 11 |
|   | 1.89  Substitute Tenant                 | 12 |
|   | 1.90  System Marks                      | 12 |
|   | 1.91  Term                              | 12 |
|   | 1.92  Transaction Documents             | 12 |
|   | 1.93  Transferred Hotels                | 12 |

 

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|                                                  | 1.94  Uniform System of Accounts                   | 12 |
|-------------------------------------------------------|---------------------------------------------------------|----|
|                                                  | 1.95  Ultimate Parent                              | 12 |
|                                                  | 1.96  Unsuitable for Its Permitted Use             | 12 |
|                                                  | 1.97  Working Capital                              | 12 |
|                                                  | 1.98  Yearly Budget                                | 12 |
| ARTICLE 2 SCOPE OF  AGREEMENT                         | 13                                                      |
|                                                  | 2.1  Engagement of Manager                         | 13 |
|                                                  | 2.2  Additional Services                           | 14 |
|                                                  | 2.3  Use of Hotels                                 | 15 |
|                                                  | 2.4  Right to Inspect                              | 15 |
|                                                  | 2.5  Right of Offset                               | 15 |
|                                                  | 2.6  Condition of the Hotels                       | 15 |
| ARTICLE 3 TERM AND  RENEWALS                          | 16                                                      |
|                                                  | 3.1  Term                                          | 16 |
|                                                  | 3.2  Renewal Term                                  | 16 |
|                                                  | 3.3  Owner’s Termination Right at End of Term | 16 |
| ARTICLE 4 TITLE TO HOTEL                              | 16                                                      |
|                                                  | 4.1  Covenants of Title                            | 16 |
|                                                  | 4.2  Non-Disturbance                               | 17 |
|                                                  | 4.3  Financing                                     | 17 |
|                                                  | 4.4  Sale of a Hotel                               | 19 |
|                                                  | 4.5  Sale of All the Hotels                        | 20 |
|                                                  | 4.6  The Lease                                     | 20 |
|                                                  | 4.7  Restricted Sale                               | 20 |
| ARTICLE 5 REQUIRED FUNDS                              | 20                                                      |
|                                                  | 5.1  Working Capital                               | 20 |
|                                                  | 5.2  Reserve Account                               | 21 |
|                                                  | 5.3  Additional Requirements for Reserve           | 22 |
|                                                  | 5.4  Ownership of Replacements                     | 22 |
|                                                  | 5.5  Manager Reserve Advances                      | 22 |
|                                                  | 5.6  No Additional Contributions                   | 23 |
| ARTICLE 6 BRAND STANDARDS  AND MANAGER’S CONTROL | 23                                                      |
|                                                  | 6.1  Brand Standards                               | 23 |
|                                                  | 6.2  Manager’s Control                        | 23 |
|                                                  | 6.3  Arbitration                                   | 23 |
| ARTICLE 7 OPERATION OF THE  HOTEL                     | 23                                                      |
|                                                  | 7.1  Permits                                       | 24 |
|                                                  | 7.2  Equipment and Supplies                        | 24 |
|                                                  | 7.3  Personnel                                     | 24 |
|                                                  | 7.4  Sales, Marketing and Advertising              | 25 |
|                                                  | 7.5  Reservation and Communication Services        | 25 |
|                                                  | 7.6  Maintenance and Repairs                       | 26 |
|                                                  | 7.7  Material Repairs                              | 26 |
|                                                  | 7.8  Liens; Credit                                 | 27 |
|                                                  | 7.9  Real Estate and Personal Property Taxes       | 27 |
|                                                  | 7.10  Contest                                      | 28 |

 

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| ARTICLE 8 FISCAL MATTERS                              | 28                                             |
|-------------------------------------------------------|------------------------------------------------|
|                                                  | 8.1  Accounting Matters                   | 28 |
|                                                  | 8.2  Yearly Budgets                       | 30 |
|                                                  | 8.3  Bank Accounts                        | 30 |
|                                                  | 8.4  Consolidated  Financials             | 31 |
| ARTICLE 9 FEES TO MANAGER                             | 31                                             |
|                                                  | 9.1  Management Fees                      | 31 |
|                                                  | 9.2  Services Fees                        | 32 |
| ARTICLE 10 DISBURSEMENTS                              | 32                                             |
|                                                  | 10.1  Disbursement of Funds               | 32 |
|                                                  | 10.2  Residual Distribution               | 33 |
|                                                  | 10.3  Owner’s  Priority              | 34 |
|                                                  | 10.4  Owner’s Percentage Priority    | 34 |
|                                                  | 10.5  No Interest                         | 34 |
|                                                  | 10.6  Amounts Outstanding  at End of Term | 34 |
|                                                  | 10.7  Survival                            | 34 |
| ARTICLE 11 CERTAIN OTHER  SERVICES                    | 35                                             |
|                                                  | 11.1  Optional Services                   | 35 |
|                                                  | 11.2  Purchasing                          | 35 |
| ARTICLE 12 SIGNS AND  SERVICE MARKS                   | 35                                             |
|                                                  | 12.1  Signs                               | 35 |
|                                                  | 12.2  System Marks                        | 35 |
|                                                  | 12.3  System Mark Litigation              | 36 |
| ARTICLE 13 INSURANCE                                  | 36                                             |
|                                                  | 13.1  Insurance Coverage                  | 36 |
|                                                  | 13.2  Insurance Policies                  | 38 |
|                                                  | 13.3  Insurance Certificates              | 39 |
|                                                  | 13.4  Insurance Proceeds                  | 39 |
|                                                  | 13.5  Manager’s Insurance Program    | 39 |
| ARTICLE 14 INDEMNIFICATION  AND WAIVER OF SUBROGATION | 39                                             |
|                                                  | 14.1  Indemnification                     | 39 |
|                                                  | 14.2  Waiver of Subrogation               | 39 |
|                                                  | 14.3  Survival                            | 40 |
| ARTICLE 15 DAMAGE TO AND  DESTRUCTION OF THE HOTEL    | 40                                             |
|                                                  | 15.1  Termination                         | 40 |
|                                                  | 15.2  Restoration                         | 41 |
| ARTICLE 16 CONDEMNATION                               | 41                                             |
|                                                  | 16.1  Total Condemnation                  | 41 |
|                                                  | 16.2  Partial Condemnation                | 42 |
|                                                  | 16.3  Temporary Condemnation              | 42 |
|                                                  | 16.4  Effect of Condemnation              | 43 |
| ARTICLE 17 DEFAULT AND  TERMINATION                   | 43                                             |
|                                                  | 17.1  Manager Events of Default           | 43 |
|                                                  | 17.2  Remedies for Manager Defaults       | 44 |
|                                                  | 17.3  Remedies for Owner Defaults         | 45 |
|                                                  | 17.4  Post Termination Obligations        | 45 |
|                                                  | 17.5  Deposit                             | 47 |

 

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| ARTICLE 18 NOTICES                                      | 48                                                              |
|---------------------------------------------------------|-----------------------------------------------------------------|
|                                                    | 18.1  Procedure                                            | 48 |
| ARTICLE 19 RELATIONSHIP,  AUTHORITY AND FURTHER ACTIONS | 49                                                              |
|                                                    | 19.1  Relationship                                         | 49 |
|                                                    | 19.2  Further Actions                                      | 50 |
| ARTICLE 20 APPLICABLE LAW                               | 50                                                              |
| ARTICLE 21 SUCCESSORS AND  ASSIGNS                      | 50                                                              |
|                                                    | 21.1  Assignment                                           | 50 |
|                                                    | 21.2  Binding Effect                                       | 51 |
| ARTICLE 22 RECORDING                                    | 51                                                              |
|                                                    | 22.1  Memorandum  of Agreement                             | 52 |
|                                                    | ARTICLE 23 FORCE MAJEURE                                        | 52 |
|                                                    | 23.1  Operation of Hotel                                   | 52 |
|                                                    | 23.2  Extension of Time                                    | 52 |
| ARTICLE 24 GENERAL PROVISIONS                           | 52                                                              |
|                                                    | 24.1  Trade Area Restriction                               | 52 |
|                                                    | 24.2  Environmental Matters                                | 53 |
|                                                    | 24.3  Authorization                                        | 53 |
|                                                    | 24.4  Severability                                         | 54 |
|                                                    | 24.5  Merger                                               | 54 |
|                                                    | 24.6  Formalities                                          | 54 |
|                                                    | 24.7  Consent to Jurisdiction; No Jury Trial               | 54 |
|                                                    | 24.8  Performance on Business Days                         | 55 |
|                                                    | 24.9  Attorneys’ Fees                                 | 55 |
|                                                    | 24.10  Section and Other Headings                          | 55 |
|                                                    | 24.11  Documents                                           | 55 |
|                                                    | 24.12  Remedies Not Cumulative                             | 55 |
|                                                    | 24.13  No Political Contributions                          | 55 |
|                                                    | 24.14  REIT Qualification                                  | 55 |
|                                                    | 24.15  Further Compliance with Section 856(d) of  the Code | 56 |
|                                                    | 24.16  Adverse Regulatory Event                            | 56 |
|                                                    | 24.17  Commercial Leases                                   | 57 |
|                                                    | 24.18  Nonliability of Trustees                            | 57 |
|                                                    | 24.19  Arbitration                                         | 58 |
|                                                    | 24.20  Estoppel Certificates                               | 59 |
|                                                    | 24.21  Confidentiality                                     | 59 |
|                                                    | 24.22  Hotel Warranties                                    | 60 |

 

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**MANAGEMENT AGREEMENT**

 

**THIS MANAGEMENT AGREEMENT**(this “Agreement”) is made and entered into as of July 1, 2003, by andbetween HPT TRS IHG-1, INC., a Maryland corporation (“Owner”), andINTERCONTINENTAL HOTELS GROUP RESOURCES, INC. a Delaware corporation (“Manager”).

 

WITNESSETH

 

**WHEREAS**, pursuant tothe Purchase Agreement (this and other capitalized terms used and not otherwisedefined herein having the meanings ascribed to such terms in Article 1),on the Effective Date: (a) Purchaser is acquiring the Hotels from Manager orits Affiliate(s); (b) Purchaser and Owner, its Affiliate, are entering into theLease; and (c) Owner and Manager are entering into this Agreement; and

 

**WHEREAS**, Ownerwishes to engage Manager and Manager wishes to be engaged to manage and operatethe Hotels, subject to and upon the terms and conditions set forth in thisAgreement.

 

**NOW, THEREFORE**, inconsideration of the mutual promises and covenants herein contained and othergood and valuable consideration, the receipt and sufficiency of which areherein acknowledged, Owner and Manager, intending to be legally bound, herebyagree as follows:

 

ARTICLE 1

 

# DEFINITIONS

#  

Capitalized Term used in this Agreement andnot otherwise defined herein shall have the meanings set forth below, in theSection of this Agreement referred to below, or in such other document oragreement referred to below:

 

# 1.1           “8.1(c) Statement”  shall have the meaning given such term inSection 8.1(c).

##  

# 1.2           “Accounting Principles”  shall mean generally accepted accountingprinciples, as adopted in the United States of America, consistently applied.

##  

# 1.3           “Affiliate” shall mean, with respect to any Person, (a) in the case of any suchPerson which is a partnership, any partner in such partnership; (b) in the caseof any such Person which is a limited liability company, any member of suchcompany; (c) any other Person which is a Parent, or Subsidiary or a Subsidiaryof a Parent with respect to such Person or to one or more of the personsreferred to in the preceding clauses (a) and (b), and; (d) any other Person whois an officer, director, trustee or employee of, or partner in, such Person orany Person referred to in the preceding clauses (a), (b) and (c).

##  

# 1.4           “Agreed Upon Procedure Letter”  shall mean, a letter from Ernst & Youngor another firm of independent certified public accountant (the “auditor”)selected by Manager and approved by Owner (which approval shall not beunreasonably withheld or delayed), which letter shall, subject to the limitationsand conditions imposed by the auditor, 

 

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## address the following components and such other reasonable matters asOwner, and the auditor shall reasonably agree:

##  

# (a)           That auditorhas tested Manager’s systems of internal controls.

####  

# (b)           That auditor hasverified that the information provided was generated from the same reportingsystems as Manager uses for its regular periodic accounting and reporting.

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# (c)           That auditorhas verified the mathematical accuracy of the 8.1(c) Statement.

####  

# (d)           That auditor hasrecomputed the annual calculation of Management Fees, Service Fees,contributions to the Reserve Account, expenditures from the Reserve Account,Owner’s Percentage Priority and the Residual Distribution.

####  

# (e)           That auditorhas confirmed the Hotels subjected to audit procedures by Manager’s internalaudit department, if any, and reviewed work papers provided in connectiontherewith. If auditor has performed hotel level audit procedures at any Hotel,auditor shall identify those Hotels and list the procedures performed andresults obtained. In any event at least three Hotels shall be subjected toaudit procedures each Fiscal Year by either internal audit or the auditor.

####  

# 1.5           “Authorized Mortgage”  shall mean any first mortgage, firstdeed-of-trust or first deed to secure debt and other related security documentsgranted in connection therewith now or hereafter granted by Purchaser to securea loan to, or other debt of, Purchaser or its Affiliates which is made by aninstitutional lender, investment bank, publicly traded investment fund or othersimilar Person regularly making loans secured by hotels or incurred inconnection with the issuance of a mortgage backed security, which loan or debtprovides for (i) level payments of interest and principal and (ii) amortizationand other terms which are commercially reasonable.

##  

# 1.6           “Arbitration” shall mean an arbitration conducted in accordance with the terms of Section24.19.

##  

# 1.7           “Award”  shall have the meaning given such term in theLease.

##  

# 1.8           “BankAccounts”  shall mean one or morebank accounts established for the operation of the Hotels in Owner’s name at abank selected by Manager and approved by Owner.

##  

# 1.9           “BaseManagement Fee”  shall mean sevenpercent (7%) of the aggregate Gross Revenues at the Hotels in each Fiscal Yearduring Term.

##  

# 1.10         “Base Year”  shall mean, for each Hotel, the 2004 FiscalYear; provided, however, if there shall occur a casualty,condemnation or other force majeure event with respect to a Hotel which causesa material decline in Gross Revenues for such Hotel for the 2004 Fiscal Year ora force majeure event nationally or in any relevant market that results in aten percent (10%) annual decline in REVPAR for the Upscale Segment (or otherappropriate segment) as calculated by Smith Travel Research, nationally or inthe relevant market, which causes a material decline in Gross Revenues for anyHotel, the 

 

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## Base Year for such Hotelshall be adjusted to be the first full Fiscal Year of operation of such Hotelafter the termination of any such casualty, condemnation or force majeureevent.

##  

# 1.11         “Brand”  shall mean, collectively, the StaybridgeSuites hotel service marks, the Brand Standards, and all of the attributes andfeatures customarily associated with the Staybridge Suites hotel chain in NorthAmerica from time to time.

##  

# 1.12         “BrandStandards”  shall mean the standardsof operation, as amended from time to time, in effect at substantially allhotels which are operated under the Staybridge Suites name, which standardsshall include, but not be limited to, standards of operation from time to timerequired of owners of similar hotels or may be specified in manuals and otherguidelines provided by the owner of the System Marks or its Affiliates.

##  

# 1.13         “Buildings”  shall mean, collectively, all buildings,structures and improvements now or hereafter located on the Sites, and allfixtures and equipment attached to, forming a part of and necessary for theoperation of such buildings, structures and improvements as a hotel (including,without limitation, heating, lighting, sanitary, air-conditioning, laundry,refrigeration, kitchen, elevator and similar items) having guest sleepingrooms, each with bath, and such (i) restaurants, bars, banquet, meeting andother public areas; (ii) commercial space, including concessions and shops;(iii) parking facilities and areas; (iv) storage and service areas; (v)recreational facilities and areas; (vi) permanently affixed signage; (vii)public grounds and gardens; and (viii) other facilities and appurtenances, asmay hereafter be attached to and form a part of such building, structures animprovements in accordance with this Agreement.

##  

# 1.14         “BusinessDay”  shall mean any day other thanSaturday, Sunday, or any other day on which banking institutions in TheCommonwealth of Massachusetts are authorized by law or executive action toclose.

##  

# 1.15         “CapitalReplacements”  shall mean,collectively, replacements and renewals to the FF&E and Repairs which arenormally capitalized under the Accounting Principles.

##  

# 1.16         “CapitalReplacements Budget”  shall mean theannual budget for Capital Replacements at the Hotels, covering a Fiscal Year,as prepared by Manager and approved by Owner as part of a Yearly Budget.References to Yearly Budget shall be deemed to incorporate the CapitalReplacement Budget unless specifically excluded.

##  

# 1.17         “Code”  shall mean the Internal Revenue Code of 1986and the Treasury Regulations promulgated thereunder, each as from time to timeamended.

##  

# 1.18         “CollateralAgency Agreement”  shall have themeaning given such term in the Guaranty.

 

# 1.19         “CollateralAgent”  shall have the meaning givensuch term in the Guaranty.

 

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# 1.20         “Competitor”  shall mean any Person which owns directly orthrough an Affiliate a hotel brand, trade name, system, or chain having atleast fifteen (15) hotels (excluding a mere franchisee or mere passiveinvestor).

##  

# 1.21         “Condemnation”  shall have the meaning given such term in theLease

##  

# 1.22         “Condemnor”  shall have the meaning given such term in theLease.

##  

# 1.23         “ConsolidatedFinancials”  shall mean for anyfiscal year or any interim period of any Person, annual or interim financialstatements of such Person prepared on a consolidated basis, including suchPerson’s consolidated balance sheet and the related statements of income andcash flows, all in reasonable detail, and setting forth in comparative form thecorresponding figures for the corresponding period in the preceding fiscalyear, and prepared in accordance with the Accounting Principles throughout theperiods reflected or if such Person’s principal place of business is the UnitedKingdom, in accordance with generally accepted accounting principles, asadopted in the United Kingdom, consistently applied throughout the periodsreflected provided that any such financial statement which is audited shallcontain a reconciliation of any differences between such accounting principlesand Accounting Principles.

##  

# 1.24         “ConsumerPrice Index”  shall mean the ConsumerPrice Index for all Urban Consumers, U.S. City Average, published by the UnitedStates Bureau of Labor Statistics.

##  

# 1.25         “ControllingInterest”  shall mean the possession,directly or indirectly, of the power to direct or cause the direction of thebusiness, management or policies of such Person.

##  

# 1.26         “DebtService Coverage Ratio”  shall mean,with respect to any loan or other debt secured by an Authorized Mortgage, thequotient obtained by dividing (a) the NOI of the properties securing such loanor other debt for the twelve (12) months ending on such date by (b) regularlyscheduled interest and principal payments projected to be paid thereunderduring the first (1st) twelve (12)months after the first day of the month next after the date on which suchAuthorized Mortgage is granted divided.

##  

# 1.27          “Deposit”  shall have the meaning given such term in Section17.5.

##  

# 1.28         “DisbursementRate”  shall mean a per annum rateequal to the greater of (i) the sum of the per annum rate for twenty (20) yearU.S. Treasury Obligations as published in The Wall Street Journal, plusthree hundred (300) basis points and (ii) ten percent (10%).

##  

# 1.29         “EffectiveDate”  shall mean the date hereof.

##  

# 1.30         “EnvironmentalLaws”  shall have the meaning givensuch term in Section 24.2(b).

##  

# 1.31         “EnvironmentalNotice”  shall have the meaning givensuch terms in Section 24.2(a).

##  

# 1.32         “ExpirationDate”  shall mean the date on whichthe Term shall expire.

 

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# 1.33         “FiscalMonth”  shall mean each calendarmonth in the Term or each partial calendar month in the Term.

##  

# 1.34         “Fiscal Year”  shall mean each calendar year in the Term andeach partial calendar year in the Term.

##  

# 1.35         “Furniture,Fixtures and Equipment” or “FF&E”  shall mean, collectively, all furniture,furnishings and equipment (except Operating Equipment and real propertyfixtures) now or hereafter located and installed in or about the Hotels whichare used in the operation thereof as hotels in accordance with the standardsset forth in this Agreement, including, without limitation (i) officefurnishings and equipment; (ii) specialized hotel equipment necessary for theoperation of any portion of the Building as a Staybridge Suites hotel, includingequipment for kitchens, laundries, dry cleaning facilities, bars, restaurants,public rooms, commercial space, parking areas, and recreational facilities; and(iii) all other furnishings and equipment hereafter located and installed in orabout the Buildings which are used in the operation of the Buildings as aStaybridge Suites hotel in accordance with the standards set forth in thisAgreement.

##  

# 1.36         “GovernmentAgencies”  shall mean any court,agency, authority, board (including, without limitation, environmentalprotection, planning and zoning), bureau, commission, department, office orinstrumentality of any nature whatsoever of any governmental orquasi-governmental unit of the United States or any state or any county or anypolitical subdivision of any of the foregoing, whether now or hereafter inexistence, having jurisdiction over Owner, the Sites or the Hotels.

