Document:

Exhibit 10.18

 

FIRST AMENDMENT TO
MANAGEMENT AGREEMENT

 

THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT
(this “Amendment”) is
made as of September 18, 2003 by and between INTERCONTINENTAL HOTELS GROUP
RESOURCES, INC., a Delaware corporation (“Manager”), and HPT TRS IHG-1, INC., a Maryland corporation (“Owner”).

 

WHEREAS, Manager and
Owner entered into that certain Management Agreement, dated as of July 1, 2003
(the “Management Agreement”);
and

 

WHEREAS, Manager and
Owner wish to amend the Management Agreement to, among other things, include
the Hotels located at the Sites listed on Exhibit A attached hereto(the “Expansion
Hotels”);

 

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

 

1.                     Capitalized
terms used in this Amendment and not otherwise defined herein shall have the
meaning ascribed thereto in the Management Agreement.

 

2.                     Section
1.10 of the Management Agreement is amended by deleting from the first and
second line the phrase “for each Hotel, the 2004 Fiscal Year” and inserting the
following in its place:

 

with respect to each Original Hotel, the 2004 Fiscal Year, and with
respect to each Expansion Hotel, the 2006 Fiscal Year;

 

3.                     Section
1.10 of the Management Agreement is further amended by inserting after the
phrase “the 2004 Fiscal Year” on the fifth line thereof the phrase “or the 2006
Fiscal Year, as applicable.”

 

4.                     Sections
1.11 and 1.12 of the Management Agreement are deleted in their entirety and the
following inserted in their place:

 

1.11 “Brand”  shall mean,
collectively, the Staybridge Suites hotel service marks or, with respect to the
Buckhead Hotel, the service marks of the Buckhead Brand, the Brand Standards,
and all of the attributes 

 

 

and features customarily associated with the Staybridge Suites hotel
chain in North America or, with respect to the Buckhead Hotel, the Buckhead
Brand, in either case, from time to time.

 

1.12 “Brand Standards” 
shall mean the standards of operation, as amended from time to time, in
effect at substantially all hotels which are operated under the Staybridge
Suites name as may be specified in manuals and other guidelines provided by the
owner of the System Marks or its Affiliates; provided, however,
with respect to the Buckhead Hotel, the term “Brand Standards” shall
mean the standards of operation from time to time required of owners of similar
hotels.

 

5.                     Section
1.66 of the Management Agreement is amended by inserting after the phrase “the
2004 Fiscal Year” the phrase “or the 2006 Fiscal Year, as applicable.”

 

6.                     Section
1.67 of the Management Agreement is amended by deleting the phrase “Sixteen
Million Eight Hundred Seventy Two Thousand Dollars ($16,872,000)” and replacing
it with “Thirty Six Million Eight Hundred Seventy Two Thousand Dollars
($36,872,000).”

 

7.                     Section
1.27 of the Management Agreement is amended by inserting the following at the
end thereof:

 

The