##  

# 1.37         “GrossRevenues”  shall mean for any periodwith respect to each Hotel, all revenues and income of any nature deriveddirectly or indirectly from such Hotel or from the use or operation thereof,including without limitation room sales; food and beverage sales (regardless ofwhether Owner, Manager or any of their Affiliates own the items being sold);telephone, telegraph, fax and internet revenues; rental or other payments fromlessees, subleases, concessionaires and others occupying or using space orrendering services at such Hotel (but not the gross receipts of such lessees,subleases or concessionaires); and the actual cash proceeds of businessinterruption, use, occupancy or similar insurance; provided, however,that Gross Revenues shall not include the following (and there shall beappropriate deductions made in determining Gross Revenues for):  gratuities or service charges in the natureof a gratuity added to a customer’s bill; federal, state or municipal excise,sales or use taxes or any other taxes collected directly from patrons or guestsor included as part of the sales price of any goods or services; interestreceived or accrued with respect to the funds in the Reserve Account or (otherthan for purposes of calculating the Incentive Management Fee and the ResidualDistribution) the other operating accounts of the Hotels; any refunds, rebates,discounts and credits of a similar nature, given, paid or returned in thecourse of obtaining Gross Revenues or components thereof; insurance proceeds(other than proceeds from business interruption or other loss of incomeinsurance; condemnation proceeds (other than for a temporary taking); creditsor refunds made to customers, guests or patrons; sums and credits received byOwner for lost or damaged merchandise; proceeds from the sale or otherdisposition of a Hotel, any part thereof, of 

 

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## FF&E or any other assetsof the Hotels; or proceeds of any financing or re-financing; the InitialWorking Capital and any other matters specifically excluded from Gross Revenuespursuant to this Agreement.

##  

# 1.38         “Guarantor”  shall mean the Guarantor under the Guaranty.

##  

# 1.39         “Guaranty”  shall mean the Guaranty Agreement of evendate herewith made by IHG for the benefit of, interalia, Owner,as the same may be amended, supplemented or replaced from time to time.

##  

# 1.40         “HazardousSubstances”  shall mean anysubstance:

##  

# (a)           the presence ofwhich requires or may hereafter require notification, investigation orremediation under any federal, state or local statute, regulation, rule,ordinance, order, action or policy; or

####  

# (b)           which is orbecomes defined as a “hazardous waste,” “hazardous material” or “hazardoussubstance” or “pollutant” or “contaminant” under any present or future federal,state or local statute, regulation, rule or ordinance or amendments theretoincluding, without limitation, the Comprehensive Environmental Response,Compensation and Liability Act (42 U.S.C. Section 9601 etseq.)and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 etseq.) and the regulations promulgated thereunder; or

####  

# (c)           which is toxic,explosive, corrosive, flammable, infectious, radioactive, carcinogenic,mutagenic or otherwise hazardous and is or becomes regulated by anygovernmental authority, agency, department, commission, board, agency orinstrumentality of the United States, any state of the United States, or anypolitical subdivision thereof; or

####  

# (d)           the presence ofwhich at a Hotel causes or materially threatens to cause an unlawful nuisanceupon such Hotel or to adjacent properties or poses or materially threatens topose a hazard to such Hotel or to the health or safety of persons on or aboutsuch Hotel; or

####  

# (e)           withoutlimitation, which contains gasoline, diesel fuel or other petroleumhydrocarbons or volatile organic compounds; or

####  

# (f)            withoutlimitation, which contains polychlorinated biphenyls (PCBs) or asbestos or ureaformaldehyde foam insulation; or

####  

# (g)           withoutlimitation, which contains or emits radioactive particles, waves or material;or

####  

# (h)           withoutlimitation, constitutes materials which are now or may hereafter be subject toregulation pursuant to the Material Waste Tracking Act of 1988, or anyapplicable laws promulgated by any Government Agencies.

####  

# 1.41         “Hotel”  shall mean each Hotel located at a Siteincluding all of the Owner’s interest in such Site, the Building there, the Furniture,Fixtures and Equipment there, the Operating 

 

6

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## Equipment there and theOperating Supplies there; provided, however, upon the terminationof the Agreement with respect to less than all of the Hotels, pursuant to theterms hereof or otherwise, the term “Hotel” shall, with respect to theobligation of the parties thereafter accruing, only refer to a Hotel withrespect to which this Agreement is in full force and effect.

##  

# 1.42         “HPT”  shall mean Hospitality Properties Trust, aMaryland real estate investment trust, together with its successors andpermitted assigns.

##  

# 1.43         “IHG”  shall mean Intercontinental Hotels Group PLC,its successors and assigns.

##  

# 1.44         “IncentiveManagement Fee”  shall mean for any FiscalYear, fifty percent (50%) of the excess, if any, of Gross Revenues from all ofthe Hotels in excess of the applications thereof made pursuant to Sections10.1(a) through and including 10(n).

##  

# 1.45         “InitialTerm”  shall mean the periodcommencing on the Effective Date and ending on the last day of the month inwhich occurs the day that is twenty (20) years after the Effective Date.

##  

# 1.46         “InitialWorking Capital”  shall have themeaning given to such term in Section 5.1.

##  

# 1.47         “InsuranceRequirements”  shall mean all termsof any insurance policy required by this Agreement and all requirements of theissuer of any such policy and all orders, rules and regulations and any otherrequirements of the National Board of Fire Underwriters (or any other body exercisingsimilar functions) binding upon the Hotels.

##  

# 1.48         “InterestRate”  shall mean a rate, not toexceed the maximum legal interest rate, equal to the greater of (i) twelve(12%) percent per annum and (ii) two percent (2%) per annum in excess of the DisbursementRate determined as of the first day that interest accrues on any amount towhich such Interest Rate is to be applied.

##  

# 1.49         “Lease”  shall mean the Lease Agreement dated as ofthe Effective Date, by and between HPT IHG Properties Trust and Owner, as thesame may be amended from time to time in accordance with the terms of thisAgreement.

##  

# 1.50         “LegalRequirements”  shall mean allfederal, state, county, municipal and other governmental statutes, laws, rules,orders, regulations, ordinances, judgments, decrees, injunctions andrequirements affecting Owner(excluding any requirements which affect Owner’sstatus as a real estate investment trust), a Hotel or the maintenance,construction, alteration, management or operation thereof, whether now or hereafterenacted or in existence, including, without limitation, (a) all permits,licenses, authorizations, certificates and regulations necessary to operate aHotel, (b) all covenants, agreements, restrictions and encumbrances, (c) allEnvironmental Laws and (d) the outcome of any Arbitration.

##  

# 1.51         “ManagementFees”  shall mean, collectively, theBase Management Fee and the Incentive Management Fee.

 

7

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# 1.52         “Manager”  shall have the meaning given such term in thepreamble to this Agreement.

##  

# 1.53         “ManagerDefault”  shall mean a Manager Eventof Default or any other circumstances with which the giving of notice, thepassage of time or both would constitute a Manager Event of Default orotherwise entitle Owner to terminate this Agreement in its entirety pursuant tothe terms hereof.

##  

# 1.54         “ManagerEvent of Default”  shall have themeaning given such term in Section 17.1.

##  

# 1.55         “MaterialRepair”  shall mean a Repair the costwhich exceeds $250,000; provided, however, on January 1 of eachyear starting in 2005 said $250,000 shall be adjusted to reflect the percentagechange in the Consumer Price Index since the prior January 1.

##  

# 1.56         “NewManagement Agreement”  shall have themeaning given such term in Section 4.4.

##  

# 1.57         “NOI”  shall mean, with respect to any property, forany period, the Gross Operating Profit (as defined in the Uniform System ofAccounts) of such property for such period net of, for such period and suchproperty, real and personal property taxes and casualty and liability insurancepremiums, an imputed reserve for capital replacements equal to five percent(5%) of gross revenues, an imputed management fee equal to three percent (3%)of gross revenues and an imputed royalty fee of five percent (5%) of roomrevenues.

##  

# 1.58         “Officer’sCertificate”  shall mean as to anyPerson, a certificate of the chief executive officer, chief financial officeror chief accounting officer of such Person, duly authorized, accompanying thefinancial statements required to be delivered by such Person pursuant to Sections8.1 and 17.4, in which such officer shall certify to such officer’sbest knowledge (a) that such statements have been properly prepared inaccordance with the Accounting Principles, (b) in the event that the certifyingparty is an officer of IHG or another Guarantor, that such statements are true,correct and complete in all material respects and fairly present theconsolidated financial condition of such Person at and as of the dates thereofand the results of its and their operations for the periods covered thereby andthat there is no default on the part of the Guarantor under the Guaranty, and(c) in the event that the certifying party is an officer of Manager and thecertificate is being given in such capacity, that such statements fairlypresent the financial operation of the Hotels.

##  

# 1.59         “OpeningDate”  shall mean for each Hotel, thedate set forth as such on Exhibit B for such Hotel.

##  

# 1.60         “OperatingCost(s)”  shall mean, collectively,all costs and expenses of the Hotels (regardless of whether the same isincurred by Owner, Purchaser or Manager) that are normally charged as anoperating expense under Accounting Principles, including, without limitation:

##  

# (i)            the cost ofOperating Supplies, wages, salaries and employee fringe benefits, advertisingand promotional expenses, the cost of personnel training programs, utility 

 

8

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##### and energy costs, operatinglicenses and permits, maintenance costs, and equipment rentals;

#####  

# (ii)           allexpenditures made for maintenance and repairs to keep the Hotel in goodcondition and repair (other than Capital Replacements);

#####  

# (iii)          premiums forinsurance required hereunder;

#####  

# (iv)          the ServicesFees;

#####  

# (v)           real estate andpersonal property taxes and expenses except to the extent expressly specifiedotherwise herein;

#####  

# (vi)          audit, legaland accounting fees and expenses except to the extent expressly specifiedotherwise herein; and

#####  

# (vii)         rent or leasepayment for equipment used at the Hotels in the operation thereof.

#####  

Notwithstanding anything contained herein to the contrary, OperatingCosts shall exclude:  (a) the BaseManagement Fee and the Incentive Management Fee; (b) items expressly excludedfrom Operating Costs pursuant to the terms hereof; (c) items for which Manageror its Affiliates are to indemnify Purchaser or Owner; (d) items for whichOwner or its Affiliates are to indemnify Manager (e) items for which Manager orits Affiliates has expenses agreed under the Transaction Documents to be liableat its own cost and expense; (f) amounts payable to Owner or its Affiliatesunder the Purchase Agreement or the Transaction Documents or for periods notincluded in the Term; (g) any reimbursement of advances made by Manager orOwner; (h) the cost of Capital Replacements; (i) the Minimum Rent and theAdditional Rent under the Lease; (j) debt service on any loan or other debtsecured by an Authorized Mortgage or other financing obtained by Purchaser,Owner or Manager other than equipment financing permitted hereunder; and (k)except as provided in Sections 2.2, 6.1 or 11.1, the cost ofproviding any services by the Manager or its Affiliates using their ownpersonnel to the Hotels which are not performed at the Hotels; and (l) any costincurred in connection with the sale of the Hotels from Manager to Ownerincluding, without limitation, any expense incurred in connection withperforming obligations under the Purchase Agreement or any agreement,instrument, indemnity or undertaking executed and delivered by any IHG Party inconnection with the Closing thereunder.

 

# 1.61         “OperatingEquipment”  shall have the meaninggiven to the term “Property and Equipment” under the Uniform System ofAccounts.

##  

# 1.62         “OperatingProfit”  shall mean for any period,the excess, if any, of Gross Revenues for all of the Hotels for such periodover the sum of Operating Costs for such Period.

##  

# 1.63         “OperatingStandards”  shall have the meaninggiven such term in Section 2.1.

##  

# 1.64         “OperatingSupplies”  shall have the meaninggiven to the term “Inventories” under the Uniform System of Accounts.

##  

# 1.65         “Owner”  shall have the meaning given such term in thepreamble to this Agreement and shall include its successors and assigns.

 

9

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# 1.66         “Owner’s Percentage Priority” shall mean, for each Fiscal Year after the 2004 Fiscal Year, an amount,not less than zero ($0) equal to the aggregate of the sum of seven and one-halfpercent (7.5%) of the Gross Revenues of each Hotel for such Fiscal Year inexcess of the Gross Revenues for such Hotel for its Base Year.

##  

# 1.67         “Owner’sPriority”  shall mean an annualamount equal to the sum of (a) Sixteen Million Eight Hundred Seventy TwoThousand Dollars ($16,872,000) per annum plus, (b) effective on the date ofeach disbursement by Purchaser or Owner pursuant to Sections 5.2 (c), 15.2(in excess of net insurance proceeds) or 16.2 (in excess of the Award)hereof, an amount equal to the amount so disbursed multiplied by theDisbursement Rate (determined as of the dates on which such sums are advanced)plus, (c) effective as of the first day of the first Renewal Term, the amount,if any, to be added to the Owner’s Priority pursuant to Sections 17.5(b)or 17.5(d). Owner’s Priority shall be subject to further adjustment asprovided in Section 15.1(c).

##  

# 1.68         “Parent”  shall mean with respect to any Person, anyPerson who owns directly, or indirectly through one or more Subsidiaries orAffiliates, greater than fifty percent (50%) of the voting or beneficialinterest in, or otherwise has the right or power (whether by contract, throughownership of securities or otherwise) to control, such Person.

##  

# 1.69         “Person”  shall mean any individual or entity, and theheirs, executors, administrators, legal representatives, successors and assignsof such individual or entity where the context so admits.

##  

# 1.70         “PledgedHotels”  shall mean, with respect toany loan or other debt secured by an Authorized Mortgage, collectively, theHotels which secure such loan or other debt.

##  

# 1.71         “PriorityCoverage Ratio”  shall mean for anyperiod, for any Hotel or group of Hotels, the quotient of (a) the excess ofGross Revenue for such Hotel or group of Hotels for such period over amountsdistributed or applied for such period pursuant to Sections 10.1(a), (b),(f) (h) and (i), of this Agreement allocated to such Hotel or groupof Hotels (as applicable), divided by (b) the sum of the Owner’s Priorityallocated to such Hotel or group of Hotels (as applicable)for such period, plusthe Owner’s Percentage Priority for such period allocated to such Hotels orgroup of Hotel (as applicable), plus, for purposes of Section 17.5(b)only, any increase in the Owner’s Priority that will occur upon the return ofthe Deposit to Manager pursuant to that Section.

##  

# 1.72         “PurchaseAgreement”  shall mean that certainPurchase and Sale Agreement between HPT and Manager or its Affiliate(s)pursuant to which Purchaser has on the Effective Date acquired the Hotels fromManager or its Affiliate(s).

##  

# 1.73         “Purchaser”  shall mean the Landlord under the Lease.

##  

# 1.74         “RenewalTerms”  shall mean any period ofyears extending the Term of this Agreement, commencing upon the expiration ofthe Initial Term or any extensions thereto, as provided in Article 3.

##  

# 1.75         “Repairs”  shall have the meaning given such term in Section7.6.

 

10

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# 1.76         “ReplacementProperty”  shall mean a StaybridgeSuite hotel or other type of hotel mutually acceptable to the parties acquiredby Purchaser in substitution for a Hotel with respect to which this Agreementwas terminated pursuant to Section 16.1.

##  

# 1.77         “ReservationSystem”  shall mean a computerizednetwork of high speed terrestrial and satellite-linked hardware and data linesconnecting hotels, central reservation centers, data processing centers andtravel agencies which provides reservation services to the Staybridge Suiteshotel chain in North America.

##  

# 1.78         “ReserveAccount”  shall mean aninterest-bearing account established for funds to be held in reserve forCapital Replacements in Purchaser’s name at a bank selected by Purchaser.

##  

# 1.79         “ReservePercentage”  shall mean with respectto each Hotel, the following percentages for the following periods:

 
| **Period after first day of  the Fiscal Month following****such Hotel’s Opening Date** | ** ** | **Reserve Percentage** | ** ** |
|---------------------------------------------------------------------------------------------|------------|------------------------|------------|
|                                                                                        |       |                   |       |
| 0 – 12 months                                                                          |       | 2                      | %          |
| 13 – 24 months                                                                         |       | 3                      | %          |
| 25 – 36 months                                                                         |       | 4                      | %          |
| 37th month and thereafter                                                              |       | 5                      | %          |

 

# 1.80         “ResidualDistribution”  shall mean amounts tobe distributed to Owner pursuant to Section 10.2.

##  

# 1.81         “RestrictedArea”  shall mean, for any Hotel, thearea around such Hotel depicted on Exhibit D.

##  

# 1.82         “RestrictedPeriod”  shall mean, for each Hotel,the period ending on the third (3rd) anniversary of the Effective Date.

##  

# 1.83         “Rooms Revenue”  shall mean all revenue derived from therental of guest rooms in a Hotel determined in accordance with the AccountingPrinciples.

##  

# 1.84         “SARA”  shall mean the Superfund Amendments andReauthorization Act of 1986.

##  

# 1.85         “SecuredObligations”  shall have the meaninggiven such term in Section 17.5.

##  

# 1.86         “ServicesFees”  shall mean the fees specifiedin Section 9.2.

##  

# 1.87         “Sites”  shall mean the parcels of real estate moreparticularly described on Exhibit A.

##  

# 1.88         “Subsidiary”  shall mean with respect to any Person, anyentity (a) in which such Person owns directly, or indirectly, greater thantwenty percent (20%) of the voting or beneficial interest or (b) which suchPerson otherwise has the right or power to control (whether by contract,through ownership of securities or otherwise).

 

11

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# 1.89         “SubstituteTenant”  shall have the meaning givenand term in Section 4.2.

##  

# 1.90         “SystemMarks”  shall mean all service marks,trademarks, copyrights, trade names, logo types, commercial symbols, patents orother similar rights or registrations now or hereafter held, applied for orlicensed by Manager or any Affiliate of Manager in connection with theStaybridge Suites brand of hotels.

##  

## 1.91         “Term”  shall mean the term of this Agreement as itmay be extended or terminated.

##  

# 1.92         “TransactionDocuments”  shall mean, collectively,this Agreement, the Purchase Agreement, any agreement, instrument, indemnity orundertaking executed and delivered by an IHG Party in connection with theClosing, the Guaranty and the Collateral Agency Agreement.

##  

# 1.93         “TransferredHotels”  shall have the meaning givensuch term in Section 4.4.

##  

# 1.94         “UniformSystem of Accounts”  shall mean theUniform System of Accounts for the Lodging Industry, Ninth Revised Edition,1996, as published by the Educational Institute of the American Hotel and MotelAssociation, as it may be amended from time to time.

##  

# 1.95         “UltimateParent”  shall mean, with respect toany Person, each Parent of such Person who in turn has no Parent.

##  

# 1.96         “Unsuitablefor Its Permitted Use”  shall meanwith 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 beoperated in the good faith judgment of Manager or Owner on a commerciallypracticable basis and it cannot reasonably be expected to be restored tosubstantially the same condition as existed immediately before such damage ordestruction and otherwise as required under Article 15 hereof, usingonly the net proceeds of insurance obtained in connection therewith and otherfunds that Owner or Manager elect to provide pursuant to the terms of Article15 hereof within twelve (12) months following such damage or destruction orsuch shorter period of time as to which business interruption insurance isavailable to cover amounts payable to Owner hereunder and other costs relatedto the Hotel following such damage or destruction, or (b) as the result of apartial taking by Condemnation, such Hotel cannot be operated, in the goodfaith judgment of Manager or Owner on a commercially practicable basis in lightof then existing circumstances.

##  

# 1.97         “WorkingCapital”  shall mean funds that areused (or held for use) in the day-to-day operation of the business of theHotels, including, without limitation, change and petty cash funds, amountsdeposited in operating bank accounts, receivables, amounts deposited in payrollaccounts, prepaid expenses and funds required to maintain Operating Supplies,less accounts payable and accrued current liabilities, exclusive of any fundsin the Reserve Account.

##  

# 1.98         “YearlyBudget”  shall mean, with respect toeach Hotel, the annual operating budget of such Hotel, covering a Fiscal Year,as prepared by Manager in accordance with the Accounting Principles andapproved by Owner. Such budget shall include an operating 

 

12

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## budget, a business plan anda Capital Replacement Budget. Without limiting the generalityof the foregoing, the Yearly Budget shall include aprojection of the estimated financial results of the operation of each Hotelfor the Fiscal Year. Such projection shall project the estimated GrossRevenues, departmental profits, Operating Costs and Operating Profit for theFiscal Year for each Hotel.

 

ARTICLE 2

 

# SCOPE OF AGREEMENT

 

# 2.1           Engagement ofManager. Subject to the terms of this Agreement, Owner hereby grants toManager the sole and exclusive right to supervise and direct the management andoperation of the Hotels for the Term. Manager hereby accepts such grant andagrees that it will control, supervise and direct the management and operationof the Hotels, in an efficient and economical manner consistent with standardsprevailing in well managed hotels similar to the Hotels, including allactivities in connection therewith which are customary and usual to such anoperation (all of the foregoing, collectively, the “Operating Standards”).Subject to the terms and conditions of this Agreement, the Operating Standardsand the Brand Standards, Manager shall have the right to determine operatingpolicy, standards of operation, quality of service and any other mattersaffecting customer relations or management and operation of the Hotels. Withoutlimiting the generality of the foregoing, and in addition to the otherfunctions to be performed by Manager pursuant to this Agreement, Manager shall,in connection with the Hotels and in accordance with the Brand Standards, theOperating Standards and the terms of this Agreement, perform each of thefollowing functions, provided, however, except as otherwise setforth in this Agreement, the costs and expenses of performing the followingfunctions shall be Operating Costs:

##  

# (a)           Establish andrevise, as necessary, administrative policies and procedures, includingpolicies and procedures for the control of revenue and expenditures, for thepurchasing of supplies and services, for the control of credit, and for thescheduling of maintenance, and verify that the foregoing procedures areoperating in a sound manner.

####  

# (b)           Manageexpenditures to replenish Operating Supplies and Operating Equipment, makepayments on accounts payable and collect accounts receivable.

####  

# (c)           Arrange for andsupervise public relations and advertising and prepare marketing plans.

####  

# (d)           Procure allOperating Supplies and replacement Operating Equipment.

####  

# (e)           Provide, orcause to be provided, risk management services relating to the types ofinsurance required to be obtained or provided by Manager under this Agreement.

####  

# (f)            Reasonablycooperate (provided that except as herein expressly provided Manager shall notbe obligated to enter into any amendments of this Agreement or, unless Owneragrees to reimburse Manager therefore, to incur any material expense including anyinternal expenses) in any attempt(s) to: (i) effectuate a sale or othertransfer of a Hotel 

 

13

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#### subject to the terms of Sections 4.4and 4.5 of this Agreement; or (ii) to obtain any Authorized Mortgage.

####  

# (g)           Negotiate,enter into and administer service contracts and licenses for the operation ofthe Hotels, including, to the extent appropriate, contracts and licenses forhealth and safety systems maintenance, electricity, gas, telephone, cleaning,elevator and boiler maintenance, air conditioning maintenance, laundry and drycleaning, master television service, use of copyrighted materials (such asmusic and videos), entertainment and other services as Manager deems advisable.

####  

# (h)           Negotiate,enter into and administer contracts for the use of banquet and meetingfacilities and guest rooms by groups and individuals.

####  

# (i)            Take reasonableaction to collect and institute in its own name or in the name of Owner or aHotel, in each instance as Manager in its reasonable discretion deemsappropriate, legal actions or proceedings to collect charges, rent or otherincome derived from the operation of the Hotels or to oust or dispossessguests, tenants, members or other persons in possession therefrom, or to cancelor terminate any lease, license or concession agreement for the breach thereofor default thereunder by the tenant, licensee or concessionaire.

####  

# (j)            Makerepresentatives available to consult with and advise Owner or Owner’s designeeat Owner’s reasonable request concerning policies and procedures affecting theconduct of the business of the Hotels.

####  

# (k)           Collect andaccount for and remit to governmental authorities all applicable excise, sales,occupancy and use taxes or similar governmental charges collected by or at theHotels directly from guests, members or other patrons, or as part of the salesprice of any goods, services or displays, such as gross receipts, admission orsimilar or equivalent taxes, duties, levies or charges.

####  

# (l)            Keep Owneradvised of events which might reasonably be expected to have a material effecton the financial performance or value of any Hotel.

####  

# (m)          To the extentin Manager’s control, obtain and maintain all approvals necessary to use andoperate the Hotels in accordance with the Brand Standards, Operating Standardsand Legal Requirements.

####  

# (n)           Perform suchother tasks with respect to the Hotels as are generally performed by managersof similar hotels consistent with the Operating Standards and the BrandStandards.

####  

# 2.2           Additional Services. Any fees forservices not included in the Management Fees for the Hotels shall be consistentwith fees established for similar types of hotels managed by Manager or itsAffiliates. Any disputes under this Section 2.2 shall be resolved byArbitration.

 

14

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# 2.3           Use of Hotels. Manager shallnot use, and shall exercise commercially reasonable efforts to prevent the useof, the Hotels and Owner’s and Manager’s personal property used in connectionwith the Hotels, if any, for any unlawful purpose. Manager shall not commit,and shall use commercially reasonable efforts to prevent the commission of, anywaste at the Hotels. Manager shall not use, and shall use commerciallyreasonable efforts to prevent the use of, the Hotels in such a manner as willconstitute an unlawful nuisance thereon or therein. Manager shall usecommercially reasonable efforts to prevent the use of the Hotels in such amanner as might reasonably be expected to impair Owner’s or Purchaser’s titlethereto or any portion thereof or might reasonably be expected to give rise fora 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.

##  

# 2.4           Right toInspect. Manager shall permit Owner and its authorized representatives toinspect or show the Hotels during usual business hours upon not less thantwenty four (24) hours’ notice, provided that any inspection by Purchaser orits representatives shall not unreasonably interfere with the use and operationof the Hotels and further provided that in the event of an emergency asdetermined by Purchaser in its reasonable discretion, prior notice shall not berequired.

##  

# 2.5           Right of Offset. Manager shallnot offset against any amounts owed to Owner; provided, however,Manager may offset amounts which Owner has failed to fund in violation of Section5.2(c) against the amounts owed to Owner hereunder provided that aftergiving effect to such offset there shall still be paid to Owner an amountsufficient to pay regularly scheduled payments of interest and principal underany loan or other debt secured by an Authorized Mortgage and attributable tothe Pledged Hotels.

##  

# 2.6           Condition ofthe Hotels. Manager acknowledges receipt and delivery ofpossession of each Hotel, and Manager accepts each Hotel in its “as is”condition as of the Effective Date, subject to the rights of parties inpossession, the existing title, including all covenants, conditions,restrictions, reservations, mineral leases, easements and other matters ofrecord or that are visible or apparent on the Hotels, all applicable LegalRequirements, and such other matters which would be disclosed by an inspectionof the Hotels and the record title thereto or by an accurate survey thereof. MANAGERREPRESENTS THAT:  IT HAS INSPECTED THEHOTELS INCLUDING THE FF&E AND ALL OF THE FOREGOING AND HAS FOUND THECONDITION THEREOF SATISFACTORY AND IN COMPLIANCE WITH THE BRAND STANDARDS INALL MATERIAL RESPECTS; EXCEPT FOR CAPITAL REPLACEMENT TO BE MADE FROM TIME TOTIME USING FUNDS TO BE DEPOSITED IN THE RESERVE ACCOUNT PURSUANT TO SECTION5.2(a), MANAGER CURRENTLY DOES NOT ANTICIPATED THE NEED TO MAKE CAPITALREPLACEMENTS DURING THE FIRST FIVE YEARS OF THE TERM (PROVIDED, HOWEVER,SUCH REPRESENTATION IS NOT A GUARANTY OR WARRANTY THAT NO SUCH CAPITALREPLACEMENT WILL BE REQUIRED); AND IT IS NOT RELYING ON ANY REPRESENTATION ORWARRANTY OF OWNER, PURCHASER OR ANY OF THEIR AGENTS OR EMPLOYEES WITH RESPECTTO ANY OF THE MATTERS SET FORTH IN THIS SECTION. MANAGER WAIVES ANY CLAIM ORACTION AGAINST OWNER AND PURCHASER WITH RESPECT TO THE CONDITION OF THE HOTELS.

 

15

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## PURCHASER AND OWNER MAKE NOWARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE HOTELS ORANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANYPARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO THE QUALITY OF THE MATERIAL ORWORKMANSHIP THEREIN, LATENT OR PATENT.

 

ARTICLE 3

 

# TERM AND RENEWALS

#  

# 3.1           Term. The term ofthis Agreement shall be for a period beginning on the Effective Date andcontinuing for the Initial Term and any extension of the term hereof inaccordance with the provision of this Agreement, unless sooner terminated ashereinafter provided.

##  

# 3.2           Renewal Term. The Term maybe extended, at Manager’s option, for up to two (2) consecutive periods (each,a “Renewal Term”) of twelve (12) years and six (6) months each on notless than two (2) years’ prior notice to Owner. In the event Manager fails togive notice of its election not to exercise either of its options to extend theTerm on or before the date which is the day prior to the date that is two (2)years prior to the then Expiration Date, Manager shall be deemed to have exercisedthe applicable extension option. The terms and provisions of this Agreementwill remain in effect as stated herein during any Renewal Term except thatManager shall have no right to extend the Term beyond the Renewal Terms hereinprovided.

##  

# 3.3           Owner’s TerminationRight at End of Term. If Manager, gives notice of its election not toextend or if Manager shall have no further right to extend the Term, at anytime during the last two years of the Term, Owner may terminate this Agreementon not less than thirty (30) days’ prior written notice.

 

ARTICLE 4

 

# TITLE TO HOTEL

#  

# 4.1           Covenants ofTitle. During the Term, provided no Manager Default exists, Manager shallhave the right peaceably and quietly to operate the Hotels in accordance withthe terms of this Agreement, free from interference, disturbance and evictionby Owner or Purchaser or by any other Person or Persons claiming by, through orunder Owner or Purchaser, subject only to termination of this Agreement asherein provided. Except as may otherwise be provided herein, Owner, at Owner’sown expense (and not as an Operating Cost), shall prosecute all appropriateactions, judicial or otherwise, required to assure such quiet and peaceableoperation by Manager and shall pay and discharge any rental obligations underthe Lease. Without Manager’s written consent, which consent shall not beunreasonably withheld, Owner shall not enter into an agreement, covenant orencumbrance affecting title to the Hotels except in connection with AuthorizedMortgages and sales or transfers of the Hotels not prohibited hereby.

 

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# 4.2           Non-Disturbance. Purchaseragrees that in the event the Lease terminates prior to expiration or earliertermination of the Term, so long as (i) there exists no uncured Manager Eventof Default and (ii) Owner is not otherwise entitled to terminate thisAgreement: (a) Manager shall not be disturbed in its rights under thisAgreement by Purchaser; (b) Purchaser shall assume the obligations of Ownerunder this Agreement; and (c) Manager shall attorn to Purchaser and recognizePurchaser as the “Owner” under this Agreement. Purchaser shall have the rightto assign all of its right, title and interest in, to and under this Agreementto a new tenant (a “Substitute Tenant”) to which Purchaser shall leasethe Hotels (pursuant to a lease which imposes no greater risks, obligations,duties or liability on Manager than the Lease (assuming the same had not beenterminated) and for a term equal to the unexpired term of this Agreement) whichSubstitute Tenant shall expressly assume all of the Owner’s obligations underthis Agreement. Upon such assignment to, and assumption by, a SubstituteTenant, Purchaser shall be relieved of all future obligations arising underthis Agreement (other than any expressly imposed on Purchaser pursuant to Sections4.2 through and including 4.7), Manager shall attorn to theSubstitute Tenant and recognize the Substitute Tenant as the “Owner” under thisAgreement, and the term “Lease” as used in this Agreement shall be deemed torefer to such lease between Purchaser and the Substitute Tenant.

##  

# 4.3           Financing.

##  

# (a)           Purchaser shallbe entitled to encumber the Hotels or any of them with one or more AuthorizedMortgages which is expressly subordinate to this Agreement or in connectionwith which the following terms and conditions are satisfied:

####  

(i)            loan or other debtsecured by such Authorized Mortgage shall not be cross-collateralized withother property or hotels which are not managed or franchised by Manager, IHG ortheir respective Affiliates;

####  

(ii)           the principal amountsecured by such Authorized Mortgage shall not exceed the sum of seventy fivepercent (75%) (or, if less than four (4) Hotels secure such principal amount,sixty five percent (65%)) of the sum of the fair market value as of the date ofthe granting of such Authorized Mortgage of the Pledged Hotels and the otherproperties securing such principal amount;

####  

(iii)          as of the date of thegranting of such Authorized Mortgage, the Debt Service Coverage Ratioassociated with such loan or debt secured thereby shall not be less than (i)1.4 if fewer than four (4) Hotelssecure such loan or other debt or (ii) 1.3****iffour (4) or more Hotels secure such loan or other debt; and

####  

(iv)          the holder of suchAuthorized Mortgage shall execute and deliver to Manager (Manager agreeing tolikewise execute and deliver to such holder) a so-called subordination,non-disturbance and attornment agreement which shall provide that:

 

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(A)  this Agreement and Manager’srights hereunder are subject and subordinate to the Authorized Mortgage, thelien thereof, the rights of the holder thereof and to any and all advances madethereunder, interest thereon or costs incurred in connection therewith;

#####  

(B)   so long as this Agreement is infull force and effect and there exists no Manager Event of Default, Manager’srights under this Agreement shall not be disturbed by reason of suchsubordination or by reason of foreclosure of such Authorized Mortgage orreceipt of deed in lieu of foreclosure;

#####  

(C)   Manager shall attorn to theholder or the purchaser at any such foreclosure or the grantee of any such deed(each, a “Successor Purchaser”);

#####  

(D)  in the event of such attornment,the terms of this Agreement binding on Purchaser and Manager shall continue infull force and effect as a direct agreement between such Successor Purchaserand Manager, upon all the terms, conditions and covenants set forth herein,except that the Successor Purchaser shall not be (1) bound by any payment ofOwner’s Priority, Owner’s Percentage Priority or the Residual Distribution inadvance of when due; (2) bound by any amendment or modification of thisAgreement made after the date that Manager first had written notice of suchAuthorized Mortgage without the consent of the holder thereof; (3) liable inany way to Manager for any act or omission, neglect or default on the part ofPurchaser or Owner under this Agreement; (4) obligated to perform any work or improvementsto be done by Purchaser or Owner or to make any advances except for thoseadvances to be made pursuant to Section 5.2(c) from and after the dateon which such Successor Purchaser acquired the Hotel(s); or (5) subject to anycounterclaim or setoff which theretofore accrued to Manager against Purchaseror Owner;

#####  

(E)   In the event of a casualty orcondemnation affecting any Pledged Hotel which does not result in thetermination of this Agreement with respect to such Pledged Hotel, the netinsurance proceeds or Award shall be applied to the restoration of such Hotelas herein provided; and

#####  

(F)   Such other terms or arecustomary for similar agreements.

#####  

# (b)           In the eventless than all of the Hotels are to secure loan or other debt secured by anAuthorized Mortgage, Owner shall have the right to cause the Pledged Hotels tobe managed pursuant to a separate management agreement which agreement shall befor a term equal to the unexpired portion of the Term and otherwise onsubstantially the same terms of this Agreement except as otherwise providedherein provided that the Pledged Hotels in the aggregate and the remainingHotels in the aggregate shall have Priority Coverage Ratios for the 12-monthperiod ending on the last day of the month next prior to the date on which suchAuthorized Mortgage is granted such Priority 

 

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#### Coverage Ratios are equal toeach other or equal to, or greater than, 1.3. In connection with entering intosuch separate management agreement, the parties shall make appropriateallocations of Owner’s Priority, amounts in the Reserve Account, the Deposit(based on Exhibit C), the Working Capital, and any outstanding advancesmade by Owner, Manager or their respective Affiliates so that the obligationsallocable to the Hotels subject to such Authorized Mortgage shall not be duefrom the other Hotels and viceversa. The allocation of Owner’sPriority for each Hotel shall be proportional to the NOI of such Hotel for thethen most recently ended twelve (12) months relative to the NOI of all theother Hotels for such period. Without the consent of Manager, the holder of anyAuthorized Mortgage shall have the right to elect to be subject and subordinateto this Agreement, such subordination to be effective upon such terms andconditions as such holder may direct which are not inconsistent with theprovisions hereof.

####  

# 4.4           Sale of a Hotel. In the eventof a sale or transfer of any Hotel to an Affiliate of Purchaser, this Agreementshall remain in full force and effect without regard to such sale or transfer. Thefollowing shall apply each time Purchaser sells or otherwise transfers lessthan all of the Hotels other than to an Affiliate:

##  

# (a)           Subject to theterms of Section 4.7 and the execution or delivery of a New ManagementAgreement as provided below, this Agreement with respect to such Hotel(s) (the “TransferredHotels”) shall be terminated effective as of the date title is transferredto such Transferred Hotels.

####  

# (b)           Simultaneouslywith such termination, Manager and the transferee of the Transferred Hotels orOwner (if the Lease remains in full force and effect with respect to theTransferred Hotels) or any tenant under a new lease with respect to theTransferred Hotels (which new lease shall have a term equal to the thenunexpired term of the Lease and shall impose no greater liability,responsibility, or obligation on Manager than the Lease) shall enter into a newmanagement agreement (a “New Management Agreement”) with Manager onsubstantially the same terms as this Agreement except as otherwise providedherein for a term equal to the unexpired portion of the Term of this Agreement.

####  

# (c)           Manager,Purchaser and the transferee (or its tenant, acting reasonably, shall allocateamounts in the Reserve Account, the Deposit (based on Exhibit C) and theWorking Capital between the Transferred Hotels and the other Hotels. Theparties shall also make reasonable allocations with respect to Owner’sPriority, and any outstanding advances made by Owner, Manager or theirrespective Affiliates. The allocation of Owner’s Priority for each Hotel shallbe proportional to the NOI of such Hotel for the then most recently endedtwelve (12) months relative to the NOI of all the other Hotels for such period.Amounts which are allocated to the Transferred Hotels shall be transferred tothe transferee thereof to be held by Manager or such transferee (or its tenant)pursuant to the New Management Agreement.

####  

# (d)           Following suchsale or transfer, Owner, its Affiliates and the Hotels which are notTransferred Hotels shall have no responsibilities with respect to amounts thatare so 

 

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#### transferred and thetransferee, its tenant and their Affiliates and the Transferred Hotels shall haveno responsibility with respect to amounts which are not so transferred.

####  

# (e)           From and afterthe consummation of such sale or other transfer and compliance with the termshereof, the term “Hotels” as used herein shall not include the TransferredHotels.

####  

# (f)            Owner shall beresponsible to cause its Affiliates, any new tenant and the transferee toexecute and deliver the documents contemplated by this Section 4.4to be executed and delivered by them.

####  

# (g)           The Hotelswhich are to be Transferred Hotels in the aggregate and the remaining Hotels inthe aggregate shall have a Priority Coverage Ratios for the 12-month periodending on the last day of the month next prior to the date of such transferwhich are either (i) equal to each other or (ii) equal to, or greater than,1.3.

####  

# (h)           Not less thanten (10) days prior to commencing to market any Hotel for sale, Purchaser(unless it is a Successor Purchaser) shall solicit from Manager an offer topurchase such Hotel.

####  

# 4.5           Sale of All theHotels. If Purchaser sells or otherwise transfers all of the Hotels to asingle transferee in a single transaction, (a) the transferee shall assumePurchaser’s obligations hereunder and (b) Purchaser shall be released andrelieved from any and all obligation hereunder. In connection with suchtransfer, Owner may assign this Agreement, to the transferee or its Affiliate,and provided the assignee assumes all of Owner’s obligations hereunderthereafter accruing, Owner shall be released and relieved from all suchobligations.

##  

# 4.6           The Lease. The Leaseshall not be amended or modified in any way which would materially increaseManager’s obligations hereunder or materially reduce its rights hereunder. Inthe event of a conflict between the terms hereof and the terms of the Lease,the terms hereof shall govern.

##  

# 4.7           Restricted Sale. Except inconnection with a foreclosure of an Authorized Mortgage, neither Purchaser norOwner shall transfer its interest in any Hotel directly or indirectly, to anyPerson which: (i) is in control of or controlled by Persons who have beenconvicted of felonies; (ii) is a Competitor or an Affiliate of a Competitor; or(iii) lacks the financial capabilities to perform Owner’s obligationshereunder.

 

ARTICLE 5

 

# REQUIRED FUNDS

 

# 5.1           Working Capital. Manager shallcontribute to the Working Capital for the Hotels an amount reasonablysufficient to pay Operating Costs for the first thirty (30) days of operatingof the Hotels following the Effective Date (the “Initial Working Capital”)and (b) upon the execution and delivery hereof, pay to Owner the monthlyinstallment of Owner’s Priority for the month in which the Effective Dateoccurs. Promptly after the 

 

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## month in which the EffectiveDate occurs, the parties shall agree on the amount of the Initial WorkingCapital which Manager so contributed. After the first thirty (30) days ofoperating the Hotels, upon written notice from Manager, Owner shall advance anyadditional funds, over and above the Initial Working Capital, necessary to payOperating Costs (but not Owner’s Priority) as they come due. Any such requestby Manager shall be accompanied by a reasonably detailed explanation of thereasons for the request. All funds so advanced for Working Capital shall beutilized by Manager to pay Operating Costs as they come due. If Owner does notadvance such additional Working Capital within two (2) Business Days afternotice, Manager, as its exclusive remedy, shall have the right either to (i)advance such additional Working Capital or (ii) terminate this Agreement on ten(10) days’ advance written notice to Owner; provided, however,such notice of termination shall be void abinitio if Owneradvances the requested funds necessary to pay Operating Costs prior to the endof the tenth (10th) day after thereceipt of such termination notice. If Manager fails to either make suchadvance or give notice of termination within ten (10) days, after theexpiration of such two (2) Business Days, Owner may elect by written notice toManager to terminate this Agreement, which termination shall be effective ten(10) days after the date such notice is given. Upon the expiration or earliertermination of the Term, provided there is no uncured Manager Default, afterthe payment of all Operating Costs and all amounts owed to Owner, Manager shallbe entitled to retain the Initial Working Capital.

##  

# 5.2           Reserve Account.

##  

### (a)           Manager shalltransfer from the Bank Accounts to the Reserve Account in cash on or before the25th day of each Fiscal Month, beginning on August25, 2003 and continuing for each and every month during the Term an aggregateamount equal to the sum of each Hotel’s Reserve Percentage of its GrossRevenues for the prior Fiscal Month. Amounts in the Reserve Account are to payfor Capital Replacements undertaken after the Effective Date required tomaintain any and all of the Hotels in accordance with the Operating Standardsand the Brand Standards; provided, however, notwithstanding anything inthis Agreement to the contrary, no additional cost or expense shall be incurredor paid in connection with any Capital Replacements made during the last two(2) years of the Term to the extent attributable solely to complying with theBrand Standards. The amounts so paid into the Reserve Account shall berecorded on the Hotels’ books of account as “Reserve for FF&E Replacements.”  Except as expressly provided herein, anyexpenditures for Capital Replacements during any Fiscal Year which have beenapproved in the yearly Capital Replacements Budget may be made without Owner’sfurther approval and, to the extent available, may be made by Manager from theReserve Account. Any amounts remaining in the Reserve Account at the close ofeach Fiscal Year will be carried forward and retained in the Reserve Account.Any and all portions of the Hotels which are scrapped or removed in connectionwith the making of any major or non-major repairs, renovations, additions,alterations, improvements, removals or replacements at the Hotels shall bedisposed of by Manager and any net proceeds thereof shall be deposited in theReserve Account and not included in Gross Revenues. In addition, any proceedsfrom the sale of FF&E no longer necessary to the operation of the Hotelsshall be added to the Reserve Account. Manager shall be entitled to use fundsin the Reserve Account to make 

 

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### Capital Replacements at anyand all of the Hotels regardless of the Hotel from which such funds originate.

###  

### (b)           Manager shallbe the only party entitled to withdraw funds from the Reserve Account until aManager Default shall occur.

###  

### (c)           If, at anytime, the funds in the Reserve Account shall be insufficient for CapitalReplacements which are set forth in the Capital Replacement Budget or requiredto comply with the Operating Standards, Brand Standards, Insurance Requirementsor Legal Requirements, Manager shall give Owner written notice thereof, whichnotice shall set forth, in reasonable detail, the nature of the requiredaction, the estimated cost thereof (including the amount which is in excess ofthe amount of funds in such Reserve Account) and such other information withrespect thereto as Owner may reasonably require. Provided that there is then nouncured Manager Default, Owner shall, within twenty (20) Business Days aftersuch notice, disburse (or cause Purchaser to disburse) such required funds toManager for deposit into the Reserve Account. In such event Owner’s Priorityshall be adjusted as provided for herein in the definition of Owner’s Priority.

###  

### (d)           If Owner shallfail to disburse (or cause Purchaser to disburse) funds to Manager for depositinto the Reserve Account in violation of Section 5.2(c), which failurecontinues for five (5) days after the giving of notice from Manager to Owner,in addition to Manager’s other remedies hereunder or under the HPT Guaranty (asdefined in the Purchase Agreement) Manager shall be entitled, but notobligated, to deposit in the Reserve Account the amount of funds which Owner sofailed to disburse.

###  

### (e)           Upon theexpiration or earlier termination of the Term, Manager shall disburse to Owner,or as Owner shall direct, all amounts remaining in the Reserve Account afterpayments of all expenses on account of Capital Replacements incurred by Managerduring the Term.

###  

# 5.3           AdditionalRequirements for Reserve. All expenditures from the Reserve Accountshall be (as to both the amount of each such expenditure and the timingthereof) both reasonable and necessary given the objective that the Hotels willbe maintained and operated to a standard comparable to competitive propertiesand in accordance with the Operating Standards and the Brand Standards.

##  

# 5.4           Ownership ofReplacements. All Capital Replacements made pursuant to thisAgreement and all amounts in the Reserve Account, shall be the property ofOwner or Purchaser, as applicable, as provided under the Lease.

##  

# 5.5           Manager ReserveAdvances. Manager shall have the right to propose certainCapital Replacements not required by the Operating Standards or the Brand Standardswhich Manager reasonably believes would maximize the profit potential of one ormore of the Hotels. If Owner does not agree to provide funds for the same,Manager shall have the right to contribute to the Reserve Account the cost ofsame and cause such Capital Replacement to be made.

 

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# 5.6           No AdditionalContributions. Except as otherwise expressly provided in thisAgreement, Owner shall not, under any circumstances, be required to, or providefunds to, build or rebuild any improvement at the Hotel, or to make anyrepairs, replacements, alterations, restorations or renewals of any nature ordescription to the Hotel, whether ordinary or extraordinary, structural ornonstructural, foreseen or unforeseen.

 

ARTICLE 6

 

# BRAND STANDARDS AND MANAGER’S CONTROL

 

# 6.1           Brand Standards. Manager shalloperate each Hotel as a Staybridge Suites hotel in accordance with the terms ofthis Agreement, the Brand Standards and the Operating Standards. Manager andits affiliates which own the System Marks and Brand Standards reserve the rightto revise and amend the System Marks or Brand Standards from time to time on anon-discriminatory basis; provided, however, at any time whileOwner and its Affiliates own or lease at least fifty percent (50%) of thehotels comprising the Brand, no revision or amendment to the Brand Standards orSystem Marks shall be made without Owner’s prior written approval, whichapproval shall not be unreasonably withheld, conditioned or delayed and shallbe deemed given if no written objection thereto is given by Owner within twenty(20) days after receipt of a request for such approval given by Manager. Owneralso agrees that the Hotel will be required to participate in Brand-wide orarea programs that are implemented after the date hereof from time to time byManager or its Affiliates with respect to the Brand. The allocable cost ofparticipation in such programs (to the extent not duplicative of the servicesfor which the Management Fee is being paid, shall be Operating Costs of theHotel to the extent the same are consistent in all material respects with theamounts for the same included in the applicable Yearly Budget.

##  

# 6.2           Manager’sControl. Subject to the terms of this Agreement, Manager shall haveuninterrupted control over the operation of the Hotel. Owner acknowledges thatunder this Agreement, Owner delegates all authorities and responsibilities foroperation of the Hotel to Manager provided, however, Managershall not be entitled to make any agreement or commitment binding on Ownerexcept as herein expressly provided. Manager shall be solely responsible fordetermining room rates, food and beverage menu prices, charges to guests forother Hotel services and the terms of guest occupancy and admittance to theHotels, use of rooms for commercial purposes, policies relating toentertainment, labor policies, publicity and promotion activities andtechnology services and equipment to be used in the Hotel. Manager shall reviewwith Owner from time to time, and during the annual review of the YearlyBudget, material changes in policies, practices and procedures and their effecton the financial performance of the Hotels.

##  

# 6.3           Arbitration. Any disputeunder this Article 6 shall be resolved by Arbitration.

 

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ARTICLE 7

 

# OPERATION OF THE HOTEL

 

# 7.1           Permits. Manager, asan Operating Cost, shall obtain and maintain in its name (or Owner’s orPurchaser’s name to the extent the same is required by applicable LegalRequirements)in full force and effect all necessary operating licenses andpermits, including liquor, bar, restaurant, sign and hotel licenses, as may berequired for the operation of the Hotels in accordance with this Agreement, theBrand Standards and the Operating Standards. Owner and/or Purchaser shallreasonably cooperate with Manager in obtaining any such operating licenses orpermits. Any costs or expenses (including, without limitation, reasonableattorneys’ fees) incurred by Owner and/or Purchaser in connection therewithshall constitute Operating Costs. Manager will use reasonable efforts to complywith all Legal Requirements imposed in connection with any such licenses andpermits and at all times use commercially reasonable efforts to manage theHotels in accordance with, and cause the Hotels to comply with, such LegalRequirements, any other Legal Requirements and Insurance Requirementsapplicable to any Hotel.

##  

# 7.2           Equipment andSupplies. Manager shall procure pursuant to the YearlyBudgets all such Operating Supplies and Operating Equipment as Manager deemsnecessary for the normal and ordinary course of operation of the Hotel inaccordance with the Brand Standards and Operating Standards.

##  

# 7.3           Personnel.

##  

# (a)           All personnelemployed at the Hotels will be employees of Manager. Manager will hire,supervise, direct, discharge and determine the compensation, other benefits andterms of employment of all personnel working in the Hotels. Manager, in theexercise of reasonable discretion and business judgment, will be the sole judgeof the fitness and qualifications of such personnel and is vested with absolutediscretion in the hiring, supervising, directing, discharging and determiningthe compensation, other benefits and terms of employment of such personnel. Insuch discretion, Manager may elect to staff certain functions at offsite orregional locations, or to provide employee benefits on a Brand-wide or othermulti-location basis and shall equitably allocate the employee costs among thehotels participating in such staffing or benefits. Owner shall not interferewith the performance of employment duties of, or give orders or instructionsto, any personnel employed at the Hotel. Except as otherwise provided herein,Operating Costs will include all expenses, costs or charges which are allocableto the Term and are related to or incidental to any on-site personnel employedin the operation of the Hotels (including, without limitation, salaries, wages,other compensation, benefit contributions and premiums, net of amounts paid byHotel employees; stop-loss insurance premiums; group health plan benefitpayments in excess of contribution and premium amounts paid by Hotel employees;pay for vacation, holidays, sick leave and other leaves of absence; workers’compensation premiums; workers compensation benefit payments paid by Manager;reasonable and customary administrative fees and taxes; and severance benefitsapplicable under Manager’s then current human resources policies).

####  

# (b)           Manager shallcomply with all Legal Requirements pertaining to labor relations and thepersonnel employed by it pursuant to this Agreement. Manager shall not enterinto any 

 

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#### written employmentagreements with any person which purport to bind the Owner without obtainingOwner’s consent, which consent may be withheld in Owner’s sole and absolutediscretion. If either Manager or Owner shall be required, pursuant to any suchLegal Requirement, to recognize a labor union or to enter into collectivebargaining with a labor union, the party so required shall promptly notify theother. The terms of this Section 7.3(b) shall survive the expiration orearlier termination of this Agreement.

####  

# (c)                                  No employee ofthe Hotels shall reside at the Hotels without the prior written approval ofOwner. No person shall be given gratuitous accommodations or services withoutprior approval of Owner except in accordance with usual practices of the Brandand the hotel and travel industry.

####  

# (d)          To the extent consistent with the applicable Yearly Budget, OperatingCost may include up to $5,000 per Hotel, per Fiscal Year for travel relatedexpense of Manager’s senior operational personnel in connection with theirvisits to the Hotel. Said $5,000 shall be adjusted every January 1 starting in2005 to reflect the percentage change in the Consumer Price Index since theprior January 1.

####  

# 7.4          Sales, Marketing and Advertising. Manager shall and/or shallcause its Affiliates to:

##  

# (a)          advertise and promote the business of the Hotels;

####  

# (b)          institute and supervise a sales and marketing program for the Hotels;

####  

# (c)          include the Hotels in Manager’s and its Affiliates’ Brand relatedlocal, regional and worldwide promotional and advertising programs;

####  

# (d)          represent the Hotels through Manager’s and its Affiliates’ worldwidesales offices;

####  

# (e)            include the Hotels in theHotels loyalty program, presently called “Priority Club”, including, withoutlimitation, inclusion of the Hotels in promotional materials distributed toparticipants of such program;

####  

# (f)           coordinate the Hotels’ participation in travel programs marketed byairlines, travel agents and government tourist departments when Managerdetermines such participation to be advisable; and

####  

# (g)          cause the Hotels to participate in sales and promotional campaigns andactivities involving complimentary rooms, food and beverages to bona fidetravel agents, tourist officials and airline representatives where Manager hasdetermined that such participation is in furtherance of the Hotels’ businessand is customary in the travel industry or in the practices and policies ofManager.

####  

# 7.5          Reservation and Communication Services. The Hotels shall beincluded as participating hotels on the Reservation System operated by Manager,its Affiliates or agent(s) for the benefit of Staybridge Suites hotels from andafter the Effective Date. Manager will provide the following services to theHotels through the Reservation System:

 

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#### (a)                                  acceptance ofreservations for the Hotels through the Reservation System from individualcustomers and groups who contact Manager (or its Affiliates or agents) directlyor through a regional reservation or sale office of Manager or its Affiliatesor agents;

####  

#### (b)                                 acceptance ofreservations for the Hotels through other hotels in the Brand;

####  

#### (c)                                  acceptance ofreservations for the Hotels through the reservation systems of other providersin the travel industry, including, without limitation, global distributionsystems and general sales agencies with which Manager (or its Affiliates) mayhave agreements from time to time, whereby the reservation systems of suchparties are available for communication of reservations to hotels in the Brand;

####  

#### (d)                                 acceptance ofreservations for the Hotel received through alternative communications channelssuch as the internet; and

####  

#### (e)                                  access to theHotels of the communications network used by Manager (or its Affiliates) forcommunication between it and hotels in the Brand.

####  

#### 7.6                                 Maintenance andRepairs. Subject to the terms hereof, Manager shall promptly make or cause tobe made all repairs, replacements, corrections, maintenance, alterations,improvements, renovations, installations, replacements, renewals and additions(collectively, “Repairs”) of every kind and nature, whether interior orexterior, structural or nonstructural, ordinary or extraordinary, foreseen orunforeseen or arising by reason of a condition existing prior to thecommencement of the Term (concealed or otherwise) necessary or appropriate tomaintain the Hotels including all private roadways, sidewalks and curbs locatedthereon for which Owner, Purchaser or a Hotel has responsibility in good orderand repair, reasonable wear and tear excepted (whether or not the need for suchRepairs occurs as a result of Owner’s or Manager’s use, any prior use, theelements or the age of the Hotels, or any portion thereof), and in conformitywith Legal Requirements, Brand Standards and the Operating Standards. AllRepairs shall be made in a good, workmanlike manner, consistent with Manager’sand industry standards for like hotels in like locales, in accordance with allapplicable Legal Requirements. To the extent such Repairs cannot be performedby Manager’s on-site staff, Manager shall entitled to cause such repairs to beperformed by third parties or, subject to Owner’s prior approval, Affiliates ofManager acting under separate Technical Services Agreements pursuant to Section11.1.

##  

#### 7.7                                 MaterialRepairs.

##  

#### (a)                                  Except as set forthin Section 7.7(b), prior to making any Material Repair, Manager shallsubmit, to Owner in writing, a proposal setting forth, in reasonable detail,the proposed Material Repair and shall provide to Owner such plans andspecifications, and such permits, licenses, contracts and such otherinformation concerning the same as Owner may reasonably request. Owner shallhave twenty (20) Business Days to approve or disapprove all materials submittedto Owner, in connection with any such proposal; provided, however,(i) Owner may not withhold its approval of a Material Repair with 

 

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#### respect to such items as are(A) required in order for the Hotels to comply with Brand Standards (exceptduring the last two (2) years of the Term as set forth in Section 5.2(a))or Operating Standards; or (B) required by reason of or under any InsuranceRequirement or Legal Requirement, or otherwise required for the continued safeand orderly operation of each Hotel and (ii) Owner’s approval shall not berequired with respect to the cost of any proposed Material Repair if the sameis set forth as a separate line item in the then applicable CapitalReplacements Budget. If Owner fails to disapprove of such Material Repairwithin such twenty (20) Business Days, Owner shall be deemed to have approvedsame.

####  

#### (b)                                 In the eventthat a condition should exist in or about the Hotel of an emergency nature orin violation of applicable Legal Requirements or Insurance Requirements,including structural conditions, which requires immediate repair necessary toprevent imminent danger or damage to persons or property, Manager is herebyauthorized to take all steps and to make all expenditures necessary to repairand correct any such condition, regardless of whether provisions have been madein the applicable Yearly Budget for any such expenditures or if sufficientfunds exist in the Reserve Accounts. Upon the occurrence of such an event orcondition, Manager will communicate to Owner all available informationregarding such event or condition as soon as reasonably possible and will takereasonable steps to obtain Owner’s approval before incurring such expenses. Expendituresunder this Section 7.7(b) shall be paid from the Reserve Account orotherwise paid in accordance with Section 5.2(c) to the extent suchexpenditure is properly considered a Capital Replacement.

####  

#### (c)                                  No CapitalReplacement shall be made which would tie-in or connect a Hotel with any otherimprovements on property adjacent to such Hotel (and not part of its Site)including, without limitation, tie-ins of buildings or other structures orutilities (other than connections to public or private utilities) without theprior written approval of Owner, which approval may be granted or withheld inOwner’ sole and absolute discretion.

####  

#### 7.8                                 Liens; Credit. Manager shalluse commercially reasonable efforts to prevent any liens from being filedagainst any Hotel which arise from any Repairs in or to such Hotels. Managershall use commercially reasonable efforts to cause the release of any suchliens from the Hotels. If any such lien arises as a result of or in connectionwith a Manager Default, then Manager shall bear the cost of obtaining the lienrelease (exclusive of the cost of the Repair to which it pertains, unlessManager is otherwise responsible therefor) and the same shall not constitute anOperating Cost. In no event shall any party borrow money in the name of, orpledge the credit of, any other party. Manager shall not allow any lien to existwith respect to its interest in this Agreement. Manager shall not finance thecost of any Repair by the granting of a lien on, or security interest in, anyHotel or Manager’s interest therein or hereunder.

##  

#### 7.9                                 Real Estate andPersonal Property Taxes. Manager shall pay as Operating Costs, priorto delinquency, all taxes and assessments which may become a lien on, or areassessed against, any Hotel or any component thereof and which may be due andpayable for the Term, unless payment thereof is being contested by Manager, ashereinafter provided, enforcement is stayed and the amount so contested isescrowed 

 

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## or guaranteed in a formsatisfactory to Owner. Owner shall, promptly after receipt thereof by Owner,give Manager copies of all notices as to all such taxes and assessments.

##  

#### 7.10                           Contest. Manager shallhave the right in Manager’s or Owner’s name to contest or protest any tax orassessment or proposed assessment which may become a lien on, or be assessedagainst, any Hotel or any component thereof due and for the Term or any LegalRequirement payable by appropriate legal proceedings, conducted in good faithand with due diligence provided that (a) such contest shall not cause Purchaseror Owner to be in default under any Authorized Mortgage, (b) no part of a Hotelnor any Gross Revenues therefrom shall be in any immediate danger of sale,forfeiture, attachment or loss, and (c) Owner and Purchaser are not exposed toany risk for criminal or civil liability.

 

ARTICLE 8

 

# FISCAL MATTERS

 

8.1                                 AccountingMatters.

##  

(a)                                  Managershall maintain books and records reflecting the results of Hotel operations onan accrual basis in accordance with the Uniform System of Accounts and theAccounting Principles. In consideration thereof, Manager shall be paid theaccounting fee as provided in Article 8. Owner and Manager and theirrespective independent accounting firms and representatives will have the rightto examine such books and records of the Hotel at any reasonable time and tomake and retain copies thereof. Manager shall retain, for at least three (3)years after the expiration of each Fiscal Year, reasonably adequate recordsshowing Gross Revenues and applications thereof for the Hotels for such FiscalYear (which obligation shall survive termination hereof).

####  

(b)                                 Onor before the twenty-fifth (25th) day after the end of each Fiscal Month,Manager shall furnish Owner with a detailed operating statements setting forththe results of operations at the Hotels with respect to such month showing foreach Hotel, Gross Revenues, Rooms Revenues, revenue per available room,occupancy percentage and average daily rate, Operating Costs, Operating Profit,the applications and distributions thereof and its Owner’s Percentage Prioritytogether with an Officer’s Certificate. Such statements may be providedelectronically to Owner.

####  

(c)                                  Notless than ten (10) days prior to the date on which Owner or any of itsAffiliates are required to file audited financial statements with the UnitedStates Securities and Exchange Commission (but in all events on or beforeFebruary 15 of each year), Manager shall deliver to Owner and Purchaser anOfficer’s Certificate (the “8.1(c) Statement”) setting forth the totalsfor each Hotel and for all of the Hotels of Gross Revenues and Operating Costs,the calculation of Owner’s Percentage Priority and the Residual Distributionand deposits to, and expenditures from, the Reserve Account together with anAgreed Upon Procedures Letter with respect thereto. The cost of obtaining suchletter shall be an Operating Cost.

 

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(d)                                 Ifany amounts due to Owner as shown in an Officer’s Certificate or audit providedpursuant to Sections 8.1(f) or 17.4 exceed the amounts previouslypaid with respect thereto to Owner, Manager shall pay such excess to Owner atsuch time as the Officer’s Certificate or audit is delivered, together withinterest at the Interest Rate from the date due. (Any such interest whichaccrues after the day that is ten (10) Business Days after the date on whichthe 8.1(c) Statement is delivered and any such interest which resultsfrom Manager’s willful understatement of amounts due to Owner shall not beOperating Costs, but shall be paid by Manager.) If Owner’s Percentage Priority due as shown in an Officer’s Certificateor audit is less than the amount previously paid with respect thereto to Owner,Owner shall be entitled to retain the same but shall credit such overpaymentagainst the next installment of Owner’s Percentage Priority. If any ManagementFee due to Manager as shown on an Officer’s Certificate or audit is less thanthe amount previously paid to Manager on account thereof, Manager shall, withinten (10) Business Days after the date on which such Officer’s Certificate oraudit is delivered, deposit the overpayment in the Bank Accounts. If theResidual Distribution due as shown on the Officer’s Certificate or audit isless than the amount previously paid to Owner with respect thereto, Owner shallpromptly deposit (or deliver to Manager who will in turn deposit) theoverpayment in the Bank Accounts. In no event shall (i) any amount previouslydeposited in the Reserve Account be withdrawn therefrom pursuant to this Article8 or (ii) distributions of Owner’s Priority be subject to adjustment.

####  

(e)                                  Inaddition, Manager shall provide Owner with information relating to the Hotels,Manager and its Affiliates that (i) may be required in order for Owner or itsAffiliates to prepare financial statements in accordance with AccountingPrinciples or to comply with any Legal Requirement including, withoutlimitation, any applicable securities laws and regulations and the UnitedStates Securities and Exchange Commission’s interpretation thereof, (ii) may berequired for Owner or any of its Affiliates to prepare federal, state or localtax returns, or (iii) is of the type that Manager customarily prepares forother hotel owners or itself.

####  

(f)                                    AtOwner’s election and at Owner’s cost except as otherwise provided herein, acertified audit of the Hotels’ operations may be performed annually, and afterthe Expiration Date, by a nationally recognized, independent certified publicaccounting firm appointed by Owner. In the event that Owner elects to have suchan audit performed, Owner must give notice of its election within twelve (12)months after its receipt of the applicable 8.1(c) Statement. Any disputeconcerning the correctness of an audit shall be settled by Arbitration. Managershall pay the cost of any audit revealing an understatement of Owner’sPercentage Priority and the Residual Distribution by more than three percent(3%) in the aggregate, and such cost shall not be an Operating Cost. In theevent that either no notice of audit is given within said twelve (12) months,or no audit is in fact commenced within eighteen (18) months after receipt ofthe 8.1(c) Statement, such operating statement will constitute the finalstatement for that Fiscal Year, deemed to have been approved by Owner.

####  

(g)                                 Theterms of this Section 8.1 shall survive the expiration or earliertermination of the Term.

 

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## 8.2                                 Yearly Budgets.

##  

(a)                                  Notless than sixty (60) days prior to the first day of each Fiscal Year after the2003 Fiscal Year, Manager shall submit to Owner for Owner’s approval a proposedYearly Budget for each Hotel including a proposed Capital Replacements Budgetfor each Hotel for the ensuing full or partial Fiscal Year, as the case may be.Owner’s approval of the Yearly Budgets and the Capital Replacements Budgetsshall not be unreasonably withheld or delayed. If Owner fails to disapprove ofa proposed Yearly Budget within thirty (30) days after the submission thereofto Owner for its approval, the same shall be deemed approved. Manager will,from time to time not less often than quarterly, issue periodic forecasts ofoperating performance to Owner reflecting any significant unanticipatedchanges, variables or events or describing significant additional unanticipateditems of income or expense. Manager will provide Owner with the material dataand information utilized in preparing the Yearly Budgets and the CapitalReplacements Budgets or any revisions thereof. Manager will not be deemed tohave made any guaranty, warranty or representation whatsoever in connectionwith the Yearly Budgets and the Capital Replacements Budgets, except that theproposed Yearly Budgets, including the Capital Replacements Budgets, reflectManager’s best professional estimates of the matters they describe. Managershall use its reasonable efforts, subject to the Operating Standards, tooperate and manage the Hotels in accordance with their Yearly Budgets. TheYearly Budgets for the Hotels for 2003 Fiscal Year shall be those most recentlydelivered by Manager to Owner on or before the Effective Date.

####  

(b)                                 Inthe event Owner disapproves or raises any objections to the proposed YearlyBudget, or any portion thereof, or any revisions thereto, Owner and Managershall cooperate with each other in good faith to resolve the disputed orobjectionable items. If Owner disapproves of a proposed Yearly Budget, Ownerwill disapprove on a specific line-by-line basis to the extent reasonablypractical. Any dispute with respect to a proposed Yearly Budget which is notresolved by the parties within thirty (30) days after the submission thereof toOwner shall be resolved by Arbitration.

####  

(c)                                  Inthe event Owner and Manager are not able to resolve the disputed orobjectionable matters raised by Owner in regard to a Yearly Budget prior to thecommencement of the applicable Fiscal Year, either voluntarily or by means ofArbitration, Manager is authorized to operate the Hotel in accordance with theproposed Yearly Budget; provided, however, that as for disputedbudget items, Manager may not expend more than the previous year’s budgetedamount for such item (if any), increased by a percentage equal to the increasein the Consumer Price Index during the last year unless such expenditure is ofthe type contemplated under Section 7.7(b) or is for an expense (such asreal estate taxes, insurance premiums or utilities) which are beyond theManagers reasonable control. For purposes of this section, “increase in theConsumer Price Index during the last year” shall mean the percentage increasein the Consumer Price Index for the twelve (12) month period ending immediatelyprior to the date of submission of the disputed proposed Yearly Budget.

 

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## 8.3                                 Bank Accounts.

 

(a)                                  Therevenues of the Hotel shall be deposited into the one or more Bank Accounts. TheBank Accounts will be separate and distinct from any other accounts, reservesor deposits required by this Agreement, and Manager’s designees who areincluded in the coverage of any required fidelity or similar insurance will bethe only parties authorized to draw upon any Bank Account; provided, however,such designees shall only be authorized to draw upon a Bank Account forpurposes authorized by the terms of this Agreement.

####  

(b)                                 Solong as this Agreement is in full force and effect and there is no uncuredManager Default, Manager shall have exclusive control of the Bank Accounts. Nothingcontained herein is to be construed as preventing Manager from maintainingseparate payroll accounts or petty cash funds and making payments therefrom asthe same may be customary in the hotel business or the Brand Standards.

####  

## 8.4                                 Consolidated Financials**.**Each Ultimate Parent of Manager and each Guarantor shall furnish to Ownerwithin ten (10) days after the filing by such Ultimate Parent or any Guarantorof any material filing with respect to the securities of such Ultimate Parentor such Guarantor or any financial statement with any governmental agency,quasi-governmental agency or stock exchange, a copy of the same; provided,however, if a Guarantor or Ultimate Parent of Manager is not required tofile interim and annual financial statements with the Securities and ExchangeCommission or its equivalent in the United Kingdom such Guarantor or UltimateParent shall furnish the following statements to Owner:

##  

(a)                                  Within forty-five (45) days after each interimperiod for which such Ultimate Parent or Guarantor prepares ConsolidatedFinancials, the Consolidated Financials of such Ultimate Parent or Guarantorfor such period accompanied by an Officer’s Certificate; and

####  

(b)                                 within ninety (90) days after each fiscal year ofsuch Ultimate Parent or Guarantor, the Consolidated Financials of such UltimateParent or such Guarantor for such fiscal year audited by a firm of independentcertified public accountants reasonably satisfactory to Owner accompanied by anOfficer’s Certificate.

 

ARTICLE 9

 

# FEES TO MANAGER

#  

9.1                                 ManagementFees. As consideration for the management and operation of the Hotel byManager, Manager shall earn the following fees, which fees shall be payable asprovided in Section 10.1.

##  

(a)                                  TheBase Management Fee shall be paid in monthly installments in arrears based onthe Gross Revenues of the Hotels for the prior Fiscal Month. The BaseManagement Fee for any period less than a full twelve (12) month Fiscal Yearshall be paid on the basis of Gross Revenues for that period.

 

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(b)                                 TheIncentive Management Fee shall be paid in monthly installments in arrears. The IncentiveManagement Fee for any period less than a full twelve (12) month Fiscal Yearshall be paid on the basis of Gross Revenues for that period.

####  

9.2                                 ServicesFees. Manager shall pay as Operating Costs, usual and customary system feesand assessments on an area-wide basis for the systems of hotels comprising theBrand which currently include a reservation and marketing fee of two andone-half percent (2.5%) of Rooms Revenue, an accounting fee of Fifteen Dollars($15) per guest room per month and a Priority Club Fee of five percent (5%) ofall charges at a Hotel to Priority Club members. Each of the foregoing ServicesFees shall be adjusted from time to time to reflect the Hotels’ equitableportion of the Manager’s and its Affiliates’ actual out-of-pocket costs forproviding the services to which such fees pertain. Not less frequently thanannually, Manager shall provide to Owner financial statements with respect toall fees comparable to the Services Fees collected by Manager and itsAffiliates and the applications thereof; provided, however,Manager shall not be obligated to provide such statements with respect to theaccounting fee until such time as it has in place the means of producing suchstatements. Manager covenants, warrants and represents that each hotel in theBrand pays, and shall at all times pay, the same fees for such services and allsuch fees collected by Manager are, and will be, applied to the cost ofproviding such services to all hotels in the Brand without profit to Manager orits Affiliates except to the extent that such profit for any year shall beapplied to the cost of providing such services in the subsequent year; provided,however, Manager and its Affiliates shall not retain any such profitsfor an unreasonable period of time. Any disputes under this Section 9.2shall be resolved by Arbitration.

 

ARTICLE 10

 

# DISBURSEMENTS

 

10.1                           Disbursementof Funds. As and when received by Manager or the Hotels, all Gross Revenuesfrom all of the Hotels shall be deposited into the Bank Accounts and applied inthe following order of priority to the extent available:

##  

(a)                                  First,to pay all Operating Costs;

####  

(b)                                 Second,to fund the Reserve Account as required by Section 5.2 for the previousFiscal Month;

####  

#### (c)                                  Third, to Owner, allaccrued but unpaid Owner’s Priority;

####  

(d)                                 Fourth,to (i) reimburse Manager for any amounts advanced by Manager pursuant to Section5.2(d) together with interest on the outstanding amounts thereof at theInterest Rate (determined as of the date of the applicable advance) (ii) to payfor Capital Replacements which Owner failed to timely fund pursuant to Section5.2(c).

 

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(e)                                  Fifth,to fund the Reserve Account to the extent that the aggregate amounts previouslyfunded for prior periods is less than the amount required to be funded for suchperiods pursuant to the terms of Section 5.2;

####  

(f)                                    Sixth,(commencing in 2005) to Owner, all accrued but unpaid Owner’s PercentagePriority;

####  

(g)                                 Seventh,to Manager, interest at the Interest Rate (determined as of the date of theapplicable advance) on any outstanding amounts advanced by Manager pursuant to Section15.2(c).

####  

(h)                                 Eighth,to Manager, any accrued but unpaid Base Management Fee for the previous FiscalMonth but no other period;

####  

#### (i)                                     Ninth, to reimburse Owner for any advances madeby Owner to Working Capital;

####  

(j)                                     Tenth,to reimburse Manager for any advances made by Manager to Working Capital inexcess of the Initial Working Capital;

####  

#### (k)                                  Eleventh, to replenish any portion of the Deposit that shall have beenapplied to the Secured Obligations;

####  

(l)                                     Twelfth, to reimburse the Guarantor for paymentsmade by it on account of the Guaranteed Obligations under the Guaranty provided,however, if the Guarantor shall have Provided Collateral under theGuaranty, then the amount to be reimbursed to the Guarantor under this Section10.1(l) shall be disbursed to Owner, to be held by Owner as collateral forthe Guarantor’s obligations under the Guaranty until the Outstanding Balance(determined as though the disbursement made under this Section 10.1(l)were made to the Guarantor) under the Guaranty does not exceed the sum of (i)the then remaining balance drawable under the Satisfactory Letter of Creditposted under the Guaranty or the balance of the cash deposited by the Guarantorthereunder, plus (ii) proceeds of any such Satisfactory Letter of Creditor cash deposited thereunder, in either case, applied to the GuaranteedObligations thereunder;

####  

(m)                               Thirteenth, to reimburse Manager for (i) advances made byManager pursuant to Section 15.2(c) to the extent then due and payableand (ii) other contributions made by it to the Reserve Account other thanpursuant to Section 5.2(d);

####  

(n)                                 Fourteenth, to pay Manager accrued but unpaid BaseManagement Fees for prior Fiscal Months; and

####  

(o)                                 Fifteenth, to Manager, the Incentive ManagementFee.

####  

10.2                           ResidualDistribution. Simultaneously with the making of each payment of theIncentive Management Fee, the then remaining Gross Revenues will be disbursedto Owner. Except as herein provided, Manager shall have no responsibility toincur Operating Costs or undertake any Capital Replacement except to the extentManager is 

 

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## reasonably assured that funds to pay such Operating Costs and for suchCapital Replacements will be timely available.

##  

10.3         Owner’s Priority.Owner’s Priority shall be due and payable in advance in equal monthlyinstallments on the first day of each Fiscal Month, pro-rated for any partialmonth, regardless of any inadequacy of Gross Revenues or Operating Profits. Ifany installment of Owner’s Priority is not paid when due, the same shall accrueinterest at the Interest Rate. (Such interest shall be payable on demand, shallnot be an Operating Cost, and shall be paid by Manager.)  Appropriate adjustments shall be made toreflect any change in Owner’s Priority on account of advances made by Owner orPurchaser on the first Business Day of the month next after the date as ofwhich such change occurs. As installments of Owner’s Priority are to be paid inadvance, Manager may advance amounts due on account of a monthly installment ofOwner’s Priority for a Fiscal Month and reimburse itself from Operating Profitsfor such Fiscal Month amounts so advanced; provided, however, ifOperating Profits for such Fiscal Month in excess of the amount to becontributed to the Reserve Account pursuant to Section 5.2 areinsufficient to make such reimbursements, the amount of such insufficiencyshall be deemed an advance to Working Capital, and Manager shall be entitled tothe reimbursement thereof only pursuant to Section 10.1(j); provided,however, by notice given to Owner within thirty (30) days after the endof Fiscal Month, Manager may elect to deem the amount of such insufficiency anadvance under the Guaranty (and not an advance to Working Capital). If Managershall so make such election, the amount of such insufficiency shall bereimbursed to the Guarantor as provided in Section 10.1(l). If Ownerfails to receive any installment of Owner’s Priority as and when due, Owner mayterminate this Agreement on not less than thirty (30) days’ notice; provided,however, such notice shall be void ab initio if such installmenttogether with any interest accrued thereon is paid to Owner prior to thethirtieth (30th) day after such notice is given.

 

10.4                           Owner’sPercentage Priority. Owner’s Percentage Priority shall be calculated on aHotel-by-Hotel basis, and shall accrue and be payable in monthly installmentsto the extent that Gross Revenues year-to-date at any Hotel exceed GrossRevenues for such Hotel for the corresponding period in its Base Year. Theinstallment of Owner’s Percentage Priority for each Fiscal Month shall be dueand payable on the twenty fifth (25th)day of the following month.

##  

10.5                           NoInterest. Except as expressly provided herein, no interest shall accrue orbe payable to either party hereunder on account of any amount owed to suchparty hereunder.

##  

10.6                           Amounts Outstanding at End of Term. Unless this Agreement is wrongfully terminatedby Owner upon the expiration or earlier termination of this Agreement, Manager shall have no claimagainst Owner, Purchaser or the Hotels for amounts owed to it under thisAgreement which have not been paid by reason of the inadequacy of GrossRevenues or Operating Profits.

##  

## 10.7                           Survival. The terms ofthis Article 10 shall survive the expiration or earlier termination ofthe Term.

 

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ARTICLE 11

 

# CERTAIN OTHER SERVICES

#  

11.1                           OptionalServices. Owner acknowledges that Manager and its Affiliates sometimesprovide separate, optional services which may relate to the Hotels in additionto those which are encompassed by this Agreement. Owner agrees to consider ingood faith any proposals presented to it by Manager or any of Manager’sAffiliates for such additional services relative to the Hotels; it beingunderstood, however that this Section shall in no event be construed to requireOwner to accept any such proposals.

##  

11.2                           Purchasing.In making purchasing decisions with respect to products and service used in theoperation of the Hotels, Manager will exercise reasonable business judgment inaccordance with the Operating Standards. Manager shall be entitled to contractwith its Affiliates, others in whom Manager or its Affiliates has an ownershipinterest and others with whom Manager or its Affiliates have contractualrelationships to provide goods and/or services to the Hotels’ provided that theprices and/or terms for such goods and/or services are competitive and no worsethan the prices and/or terms that such provider charges unrelated third-parties.In determining whether such prices and/or terms are so competitive, they willbe compared to the prices and/or terms which are available from comparablyqualified providers for goods and/or services of similar quality grouped inreasonable categories, rather than being compared item by item. Subject to theforegoing proviso, the prices charged for such goods or services may includeoverhead and the allowance of a reasonable return to the provider. Subject tothe foregoing proviso, Owner acknowledges and agrees that the providers of suchgoods and/or services may retain for their own benefit any credits, rebates orcommissions received with respect to such purchases. Notwithstanding anythingcontained herein to the contrary, Manager will act in a manner that enablesOwner and the Hotels to gain not less than the same benefits with respect topurchasing as are made available to other hotels of the same category as theHotels which other hotels are owned or operated by Manager or its Affiliates. Disputesunder this Section 11.2 shall be resolved by Arbitration.

 

ARTICLE 12

 

# SIGNS AND SERVICE MARKS

#  

12.1                           Signs.To the extent not in place on the Effective Date, Manageragrees to erect and install, in accordance with all applicable LegalRequirements, all necessary signs under the Brand Standards.

##  

12.2                           SystemMarks. It is understood and agreed by Owner that the name Staybridge Suitesand all System Marks are the exclusive property of Manager or its Affiliates. Owneragrees and acknowledges the exclusive right of ownership of Manager and itsAffiliates to the System Marks and the Reservation System. Except for anyrights 

 

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## expressly granted to Ownerin this Agreement, Owner hereby disclaims any right or interest therein,regardless of the legal protection afforded thereto. Except for any rightsexpressly granted to Owner in this Agreement, in the event of termination orcancellation of this Agreement, whether as a result of a default by Manager orotherwise, Owner shall not hold itself out as, or operate the Hotels as, aStaybridge Suites hotels, and will immediately cease using the name StaybridgeSuites, and all other System Marks in connection with the name or operation ofthe Hotel as of the Expiration Date. Promptly after the Expiration Date (orsuch later date on which Manager shall cease to operate the Hotels) and theexpiration of any right granted to Owner to use the System Marks, subject tothe terms of Section 17.4, Owner shall remove all signs, furnishings,printed material, emblems, slogans or other distinguishing characteristicswhich are now or hereafter may be connected or identified with the Brand orReservation System. Owner shall not use any System Marks or any part,combination or variation thereof in the name of any partnership, corporation orother business entity, nor allow the use thereof by others.

##  

12.3                           SystemMark Litigation.

##  

(a)                                  Manager,IHG and each other Guarantor shall hold Owner and its Affiliates harmless fromand indemnify and defend Owner and its Affiliates against any and all costs andexpenses incurred by Owner or its Affiliates (including, without limitation,attorneys’ fees reasonably incurred), arising out of the use of System Marks ator in connection with the operation of the Hotels by Owner or its designeespursuant to the terms of this Agreement or by Manager or its Affiliates.

####  

In the event aHotel, Owner or Manager is the subject of any litigation or action brought byany party seeking to claim rights in or to restrain the use of any System Markused by Manager in connection with the Hotel, then, provided Owner is a partyto such litigation or action and further provided that Manager shall haveprovided to Owner either a guaranty in form and substance reasonablysatisfactory to Owner with respect to Manager’s obligations under Section12.3(a) or collateral to secure Manager’s obligations under Section12.3(a) reasonably satisfactory to Owner, the conduct of any suit whetherbrought by Manager or instituted against Owner and/or Manager shall be underthe absolute control of counsel nominated and retained by Managernotwithstanding that Manager may not be a party to such suit.

####  

(b)                                 TheOwner shall not bring suit against any user of any System Mark alleging orasserting any claim based on Owner’s right, title or interest as of theEffective Date in any System Mark.

####  

#### (c)                                  The terms ofthis Section 12.3 shall survive the expiration or earlier termination ofthis Agreement.

 

ARTICLE 13

 

# INSURANCE

#  

13.1                           InsuranceCoverage. Unless Owner elects to procure and maintain the insurancerequired hereunder, as an Operating Cost, which election may be made from timeto 

 

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## time and withdrawn from timeto time on not less than thirty (30) days’ notice, to the extent commerciallyavailable (regardless of whether it is available on reasonable terms) Managershall procure and maintain as an Operating Cost, at all times during the Termor while it is in possession of any of the Hotels, reasonable and adequateamounts of casualty, liability and other usual and customary types of insurancefor the Hotels and their operations. Without limiting the generality of theforegoing, Manager shall obtain and maintain, with insurance companies ofrecognized responsibility a minimum of the following insurance to the extentcommercially available (regardless of whether it is available on reasonableterms):

##  

(a)                                  “SpecialForm” property insurance, including insurance against loss or damage by fire,vandalism and malicious mischief, terrorism (if available on commerciallyreasonable terms), earthquake, explosion of steam boilers, pressure vessels orother similar apparatus, now or hereafter installed in the Hotels, withequivalent coverage as that provided by the usual extended coverageendorsements, in an amount equal to one hundred percent (100%) of the then fullreplacement cost of the property requiring replacement (excluding foundations)from time to time, including an increased cost of construction endorsement;

####  

(b)                                 Businessinterruption and blanket earnings plus extra expense under a rental valueinsurance policy or endorsement covering risk of loss during the lesser of thefirst twelve (12) months of reconstruction or the actual reconstruction periodnecessitated by the occurrence of any of the hazards described in subparagraph(a) above, in such amounts as may be customary for comparable propertiesmanaged or leased by Manager or its Affiliates in the surrounding area and inan amount sufficient to prevent Owner or Purchaser from becoming a co-insurer;

####  

(c)                                  Commercialgeneral liability insurance, including bodily injury and property damage (on anoccurrence basis and on a 1993 ISO CGL form or on a form customarily maintainedby similarly situated hotels, including, without limitation, broad formcontractual liability, independent contractor’s hazard and completed operationscoverage, aggregate limit as applicable) in an amount not less than Two MillionDollars ($2,000,000) per occurrence and umbrella coverage of all such claims inan amount not less than Fifty Million Dollars ($50,000,000) per occurrence;

####  

(d)                                 Flood(if a Hotel is located in whole or in part within an area identified as an areahaving special flood hazards and in which flood insurance has been madeavailable under the National Flood Insurance Act of 1968, as amended, or theFlood Disaster Protection Act of 1973, as amended (or any successor acts thereto))and insurance against such other hazards and in such amounts as may beavailable under the National Flood Insurance Program and customary forcomparable properties in the area;

####  

(e)                                  Worker’scompensation insurance coverage for all persons employed by Manager at theHotels with statutory limits and otherwise with limits of and provisions inaccordance with the requirements of applicable local, state and federal law,and employer’s liability insurance as is customarily carried by similaremployers which coverage shall be written by an insurance company of recognizedresponsibility, as a qualified self-insurer subject 

 

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#### to applicable state requirements and approvals, or specific to theState of Texas, as a nonsubscriber;

####  

#### (f)                                    Employmentpractices liability insurance with limits of Twenty Five Million Dollars($25,000,000); and

####  

(g)                                 Suchadditional insurance as may be required, from time to time by (i) any LegalRequirement, (ii) any holder of an Authorized Mortgage or (iii) which isotherwise reasonably required.

####  

## 13.2                           InsurancePolicies.

##  

(a)                                  Allinsurance provided for under this Article 13 must be effected bypolicies issued by insurance companies of good reputation and of soundfinancial responsibility and will be subject to Owner’s reasonable approval.

####  

(b)                                 Allinsurance policies (other than workers’ compensation policies) shall be issuedin the name of Purchaser with Manager and Owner and any holder of an AuthorizedMortgage being named as additional insureds; provided, however,subject to Owner’s obligations under Article 15, Manager shall not benamed as an additional insured on, and shall not have any interest in theproceeds of, any property insurance. Purchaser or the holder of an AuthorizedMortgage shall be named loss payee(s) on any property insurance.

####  

(c)                                  Theinsurance herein required may be brought within the coverage of a so-calledblanket policy or policies of insurance carried and maintained by Owner orManager, provided that such blanket policies fulfill the requirements containedherein.

####  

(d)                                 Inthe event Owner or Manager believes that the then full replacement cost of aHotel has increased or decreased at any time during the Term, such party, atits own cost, shall have the right to have such full replacement costredetermined by an independent accredited appraiser approved by the other,which approval shall not be unreasonably withheld or delayed. The partydesiring to have the full replacement cost so redetermined shall forthwith, onreceipt of such determination by such appraiser, give written notice thereof tothe other parties. The determination of such appraiser shall be final andbinding on the parties hereto until any subsequent determination under this Section13.2(d), and the party obligation to maintain insurance hereunder shallforthwith conform the amount of the insurance carried to the amount sodetermined by the appraiser. Such replacement value determination will not benecessary so long as a Hotel is insured through a blanket replacement valuepolicy.

####  

(e)                                  Allinsurance policies and endorsements required pursuant to this Article 13shall be fully paid for, nonassessable and, except for umbrella, worker’scompensation, flood and earthquake coverage, shall be issued by insurancecarriers authorized to do business in the state where each Hotel is located,having a general policy holder’s rating of no less than B++ in Best’s latestrating guide.

####  

(f)                                    Allsuch policies shall provide Owner, Manager and any holder of an AuthorizedMortgage if required by the same, thirty (30) days’ prior written notice of anymaterial 

 

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#### change or cancellation ofsuch policy and the property insurance policies shall provide for a waiver ofsubrogation, to the extent available.

####  

13.3                           InsuranceCertificates. Manager shall deliver to Owner, Purchaser and any holder ofan Authorized Mortgage, certificates of insurance with respect to all policiesso procured by it and, in the case of insurance policies about to expire, shalldeliver certificates with respect to the renewal thereof. In the event Managershall fail to effect such insurance as herein required, to pay the premiumstherefor, or to deliver, within fifteen (15) days of a request therefor, suchcertificates, Owner shall have the right, but not the obligation, to acquiresuch insurance and pay the premiums therefor, which amounts shall be payable toOwner, upon demand, as an Operating Cost, together with interest accruedthereon at the Interest Rate (which interest shall not be an Operating Cost,but shall be paid by Manager) from the date such payment is made until (butexcluding) the date repaid.

##  

13.4                           InsuranceProceeds. All proceeds payable by reason of any loss or damage to a Hotel,or any portion thereof (other than the proceeds of any business interruptioninsurance), shall be paid directly to Purchaser as its interest may appear andall loss adjustments with respect to losses payable to Manager shall requirethe prior written consent of Purchaser.

##  

## 13.5                           Manager’sInsurance Program.

##  

(a)                                  Managerwill obtain quotations for insurance on an annual basis and provide, whenavailable, such quotations to Owner for its approval or rejection. If Ownerrejects such quotations, it may obtain such insurance and thereafter Ownershall maintain, as an Operating Cost, the insurance, the quotation for whichOwner rejected.

####  

(b)                                 Owneracknowledges that in the event the insurance required hereunder is providedthrough Manager’s insurance program, to the extent available, the costs andcharges therefore will be paid as an Operating Cost without regard to whethersuch payment is to an Affiliate of Manager and whether that Affiliate receivesa profit as a result thereof.

 

ARTICLE 14

 

# INDEMNIFICATION AND WAIVER OF SUBROGATION

#  

14.1                           Indemnification.Each of the parties hereto shall indemnify, defend and hold harmless the otherfor, from and against any cost, loss, damage or expense (including, but notlimited to, reasonable attorneys fees and all court costs and other expenses oflitigation, whether or not taxable under local law) to the extent caused by orarising from: the failure of the indemnifying party to duly and punctuallyperform any of its obligations owed to the other; or any gross negligence orwillful misconduct of the indemnifying party.

##  

14.2                           Waiverof Subrogation. To the fullest extent permitted by law, each of Owner andManager hereby waives any and all rights of subrogation and right of recoveryor cause of action, and agrees to release the other and Purchaser fromliability for loss or 

 

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## damage to property to theextent such loss or damage is covered by valid and collectible insurance ineffect at the time of such loss or damage or which would have been covered ifthe insurance required by this Agreement were being carried; provided, however,that such waiver shall be of no force or effect if the party benefitingtherefrom fails to obtain and maintain the insurance required to be obtainedand maintained by it. Such waivers are in addition to, and not in limitation orderogation of, any other waiver or release contained in this Agreement. Writtennotice of the terms of the above waivers shall be given to the insurancecarriers of Owner and Manager, and the insurance policies shall be properlyendorsed, if necessary, to prevent the invalidation of said policies by reasonof such waivers.

##  

## 14.3                           Survival. The terms ofthis Article 14 shall survive the expiration or earlier termination ofthis Agreement.

 

ARTICLE 15

 

# DAMAGE TO AND DESTRUCTION OF THE HOTEL

#  

## 15.1                           Termination.

##  

(a)                                  Ifduring the Term any Hotel shall be totally or partially destroyed and the Hotelis thereby rendered Unsuitable for Its Permitted Use, (i) Manager may terminatethis Agreement with respect to such Hotel on sixty (60) days’ written notice toOwner, or (ii) Owner may terminate this Agreement with respect to such Hotel bywritten notice to Manager, whereupon, this Agreement, with respect to suchHotel, shall terminate and Owner or Purchaser shall be entitled to retain theinsurance proceeds payable on account of such damage.

####  

(b)                                 Notwithstandingany provisions of Section 15.2 below to the contrary, if damage to ordestruction of any Hotel occurs during the last twenty four (24) months of thethen Term (after giving effect to any exercised options to extend the same) andif such damage or destruction cannot reasonably be expected to be fullyrepaired and restored prior to the date that is twelve (12) months prior to theend of such Term, then either Owner or Manager may terminate this Agreementwith respect to such Hotel on not less than thirty (30) days’ advance notice.

####  

(c)                                  Uponany termination under this Article 15 or 16, the Owner’s Priorityshall be reduced, and provided there is then no uncured Manager Default and thePriority Coverage Ratio for the Hotels (other than such Hotel with respect towhich this Agreement has been so terminated) for the prior Fiscal Year isgreater than 1.0, Owner shall return to Manager the portion of the Depositallocable to such terminated Hotel as set forth on Exhibit C. In calculatingthe reduction in Owner’s Priority, the allocation of Owner’s Priority for eachHotel shall be proportional to the NOI of such Hotel for the then most recentlyended twelve (12) months relative to the NOI of all the other Hotels for suchperiod.

####  

(d)                                 Managerhereby waives any statutory rights of termination which may arise by reason ofany damage to or destruction of any Hotel.

 

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## 15.2                           Restoration.

##  

(a)                                  Ifduring the Term any Hotel is damaged or destroyed by fire, casualty or othercause but is not rendered Unsuitable for Its Permitted Use, Owner shall makethe net proceeds of insurance received in connection with such casualty (excludingthe proceeds of business interruption or similar insurance which are a portionof Gross Revenues) and any other amount Owner elects to contribute towardrestoration available to Manager for restoration of such Hotel subject tocustomary terms applicable to advances and construction loans (to the extentapplicable) and the terms of the Lease and any Authorized Mortgage, and Ownershall make, or shall cause there to be made, all Repairs necessary to restoresuch Hotel to substantially the same condition as existed prior to suchcasualty. If Owner elects to retain Manager’s services in connection with suchRepairs, the terms of Section 11.1 shall apply.

####  

(b)                                 Anycasualty which does not result in a termination of this Agreement with respectto the applicable Hotel shall not excuse the payment of sums due to Ownerhereunder with respect to such Hotel.

####  

(c)                                  Ifthe net proceeds of the insurance received in connection with a casualty or anAward received in connection with a Condemnation are insufficient to completethe required Repairs, Owner shall have the right (but not the obligation) tocontribute (or cause Purchaser to contribute) the amount of such insufficiency.If Owner elects not to contribute such insufficiency by notice given to Managerwithin ten (10) Business Days after a notice given by Manager to Ownerreasonably detailing the existence of such insufficiency, Manager shall havethe right to contribute such insufficiency. If Manager fails to contribute suchinsufficiency to an account of Owner to be used in completing such Repairswithin ten (10) Business Days after Owner’s election, the Hotel subject to suchcasualty or Condemnation shall be deemed Unsuitable for its Permitted Use andthe terms of Section 15.1 or 16.1, as applicable, shall apply. Subjectto the terms of Section 10.1, Manager shall be entitled to the return ofamounts funded by it under this Section 15.2(c) in equal monthly installmentsbased upon the number of months remaining in the Term after the month in whichsuch advance is made (after giving effect to any then exercised or deemedexercised options to extend).

 

ARTICLE 16

 

# CONDEMNATION

#  

16.1                           TotalCondemnation. If either (x) the whole of a Hotel shall be taken byCondemnation, or (y) a Condemnation of less than the whole of a Hotel renderssuch Hotel Unsuitable for Its Permitted Use, this Agreement shall terminatewith respect to such Hotel and Owner and Purchaser shall seek the Award fortheir interests in such Hotel as provided in the Lease, which Award shallbelong solely to them. In addition, Manager shall have the right to initiate orparticipate in such proceedings as it deems advisable to recover any damages towhich Manager may be entitled; provided, however, that Managershall be entitled to retain the award or compensation it may obtain throughsuch proceedings which are conducted separately from those of Owner andPurchaser only if such award 

 

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## or compensation does notreduce the award or compensation otherwise available to Owner and Purchaser. Ifthis Agreement is so terminated with respect to a Hotel, Owner and Purchasershall make reasonable efforts to use the Award to acquire a ReplacementProperty proposed by Manager to which this Agreement shall be extended; provided,however:

##  

(a)                                  Purchaserand Owner shall not be obligated to expend in the aggregate more than the Awardin connection with (i) investigating and negotiating to purchase all propertiesproposed by Manager to be the Replacement Property (including, withoutlimitation, attorneys’ and consultants’ fees and title search and survey costs)and (ii) acquiring a Replacement Property (including, without limitation, thepurchase price therefor, title insurance premiums and transfer taxes);

####  

(b)                                 Purchaserand Owner shall have no obligation to acquire any proposed Replacement Propertyunless the projected NOI thereof and each of every other aspect of the proposedReplacement Property which Purchaser reasonably considers relevant iscomparable in Purchaser’s sole judgment in all respect to the Hotel which isbeing replaced;

####  

(c)                                  Purchaserand Owner shall not be obligated to investigate more than three (3) proposedproperties;

####  

(d)                                 Owner’sPriority will be increased by an amount equal to the reduction therein resultingfrom the termination of this Agreement with respect to the Hotel which is beingreplaced; and

####  

(e)                                  Purchasershall not be obligated to acquire any proposed Replacement Property, if Managerand Owner do not reasonably agree upon an appropriate amendment hereto pursuantto which this Agreement will be extended to such property.

####  

                                                IfPurchaser decides to acquire a proposed Replacement Property, simultaneouslywith such acquisition the Lease and this Agreement shall be appropriatelyamended so as to cover such Replacement Property.

 

16.2                           PartialCondemnation. In the event of a Condemnation of less than the whole of aHotel such that such Hotel is not rendered Unsuitable for Its Permitted Use,Owner shall, to the extent of the Award and any additional amounts disbursed byOwner or Purchaser, commence promptly and continue diligently to restore theuntaken portion of such Hotel so that such Hotel shall constitute a completearchitectural unit of the same general character and condition (as nearly asmay be possible under the circumstances) as existed immediately prior to suchCondemnation, in full compliance with all Legal Requirements, using the Awardmade available therefor and any other funds Owner elects to contribute subjectto customary terms applicable to advances of construction loans (to the extentapplicable). If Owner elects to retain Manager’s services in connectiontherewith, the terms of Section 11.1 shall apply.

##  

16.3                           TemporaryCondemnation. In the event of any temporary Condemnation of a Hotel or Owner’sinterest therein, this Agreement shall continue in full force and effect. The 

 

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## entire amount of any Awardmade for such temporary Condemnation allocable to the Term, whether paid by wayof damages, rent or otherwise, shall constitute Gross Revenues. For purposes ofthis Agreement, a Condemnation shall be deemed to be temporary if the period ofsuch Condemnation is not expected to, and does not, exceed twelve (12) months.

##  

16.4                           Effectof Condemnation. Any condemnation which does not result in a termination ofthis Agreement in accordance with its terms with respect to the applicableHotel shall not excuse the payment of sums due to Owner hereunder with respectto such Hotel and this Agreement shall remain in full force and effect as tosuch Hotel.

 

ARTICLE 17

 

# DEFAULT AND TERMINATION

#  

## 17.1                           Manager Eventsof Default. Each of the following shall constitute a “ManagerEvent of Default:”

##  

(a)                                  Thefiling by Manager, or the Guarantor of a voluntary petition in bankruptcy orinsolvency or a petition for reorganization under any bankruptcy law, or theadmission by Manager, or the Guarantor that it is unable to pay its debts asthey become due, or the institution of any proceeding by Manager, or theGuarantor for its dissolution or earlier termination.

####  

(b)                                 Theconsent by Manager, or the Guarantor to an involuntary petition in bankruptcyor the failure to vacate, within ninety (90) days from the date of entrythereof, any order approving an involuntary petition with respect to Manager,or the Guarantor.

####  

(c)                                  Theentering of an order, judgment or decree by any court of competentjurisdiction, on the application of a creditor, adjudicating Manager, or theGuarantor as bankrupt or insolvent or approving a petition seekingreorganization or appointing a receiver, trustee, or liquidator of all or asubstantial part of Manager’s, or the Guarantor’s assets, and such order,judgment or decree’s continuing unstayed and in effect for an aggregate ofsixty (60) days (whether or not consecutive).

####  

(d)                                 Thefailure of Manager or the Guarantor or any Affiliate of any of them to make anypayment required to be made in accordance with the terms of this Agreement orany Transaction Document which failure continues beyond any applicable noticeand grace period.

####  

(e)                                  Thefailure of Manager, its Ultimate Parent, the Collateral Agent or any Guarantoror any Affiliate of any of them to perform, keep or fulfill any of the othercovenants, undertakings, obligations or conditions set forth in this Agreementor any Transaction Document on or before the date required for the same, whichfailure continues for a period of thirty (30) days after receipt of writtennotice demanding such cure; provided, however, if such failure issusceptible of cure, but such cure cannot be accomplished within said thirty(30) day period, said thirty (30) days shall be extended for so long as isreasonably necessary to effect such cure provided that such cure is commencedwithin 

 

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#### thirty (30) days after such notice is given and is thereafterdiligently pursued to completion.

####  

(f)                                    Thefailure of Manager to maintain insurance coverages required to be maintained byManager under this Agreement.

####  

(g)                                 Thefailure by Manager, its Ultimate Parent or any Guarantor to deliver to Ownerany financial statement as and when required by the Transaction Documents,which failure continues for a period of ten (10) Business Days after writtennotice from Owner.

####  

(h)                                 Anyrepresentation or warranty made by Manager or any of its Affiliates in thisAgreement or any Transaction Document proves to have been false in any materialrespect on the date when made or deemed made; provided, however,if Manager did not know of such falseness at the time such representation orwarranty was made, and the facts or circumstances giving rise to such falsenessare susceptible of cure, Manager shall have up to thirty (30) days after noticefrom Owner to effectuate such cure.

####  

(i)                                     Thefailure of any Ultimate Parent of Manager or the Guarantor to timely and fullykeep and observe any obligations under the Transaction Documents or any otherdocument or instrument executed and delivered in connection herewith tomaintain any net worth, unencumbered assets or to deliver any collateral, inall cases, required under the Transaction Documents, which is not cured withinten (10) days after notice from Owner to Manager.

####  

17.2                           Remediesfor Manager Defaults. So long as a Manager Event of Default shall beoutstanding, Owner shall have (in addition to its other rights and remedies atlaw, in equity or otherwise) the right to terminate this Agreement. Upon suchtermination, or if this Agreement is terminated pursuant to Sections 5.1 or10.3, Owner shall be entitled to liquidated damages. Owner’s right toreceive liquidated damages has been agreed to due to the uncertainty,difficulty and/or impossibility of ascertaining the actual damages suffered byOwner. Further, if not for Owner’s right to receive such liquidated damages,Purchaser would not have entered into the Purchase Agreement, Purchaser wouldnot have acquired the Hotels and Owner would not have entered into the Lease. MANAGERHEREBY ACKNOWLEDGES AND AGREES THAT SUCH LIQUIDATED DAMAGES ARE NOT A PENALTY,BUT ARE TO COMPENSATE OWNER AND ITS AFFILIATES FOR THE EXPENSE AND LOSTEARNINGS WHICH MAY RESULT FROM ARRANGING SUBSTITUTE MANAGEMENT FOR THE HOTELSAS WELL AS TO COMPENSATE FOR THE RENT OWNER MUST PAY UNDER THE LEASE AND THEPRICE PAID FOR THE HOTELS BY OWNER’S AFFILIATE. Such liquidated damages shallbe equal to the sum of (i) the sum of (A) Fifty Million Dollars ($50,000,000)less (B) the aggregate amount paid by the Guarantor under Section 3 ofthe Guaranty in excess of the aggregate amount reimbursed to the Guarantorpursuant to Section 10.1(l), plus (ii) the outstanding balance of theDeposit. Owner shall be entitled to interest, at the Interest Rate, on suchliquidated damages from the date of such termination until the date of paymentof such damages and interest. Except with respect to Owner’s rights andremedies for any breach or violations by Manager of the 

 

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## terms of Section 17.4,Owner shall look solely to the Deposit or any other collateral hereafter pledgedsecuring Manager’s obligations hereunder for satisfaction of any claim of Owneragainst Manager hereunder, provided, however, nothing containedherein is intended to, nor shall limit or reduce the obligations of theGuarantor under the Guaranty or limit Owner’s rights with respect thereto.

##  

17.3                           Remediesfor Owner Defaults. In the event Owner fails to perform its obligationshereunder, Manager shall have the right to institute forthwith any and allproceedings permitted by law or equity (provided they are not specificallybarred under the terms of this Agreement), including, without limitation,actions for specific performance and/or damages; provided, however,except as may be expressly provided in this Agreement, Manager shall have noright to terminate this Agreement by reason of such a failure by Owner orotherwise. Manager shall be entitled to terminate this Agreement in the eventof a violation of the terms of Section 4.7 by Purchaser or Owner. Exceptas otherwise specifically provided in this Agreement, Manager hereby waives allrights arising from any occurrence whatsoever, which may now or hereafter beconferred upon it by law, (a) to modify, surrender or terminate this Agreementor quit or surrender any Hotel or any portion thereof, or (b) to obtain (i) anyabatement, reduction, suspension or deferment of the sums allocable orotherwise payable to Owner or other obligations to be performed by Managerhereunder or (ii) any increase in any amounts payable to Manager hereunder. Theobligations of each party hereunder shall be separate and independent covenantsand agreements.

##  

17.4                           PostTermination Obligations. Upon expiration or earlier termination of thisAgreement for any reason, Owner and Manager shall proceed as follows:

##  

(a)                                  Withinsixty (60) days following the effective date of such expiration or earliertermination, Manager will submit to Owner an audited final accounting of theresults of Hotel operations and all accounts between Owner and Manager throughthe effective date of such expiration or earlier termination, the cost of whichaudit shall be shared equally by Manager and Owner and shall not be anOperating Cost and shall be performed by Ernst & Young or anotheraccounting firm selected by Manager and approved by Owner. Said final accountingwill promptly be submitted by Manager to Owner for its approval. Owner shallnot unreasonably withhold or delay its approval of the final accounting and anysuch disapproval shall contain reasonably detailed explanation for disapproval.Within thirty (30) days after delivery of such final accounting, the partieswill make appropriate adjustments to any amounts previously paid or due underthis Agreement.

####  

(b)                                 Onthe effective date of such expiration or earlier termination, Manager willdeliver to Owner all books and records of the Hotels, provided that Manager mayretain copies of any of the same for Manager’s records. Notwithstanding theforegoing, Manager will not be required to deliver to Owner any information ormaterials (including, without limitation, software, database, manuals andtechnical information) which are proprietary property of Manager.

 

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(c)                                  Onthe effective date of such expiration or earlier termination, Manager willdeliver possession of the Hotels, together with any and all keys or otheraccess devices, to Owner.

####  

(d)                                 Onthe effective date of such expiration or earlier termination Manager willassign to Owner or its designee, and Owner or such designee will assume, allbooking, reservation, service and operating contracts relating exclusively tothe occupancy or operation of the Hotels and entered into in the ordinarycourse of business by Manager in accordance with this Agreement. Owner agreesto indemnify and hold Manager harmless from liability or other obligationsunder any such agreements relating to acts or occurrences, including Owner’s orsuch designee’s failure to perform, on or after the effective date of suchassignment.

####  

(e)                                  Managerwill assign to Owner or its designee any assignable licenses and permitspertaining to the Hotels and will otherwise reasonably cooperate with Owner asmay be necessary for the transfer of any and all Hotel licenses and permits toOwner or Owner’s designee.

####  

(f)                                    Manager shall release and transfer to Owner orPurchaser, as applicable, any fundsof Owner or Purchaser which are held or controlled by Manager.

####  

(g)                                 Manager shall have the option, to be exercisedwithin thirty (30) days after termination or expiration, to purchase, at theirthen book value, any FF&E, Operating Equipment or other personal propertyas may be marked with any System Mark at the Hotels. In the event Manager doesnot exercise such option, Owner agrees that it will use any such items not sopurchased exclusively in connection with the Hotels until they are consumed;provided however, Manager shall not be entitled to purchase FF&E, OperatingEquipment or other personal property located at a Hotel which is to be operatedunder the Brand name or by Manager, until such Hotel shall no longer be sooperated.

####  

(h)                                 Owner shall have the right to operate theimprovements on the applicable Siteswithout modifying the structural design of same and without making any MaterialRepair, notwithstanding the fact that such design or certain features thereofmay be proprietary to Manager or its Affiliates and/or protected by trademarksor service marks held by Manager or an Affiliate, provided that such use shallbe confined to the applicable Sites. Further, provided that the applicableHotels then satisfy the Brand Standards (unless the Hotels fail to satisfy suchBrand Standards due to a breach hereof by Manager), Owner shall be entitled(but not obligated) to operate such of the Hotels as Owner designates under theBrand name for a period of one (1) year following such termination inconsideration for which Owner shall pay the then standard franchise and systemfees for the Brand and comply with the other applicable terms and conditions ofthe form of franchise agreement then being entered into with respect to theBrand.

####  

(i)                                     Manager shall transfer to Owner the telephonenumbers used in connection with the operation of the Hotels (but not the Brandgenerally).

 

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(j)                                     Managershall cooperate with Owner’s or its designees’ efforts to engage employees ofthe Hotels.

####  

(k)                                  Ifrequested by Owner prior to such expiration or earlier termination of thisAgreement in whole or in part, Manager shall continue to manage under the Brandany affected Hotels designated by Owner after such expiration or earliertermination for up to one (1) year, on such reasonable terms (which shallinclude an agreement to reimburse Manager for its reasonable out-of-pocketcosts and expenses, and reasonable administrative costs and a management fee ofseven and one-half percent (7.5%) of Gross Revenues as Owner and Manager shallreasonably agree.

####  

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

 

## 17.5                           Deposit.

##  

(a)                                  Assecurity for (i) the faithful observance and performance by the Manager of allthe terms, covenants and conditions of this Agreements to be observed andperformed by the Manager, including, without limitation, the payment of theOwner’s Percentage Priority and the Residual Distribution pursuant to thisAgreement, and (ii) the payment to Owner on the first day each month ofthe installment of Owner’s Priority for such month regardless of the inadequacyof the Gross Revenues or Operating Profit for any month for such purpose (allof the foregoing, collectively, the “Secured Obligations”), Manager hasdeposited with Owner simultaneously with the execution and delivery hereof thesum of Sixteen Million Eight Hundred Seventy Two Thousand Dollars ($16,872,000)(as the same may be drawn down and replenished from time to time pursuant tothis Agreement, the “Deposit”). The Owner shall have the option toelect, in its sole discretion, whether and when to apply funds from the Depositwith respect to any of the Secured Obligations; provided however, Owner shallnot apply the Deposit to any Secured Obligation for which the Guarantor isresponsible under the Guaranty unless (a) the Guarantor shall have failed topay any amount due under the Guaranty for a period of five (5) days afternotice or (b) an event described in Sections 17.1(a), 17.1(b) or 17.1(c)shall have occurred with respect to the Guarantor.

####  

(b)                                 Uponthe expiration of the Term, provided, there is then no uncured Manager Default,the Owner shall return the outstanding balance of the Deposit to Manager. Inaddition, if the Term is duly extended by Manager beyond the Initial Term, onnot less than two (2) years’ prior notice from the Manager to Owner, Ownershall return the outstanding balance of the Deposit to Manager upon theexpiration of the Initial Term or the first Renewal Term and its receipt andapproval of the statements required to be delivered pursuant to Section8.1(c) for the last four (4) calendar years of the Initial Term or theRenewal Term, as applicable, which approval shall not be unreasonably withheld,conditioned or delayed provided that:

####  

(i)                                     thereis the no uncured Manager Default;

 

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(ii)                                  eachinstallment of Owner’s Priority for every month during the Initial Term and, ifapplicable, the first Renewal Term, shall have been paid together with anyinterest accrued thereon;

#####  

(iii)                               thePriority Coverage Ratio for all of the Hotels in the aggregate for each of thefour calendar years prior to the expiration of the Initial Term or firstRenewal Term, as applicable, shall be not less than 1.3; and

#####  

(iv)                              theOwner’s Priority shall be increased by an amount equal to the aggregate sum ofall of the Hotels’ Adjustments to Owner’s Priority set forth on Exhibit C.

#####  

(c)                                  Ownermay commingle the Deposit with its other funds and any interest earned onaccount of the Deposit shall be for the benefit of the Owner.

####  

(d)                                 IfHPT’s credit rating as of the day that is twelve (12) months before the end ofthe Term from the Rating Agencies (as defined in the Guarantee) shall be lessthan BBB-/Baa 3, then during the last twelve (12) months of the Term, providedthere is at all times thereafter no uncured Manager Default, Manager shall be entitledto reduce the monthly installments of Owner’s Priority payable by Manager foreach of the last twelve (12) months of the Term, by an amount equal toone-twelfth (1/12th) of the then remaining balance of the Depositand, if Manager makes such election, Owner shall be entitled to retain aportion of the Deposit equal to the amount by which the Owner’s Property is soreduced in the aggregate.

 

ARTICLE 18

 

# NOTICES

#  

## 18.1                           Procedure.

##  

(a)                                  Anyand all notices, demands, consents, approvals, offers, elections and othercommunications required or permitted under this Agreement shall be deemedadequately given if in writing and the same shall be delivered either by hand,by telecopier with written acknowledgment of receipt (provided if notice isgiven by telecopier, a copy shall also be sent on the following Business Day byFederal Express or similar expedited commercial carrier), or by Federal Expressor similar expedited commercial carrier, addressed to the recipient of thenotice, with all freight charges prepaid (if by Federal Express or similarcarrier).

####  

(b)                                 Allnotices required or permitted to be sent hereunder shall be deemed to have beengiven for all purposes of this Agreement upon the date of acknowledged receipt,in the case of a notice by telecopier, and, in all other cases, upon the dateof receipt or refusal, except that whenever under this Agreement a notice iseither received on a day which is not a Business Day****oris required to be delivered on or before a specific day which is not a BusinessDay, the day of receipt or required delivery shall automatically be extended tothe next Business Day.

 

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#### (c)                                  All suchnotices shall be addressed as follows:

 
| If to Owner: | HPT TRS IHG-1, INC. |
|--------------|---------------------|
|         |                | c/o Hospitality Properties Trust |
|         |                | 400 Centre Street |
|         |                | Newton, Massachusetts 02458 |
|         |                | Attn: President |
|         |                | Facsimile: 617/969-5730 |
|              |                     |  |  |

 
| with a copy to: Sullivan & Worcester  LLP |
|-----------------------------------------------|
|                                          |   | One Post Office Square |
|                                          |   | Boston, Massachusetts 02109 |
|                                          |   | Attn: Warren M. Heilbronner, Esq. |
|                                          |   | Facsimile: 617-338-2880 |

 
| If to  Manager: Intercontinental Hotels Group |
|-----------------------------------------------|
|                                          |   | Resources,  Inc. |
|                                          |   | c/o Six  Continents Hotels, Inc. |
|                                          |   | 3 Ravinia  Drive, Suite 100 |
|                                          |   | Atlanta,  Georgia 30346 |
|                                          |   | Attn: Vice  President of Operations |
|                                          |   | Facsimile:  770-604-8875 |

 
| with a copy  to: Intercontinental Hotels Group |
|------------------------------------------------|
|                                           |   | Resources,  Inc. |
|                                           |   | c/o Six  Continents Hotels, Inc. |
|                                           |   | 3 Ravinia  Drive, Suite 100 |
|                                           |   | Atlanta,  Georgia 30346 |
|                                           |   | Attn:  General Counsel - Operations |
|                                           |   | Facsimile:  770-604-5802 |

 

(d)                                 Bynotice given as herein provided, the parties hereto and their respectivesuccessors and assigns shall have the right from time to time and at any timeduring the term of this Agreement to change their respective addresseseffective upon receipt by the other parties of such notice and each shall havethe right to specify as its address any other address within the United Statesof America.

####  

ARTICLE 19

 

# RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS

#  

19.1                           Relationship.Manager shall be the agent of Owner with a limited agency solely for the purposeof operating the Hotels and carrying out ordinary and customary transactionsfor that purpose. Manager shall not have fiduciary duties to Owner by virtue ofthis Agreement. Owner and Manager shall not be construed as joint venturers orpartners of each other, and neither shall have the power to bind or obligatethe other except as set forth in this Agreement. Manager shall not constitute atenant or subtenant of Owner and this Agreement shall not constitute Owner afranchisee of Manager or of any of Manager’s Affiliates. This Agreement shallnot create a franchise or a franchisor/franchisee relationship within themeaning of the Federal Trade Commission 

 

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## Act, any rule or regulationpromulgated, or any other state or federal law, rule or regulation oradministrative or judicial decision.

##  

19.2                           FurtherActions. Each of the parties agrees to execute all contracts, agreementsand documents and take all actions necessary to comply with the provisions ofthis Agreement and the intent hereof.

 

ARTICLE 20

 

# APPLICABLE LAW

#  

This Agreement shall be interpreted,construed, applied and enforced in accordance with the laws of the State of NewYork applicable to contracts between residents of New York which are to be performedentirely within New York, regardless of (a) where this Agreement is executed ordelivered, (b) where any payment or other performance required by thisAgreement is made or required to be made, (c) where any breach of any provisionof this Agreement occurs, or any cause of action otherwise accrues, (d) whereany action or other proceeding is instituted or pending, (e) the nationality,citizenship, domicile, principal place of business, or jurisdiction oforganization or domestication of any party, (f) whether the laws of the forumjurisdiction otherwise would apply the laws of a jurisdiction other thanMassachusetts, (g) the location of the Hotels or any applicable Hotel, or (h)any combination of the foregoing.

 

ARTICLE 21

 

# SUCCESSORS AND ASSIGNS

#  

## 21.1                           Assignment.

##  

(a)                                  Except as expressly provided below, Manager shallnot assign, mortgage, pledge, hypothecate or otherwise transfer its interest inall or any portion of this Agreementor any rights arising under this Agreement or suffer or permit such interestsor rights to be assigned, transferred, mortgaged, pledged, hypothecated orencumbered, in whole or in part, whether voluntarily, involuntarily or byoperation of law, or permit the management of the Hotels by anyone other thanManager or Owner. For purposes of this Section 21.1, an assignment ofthis Agreement shall be deemed to include any transaction which results inManager no longer being an Affiliate of Guarantor or pursuant to which all orsubstantially all of Manager’s assets are transferred to any Person who is notan Affiliate of Guarantor.

####  

(b)                                 Manager shall have the right, without Owner’sconsent, to (i) assign its interest in this Agreement (i) to IHG or anyAffiliate of IHG provided such assignee satisfies the requirements of Section24.15, (ii) in connection with a merger, corporate restructuring orconsolidation of IHG or a sale of all or substantially all of the assets of IHGand (iii) in connection with a sale of all or substantially all of the assets(including associated management agreements) owned by IHG and its Affiliatesrelating to the Brand. If Owner and its Affiliates shall own or lease more thanfifty percent (50%) of the hotels comprising the Brand, IHG shall not, andManager shall cause IHG not to, transfer all or substantially all of the assetsof IHG relating to the Brand other than to a Person who at 

 

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#### alltimes is an Affiliate of IHG. At Owner’s election, Manager shall assign thisAgreement to any Person who is not an Affiliate of IHG that acquires all orsubstantially all of the assets of IHG relating to the Brand and shall causesuch Person to assume all of Manager’s obligations thereafter accruinghereunder.

####  

(c)                                  Owner shall not assign, mortgage, pledge,hypothecate or otherwise transfer its interest in all or any portion of thisAgreement or any rights arising under this Agreement without the prior written consent of Manager except(i)in connection with a sale of a Hotel in accordance with the terms of Sections4.4 and 4.5, (ii) to Purchaser or an Affiliate of Purchaser,(iii) toManager or an Affiliate of Manager, (iv) to an Affiliate of Owner in a merger,corporate restructuring or consolidation of Purchaser or any of itsAffiliates,(v) in connection with the granting of an Authorized Mortgage or(vi) to a Substitute Tenant as provided in Section 4.2; provided,however, in each instance (other than in connection with a collateralassignment) that the assignee hereof assumes all of Owner’s obligationhereunder and under the other Transaction Documents thereafter accruing.

####  

(d)                                 In the event either party consents to an assignment of this Agreement by the other,no further assignment shall be made without the express consent in writing ofsuch party, unless such assignment may otherwise be made without such consentpursuant to the terms of this Agreement. An assignment by Owner of its interestin this Agreement approved or permitted pursuant to the terms hereof shallrelieve Owner of its obligations under this Agreement thereafter accruing.

####  

(e)                                  Inthe event fifty percent (50%) or more of the hotels comprising the Brand ceaseto be Staybridge Suites hotels and are converted to another brand in a singletransaction or a series of related transactions, Owner may elect to requireManager to promptly convert at its own cost and expense (and not as anOperating Cost and without reimbursement from the Reserve Account) the Hotelsto the brand of hotels to which such other hotels are converted. In such event,all references herein to “Staybridge Suites” shall be deemed to refer to thetrade name of the system of hotels to which the Hotels are to be so converted.

####  

21.2                           BindingEffect. The terms, provisions, covenants, undertakings, agreements,obligations and conditions of this Agreement shall be binding upon and shallinure to the benefit of the successors in interest and the assigns of theparties hereto with the same effect as if mentioned in each instance where theparty hereto is named or referred to, except that no assignment, transfer,sale, pledge, encumbrance, mortgage, lease or sublease by or through Owner, asthe case may be, in violation of the provisions of this Agreement shall vestany rights in the assignee, transferee, purchaser, secured party, mortgagee,pledgee, lessee, sublessee or occupant.

 

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ARTICLE 22

 

# RECORDING

#  

22.1                           Memorandumof Agreement. As of the Effective Date, at the option of Manager, Owner andManager agree to execute, acknowledge and record a Memorandum of this Agreementin the land records of the states and counties where the Hotels are located, ina form reasonably satisfactory to Manager.

 

ARTICLE 23

 

# FORCE MAJEURE

#  

23.1                           Operationof Hotel. If at any time during the Term it becomes necessary in Manager’sreasonable opinion to cease or alter operations at any Hotel in order toprotect the health, safety and welfare of the guests and/or employees of suchHotel, or such Hotel itself, for reasons of force majeure beyond the control ofManager such as, but not limited to, acts of war, insurrection, civil strifeand commotion, labor unrest or acts of God, then in such event Manager mayclose and cease or alter operation of all or part of such Hotel, reopening andcommencing or resuming operation when Manager deems that such may be donewithout jeopardy to such Hotel, its guests and employees.

##  

23.2                           Extensionof Time. Owner and Manager agree that, with respect to any obligation,other than the payment of money, to be performed by a party during the Term,neither party will be liable for failure so to perform when prevented by anyoccurrence beyond the reasonable control of such party, herein referred to as a“force majeure” including, without limitation, occurrences such as strike,lockout, breakdown, accident, order or regulation of or by any governmentalauthority, failure of supply or inability, by the exercise of reasonablediligence, to obtain supplies, parts or employees necessary to perform suchobligation, or war or other emergency. The time within which such obligationmust be performed will be extended for a period of time equivalent to thenumber of days of delay from such cause.

 

ARTICLE 24

 

# GENERAL PROVISIONS

#  

24.1                           TradeArea Restriction. Notwithstanding anything to the contrary in thisAgreement, neither Manager nor any Affiliate shall acquire, own, manage,operate or open any hotel as a “Staybridge Suite” hotel nor shall Manager orany Affiliate authorize a third party to operate or open any hotel as a “StaybridgeSuite” hotel that is within the Restricted Area of any Hotel during itsRestricted Period, unless such hotel (a) is owned or leased by Owner or itsAffiliate; (b) is owned, operated, managed, franchised or under development onthe Effective Date and has been specifically identified in writing at or priorto the time of the execution of the Purchase Agreement; or (c) is part of anacquisition by IHG or its Affiliatesof an interest (including an interest as a franchisor) in a chain or group ofnot less than ten (10) hotels (such acquisition to occur in a singletransaction or a series of related transactions). The terms of this Section24.1 shall apply only to “Staybridge Suites” hotels and shall not in any wayrestrict the ownership, management, franchising or operation other brands orflags of any hotels owned or operated by Manager or its Affiliates within theRestricted Area.

 

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## 24.2                           EnvironmentalMatters.

##  

(a)                                  Managershall not store, spill upon, dispose of or transfer to or from any Hotel anyHazardous Substance, except in compliance with all Legal Requirements. Managershall maintain the Hotels at all times free of any Hazardous Substance (exceptin compliance with all Legal Requirements). Manager (i) upon receipt of noticeor knowledge shall promptly notify Purchaser and Owner in writing of anymaterial change in the nature or extent of Hazardous Substances at any Hotel,(ii) shall file and transmit to Purchaser and Owner a copy of any CommunityRight to Know report which is required to be filed by the Manager with respectto any Hotel pursuant to SARA Title III or any other Legal Requirements, (iii)shall transmit to Purchaser and Owner copies of any citations, orders, noticesor other governmental communications received by Manager with respect thereto(collectively, “Environmental Notice”), which Environmental Noticerequires a written response or any action to be taken and/or if suchEnvironmental Notice gives notice of and/or presents a material risk of anymaterial violation of any Legal Requirement and/or presents a material risk ofany material cost, expense, loss or damage, (iv) shall observe and comply withall Legal Requirements relating to the use, maintenance and disposal ofHazardous Substances and all orders or directives from any official, court oragency of competent jurisdiction relating to the use or maintenance orrequiring the removal, treatment, containment or other disposition thereof, and(v) shall pay or otherwise dispose of any fine, charge or imposition relatedthereto.

####  

(b)                                 Inthe event of the discovery of Hazardous Substances other than those maintainedin accordance with Legal Requirements on any portion of any Site or in anyHotel during the Term, Manager shall use reasonable efforts promptly (i) cleanup and remove from and about such Hotel all Hazardous Substances thereon, ifappropriate, (ii) contain and prevent any further release or threat of releaseof Hazardous Substances on or about such Hotel, and (iii) use good faithefforts to eliminate any further release or threat of release of HazardousSubstances on or about such Hotel, and (iv) otherwise effect a remediation ofthe problem in accordance with (A) the Comprehensive EnvironmentalResponse, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq.,as amended; (B) the regulations promulgated thereunder, from time to time;(C) all Federal, state and local laws, rules and regulations (now orhereafter in effect) dealing with the use, generation, treatment, storage,disposal or abatement of Hazardous Substances; and (D) the regulationspromulgated thereunder, from time to time (collectively referred to as “EnvironmentalLaws”).

####  

(c)                                  Tothe extent any service required to be performed under this Section 24.2or cost incurred under this Section 24.2 is not due to the fault ofManager or is not performed or incurred in the operations of the Hotels in theordinary course, the same shall be governed by Section 11.1; provided,however, to the extent that Section 11.1 shall apply to suchservices or costs, Owner shall be entitled to engage a third party to performsuch services.

####  

24.3                           Authorization.Owner represents that it has full power and authority to execute this Agreementand to be bound by and perform the terms hereof. Manager represents it 

 

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## has full power and authorityto execute this Agreement and to be bound by and perform the terms hereof. Onrequest, each such party will furnish to the other evidence of such authority.

##  

24.4                           Severability.If any provision of this Agreement shall be held or deemed to be, or shall infact be, invalid, inoperative or unenforceable as applied to any particularcase in any jurisdiction or jurisdictions, or in all jurisdictions or in allcases, because of the conflict of any provision with any constitution orstatute or rule of public policy or for any other reason, such circumstanceshall not have the effect of rendering the provision or provisions in questioninvalid, inoperative or unenforceable in any other jurisdiction or in any othercase or circumstance or of rendering any other provision or provisions hereincontained invalid, inoperative or unenforceable to the extent that such otherprovisions are not themselves actually in conflict with such constitution,statute or rule of public policy, but this Agreement shall be reformed andconstrued in any such jurisdiction or case as if such invalid, inoperative orunenforceable provision had never been contained herein and such provisionreformed so that it would be valid, operative and enforceable to the maximumextent permitted in such jurisdiction or in such case.

##  

24.5                           Merger.This Agreement constitutes the entire agreement of theparties hereto with respect to the subject matter hereof and shall supersedeand take the place of any other instruments purporting to be an agreement ofthe parties hereto relating to the subject matter hereof.

##  

24.6                           Formalities.Any amendment or modification of this Agreement must be in writing signed byall parties hereto. This Agreement may be executed in one or more counterparts,each of which will be deemed an original. The captions for each Article areintended for convenience only.

##  

## 24.7                           Consent toJurisdiction; No Jury Trial.

 

(a)                                  Exceptas provided in Section 24.19, all actions and proceedings arising out ofor in any way relating to this Agreement shall be brought, heard, anddetermined exclusively in an otherwise appropriate federal or state courtlocated within the State of New York. Except as provided in Section 24.19,the parties hereby (a) submit to the exclusive jurisdiction of any New Yorkfederal or state court of otherwise competent jurisdiction for the purpose ofany action or proceeding arising out of or relating to this Agreement and (b)voluntarily and irrevocably waive, and agree not to assert by way of motion,defense, or otherwise in any such action or proceeding, any claim or defensethat they are not personally subject to the jurisdiction of such a court, thatsuch a court lacks personal jurisdiction over any party or the matter, that theaction or proceeding has been brought in an inconvenient or improper forum,that the venue of the action or proceeding is improper, or that this Agreementmay not be enforced in or by such a court. To the maximum extent permitted byapplicable law, each party consents to service of process by registered mail,return receipt requested, or by any other manner provided by law.

 

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(b)                                 Tothe maximum extent permitted by applicable law, each of the parties heretowaives its rights to trial by jury with respect to this Agreement or matterarising in connection herewith.

####  

24.8                           Performanceon Business Days. In the event the date on which performance or payment ofany obligation of a party required hereunder is other than a Business Day, thetime for payment or performance shall automatically be extended to the firstBusiness Day following such date.

##  

24.9                           Attorneys’Fees. If any lawsuit or arbitration or other legal proceeding arises inconnection with the interpretation or enforcement of this Agreement, theprevailing party therein shall be entitled to receive from the other party theprevailing party’s costs and expenses, including reasonable attorneys’ feesincurred in connection therewith, in preparation therefor and on appealtherefrom, which amounts shall be included in any judgment therein.

##  

24.10                     Section andOther Headings. The headings contained in this Agreement are for referencepurposes only and shall not in any way affect the meaning or interpretation ofthis Agreement.

##  

24.11                     Documents.Throughout the Term, Owner agrees to furnish Manager copies of all noticesrelating to real and personal property taxes and insurance statements, allfinancing documents (including notes and mortgages) relating to the Hotel andsuch other documents pertaining to the Hotels as Manager may request.

##  

24.12                     NoConsequential Damages. Except as may be expressly provided herein, in noevent shall either party be liable for any consequential, exemplary or punitivedamages suffered by the other as the result of a breach of this Agreement. Timeis of the essence with respect to this Agreement.

##  

24.13                     NoPolitical Contributions. Notwithstanding anything contained in thisAgreement to the contrary, no money or property of the Hotels shall be paid orused or offered, nor shall Owner or Manager directly or indirectly use oroffer, 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 anycorporation, joint stock or other association organized or maintained forpolitical purposes, (iii) in aid of any candidate for political office ornomination for such office, (iv) in connection with any election, (v) for anypolitical purpose whatever, or (vi) for the reimbursement or indemnification ofany person for any money or property so used.

##  

24.14                     REITQualification. Manager shall, as an Operating Cost, take all actionsreasonably requested by Owner or Purchaser as may be necessary to ensure that Purchaser’srental income from Owner under the Lease qualifies as “rents from real property”pursuant to Sections 856(d)(2), 856(d)(8)(B) and 856(d)(9) of the Code; provided,however, any additional costs or expenses (including internal costs andexpenses) incurred by Manager in complying with such a request shall be borneby Owner (and 

 

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## shall not be an OperatingCost) to the extent the same together with the costs to Manager referred to in Section24.16 exceeds $25,000 over the Term in the aggregate.

##  

24.15                     FurtherCompliance with Section 856(d) of the Code. Throughout the Term (includingthe Effective Date), the Manager shall qualify as an “eligible independentcontractor” as defined in Section 856(d)(9)(A) of the Code. To that end,Manager:

##  

(a)                                  shallnot permit wagering activities to be conducted at or in connection with anyHotel by any person who is engaged in the business of accepting wagers and whois legally authorized to engage in such business at or in connection with suchHotel;

####  

(b)                                 shalluse reasonable efforts to cause each Hotel to qualify as a “qualified lodgingfacility” under Section 856(d)(9)(D) of the Code;

####  

(c)                                  shallnot own, directly or indirectly or constructively (within the meaning ofSection 856(d)(5) of the Code), more than thirty five percent (35%) of theshares of HPT (whether by vote, value or number of shares), and Manager shallotherwise comply with any regulations or other administrative or judicialguidance now or hereafter existing under said Section 856(d)(5) of the Codewith respect to such ownership limits; and

####  

(d)                                 shallbe actively engaged (or shall, within the meaning of Section 856(d)(9)(F) ofthe Code, be related to a person that is so actively engaged) in the trade orbusiness of operating “qualified lodging facilities” (defined below) for aperson who is not a “related person” within the meaning of Section 856(d)(9)(F)of the Code with respect to HPT or Owner (“Unrelated Persons”). In orderto meet this requirement, the Manager agrees that it (or any “related person”with respect to Manager within the meaning of Section 856(d)(9)(F) of the Code)(i) shall derive at least ten percent (10%) of both its revenue and profit fromoperating “qualified lodging facilities” for Unrelated Persons and (ii) shallcomply with any regulations or other administrative or judicial guidance underSection 856(d)(9) of the Code with respect to the amount of hotel managementbusiness with Unrelated Persons that is necessary to qualify as an “eligibleindependent contractor” within the meaning of such Code Section.

####  

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

####  

24.16                     AdverseRegulatory Event. In the event of an Adverse Regulatory Event arising fromor in connection with this Agreement, Owner and Manager shall work together ingood faith to amend this Agreement to eliminate the impact of such AdverseRegulatory Effect; provided, however, Manager shall have noobligation to materially reduce its 

 

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## rights or materiallyincrease its obligation under this Agreement, all taken as a whole, or to bearany costs or expenses (including internal costs and expenses) in excess of$25,000 in the aggregate over the Term under Section 24.14 and this Section24.16. For purposes of this Agreement, the term “Adverse Regulatory Effect”means any time that a law, statute, ordinance, code, rule or regulation imposes(or could impose in Owner’s reasonable opinion) any material threat to HPT’sstatus as a “real estate investment trust” under the Code or to the treatmentof amounts paid to such Purchaser as “rents from real property” under Section856(d) of the Code. Each of Manager and Owner shall inform the other of anyAdverse Regulatory Event of which it is aware and which it believes likely toimpair compliance of any of the Hotels with respect to the aforementionedsections of the Code.

##  

24.17                     CommercialLeases. Manager shall not enter into any sublease with respect to any Hotel(or any part thereof) unless the same has been approved by Purchaser in its soleand absolute discretion; provided, however, Manager may subleaseor grant concessions or licenses to shops or any other space at a Hotel subjectto the following terms and conditions: (a) subleases and concessions are fornewsstand, gift shop, parking garage, heath club, restaurant, bar or commissarypurposes or similar concessions; (b) such subleases and concessions do not havea term in excess of lesser of five (5) years or the remaining Term under thisAgreement; (c) such subleases and concessions do not demise, (i) in theaggregate, in excess of Two Thousand (2,000) square feet of any Hotel, or (ii)for any single sublease, in excess of Five Hundred (500) square feet of anyHotel; (d) any such sublease, license or concession to an Affiliate of a Managershall be on terms consistent with those that would be reached througharms-length negotiation; (e) for so long as Purchaser or any Affiliate ofPurchaser shall seek to qualify as a real estate investment trust under theCode, anything contained in this Agreement to the contrary notwithstanding,Manager shall not sublet or otherwise enter into any agreement with respect toa Hotel on any basis such that in the opinion of the Owner the rental or otherfees to be paid by any sublessee thereunder would be based, in whole or inpart, on either (i) the income or profits derived by the business activities ofsuch sublessee, or (ii) any other formula such that any portion of suchsublease rental would fail to qualify as “rents from real property” within themeaning of Section 865(d) of the Internal Revenue Code of 1986, as amended, orany similar or successor provision thereto; (f) such lease or concession willnot violate or affect any Legal Requirement or Insurance Requirement; (g)Manager shall obtain or cause the subtenant to obtain such additional insurancecoverage applicable to the activities to be conducted in such subleased spaceas Owner and any mortgagee under an Authorized Mortgage may reasonably require;and (b) not less than twenty (20) days prior to the date on which Managerproposes to enter into any sublease or concession, Manager shall provide a copythereof to Owner.

##  

24.18                     Nonliabilityof Trustees. THE DECLARATION OF TRUST ESTABLISHING PURCHASER, A COPY OFWHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILEDWITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,PROVIDES THAT, AND MANAGER HEREBY AGREES THAT, THE NAME “HPT IHG PROPERTIESTRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION 

 

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## COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THATNO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF PURCHASER SHALL BE HELDTO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, ORCLAIM AGAINST, PURCHASER. ALL PERSONS DEALING WITH PURCHASER, IN ANY WAY, SHALLLOOK ONLY TO THE ASSETS OF PURCHASER FOR THE PAYMENT OF ANY SUM OR THEPERFORMANCE OF ANY OBLIGATION.

##  

## 24.19                     Arbitration.

##  

(a)                                  Wheneverin this Agreement it is provided that a dispute is to be resolved by anArbitration, such dispute shall be finally resolved pursuant to an arbitrationbefore a panel of three (3) arbitrators who will conduct the arbitrationproceeding in accordance with the provisions of this Agreement and the rules ofthe American Arbitration Association. Unless otherwise mutually agreed by Ownerand Manager, the arbitration proceedings will be conducted in New York, NewYork. All arbitrators appointed by or on behalf of either party shall beindependent persons with recognized expertise in the operation of hotels ofsimilar size and class as the Hotels with not less than five (5) years’experience in the hotel industry. The party desiringarbitration will give written notice to that effect to the other party,specifying in such notice the name, address and professional qualifications ofthe person designated as arbitrator on its behalf. Within fifteen (15) daysafter service of such notice, the other party will give written notice to theparty desiring such arbitration specifying the name, address and professionalqualifications of the person designated to act as arbitrator on its behalf. Thetwo arbitrators will, within fifteen (15) days thereafter, select a third,neutral arbitrator. As soon as possible after the selection of the thirdarbitrator, and no later than fifteen (15) days thereafter, the parties willsubmit their positions on each disputed item in writing to the threearbitrators. The decision of the arbitrators so chosen shall be given within aperiod of twenty (20) days after the appointment of such third arbitrator. Thearbitrators must, by majority vote, agree upon and approve the substantiveposition of either Owner or Manager with respect to each disputed item, and arenot authorized to agree upon or impose any other substantive position which hasnot been presented to the arbitrators by Manager or Owner. It is the intentionof the parties that the Arbitrator’s rule only on the substantive positionssubmitted to them by the parties and the Arbitrators are not authorized torender rulings which are a compromise as to any such substantive position. Adecision in which any two (2) arbitrators so appointed and acting hereunderconcur in writing with respect to each disputed item shall in all cases bebinding and conclusive upon Owner and Manager and a copy of said decision shallbe forwarded to the parties. The parties request that the Arbitrator assess thecosts and expenses of the Arbitration and their fees against the parties basedon a finding as to which parties substantive positions were not upheld. Otherwisethe fees and expenses of the arbitration will be treated as an Operating Costunless otherwise determined by the arbitrators.

####  

(b)                                 Ifthe party receiving a request for Arbitration fails to appoint its arbitratorwithin the time above specified, or if the two arbitrators so selected cannotagree on the selection of the third arbitrator within the time above specified,then either party, on behalf of both 

 

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#### parties, may request suchappointment of such second or third arbitrator, as the case may be, byapplication to any judge of any court in New York County, New York of competentjurisdiction upon ten (10) days’ prior written notice to the other party ofsuch intent.

####  

(c)                                  Ifthere shall be a dispute with respect to whether a party has unreasonablywithheld, conditioned or delayed its consent with respect to a matter for whichsuch party has agreed herein not to unreasonably withhold its consent, suchdispute shall be resolved by Arbitration.

####  

(d)                                 Anydisputes under Sections 2.1 or 7.6 shall be resolved byArbitration; provided, however, notwithstanding the foregoing,Owner shall be entitled to seek and obtain injunctive and other equitablerelief if it believes there has been a breach of Manager’s obligation undereither of said Sections.

####  

24.20                     EstoppelCertificates. Each party to this Agreement shall at any time and from timeto time, upon not less than fifteen (15) days’ prior notice from the otherparty, execute, acknowledge and deliver to such other party, or to any thirdparty specified by such other party, a statement in writing:  (a) certifying that this Agreement isunmodified 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 themodifications); (b) stating whether or not to the best knowledge of thecertifying party (i) there is a continuing default by the non-certifying partyin the performance or observance of any covenant, agreement or conditioncontained 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 adefault, and, if so, specifying each such default or occurrence of which thecertifying party may have knowledge; (c) stating the date to whichdistributions of Operating Profits have been made; and (d) stating such otherinformation as the non-certifying party may reasonably request. Such statementshall be binding upon the certifying party and may be relied upon by thenon-certifying party and/or such third party specified by the non-certifyingparty as aforesaid, including, without limitation its and its Affiliates’lenders and any prospective purchaser or mortgagee of any Hotel.

##  

## 24.21                     Confidentiality.

##  

(a)                                  Theparties hereto agree that the matters set forth in this Agreement and theinformation provided pursuant to the terms hereof are strictly confidential andeach party will make every effort to ensure that the information is notdisclosed to any outside person or entities (including the press) without theprior written consent of the other party except may be required by law and asmay be reasonably necessary to obtain licenses, permits, and other publicapprovals necessary for the refurbishment or operation of the Hotels, or inconnection with financing, proposed financing, sale or proposed sale.

####  

(b)                                 Noreference to Manager or to any of its Affiliates will be made in anyprospectus, private placement memorandum, offering circular or offeringdocumentation related thereto (collectively referred to as the “Prospectus”), issued by Owner orany of its Affiliates, which is designated to interest potential investors in aHotel, unless Manager 

 

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(c)                                  haspreviously received a copy of all such references. However, regardless ofwhether Manager does or does not so receive a copy of all such references,neither Manager nor any of its Affiliates will be deemed a sponsor of theoffering described in the Prospectus, nor will it have any responsibility forthe Prospectus, and the Prospectus will so state. Unless Manager agrees inadvance, the Prospectus will not include any trademark, symbols, logos ordesigns of Manager or any of its Affiliates.

####  

24.22                     HotelWarranties. Manager shall be entitled to enforce in the name of Owner anywarranties held by Owner with respect to the Hotels or any portion thereof.

 

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

 
|   | **OWNER**:                                      |
|--------|-------------------------------------------------|
|   |                                            |
|   | HPT TRS IHG-1, INC.                             |
|   |                                            |
|   |                                            |
|   | By:                                             |  /s/ John G. Murray |   |
|   | Name:                                           |  John G. Murray |   |
|   | Title:                                          |  Vice President |   |
|   |                                            |
|   |                                            |
|   | **MANAGER**:                                    |
|   |                                            |
|   |                                            |
|   | INTERCONTINENTAL HOTELS GROUP   RESOURCES, INC. |
|   |                                            |
|   | By:                                             |  /s/ Robert G. Gunkel |   |
|   | Name:                                           | Robert G. Gunkel |   |
|   | Title:                                          | Vice President |   |
|        |                                                 |  |  |  |  |  |

 

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Purchaser in consideration of good andvaluable consideration, joins in the foregoing Agreement to evidence itsagreement to be bound by the terms of Sections 4.1 through and including4.7 and Articles 15 and 16 thereof subject to the terms ofSection 24.18.

 
|   | **PURCHASER**:                  |
|--------|---------------------------------|
|   |                            |
|   | HPT IHG PROPERTIES TRUST        |
|   |                            |
|   |                            |
|   | By:                             |  /s/ John G. Murray |   |
|   | Name:                           | John G. Murray |   |
|   | Title:                          |  President |   |
|   |                            |
|   | Date of Execution: July 1, 2003 |
|        |                                 |  |  |  |  |

 

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**THE FOLLOWING EXHIBITS HAVE BEEN OMITTED ANDWILL BE SUPPLEMENTALLY FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION UPONREQUEST:**

 
| **Exhibit** | ** ** | **Document** |
|-------------|------------|--------------|
| ** **  | ** ** | ** **   |
| **A**       | ** ** | ** **   | **The Sites** |
| ** **  | ** ** | ** **   | ** ** |
| **B**       | ** ** | ** **   | **Opening Dates** |
| ** **  | ** ** | ** **   | ** ** |
| **C**       | ** ** | ** **   | **Allocations** |
| ** **  | ** ** | ** **   | ** ** |
| **D**       | ** ** | ** **   | **Restricted Area** |

 

A-1

----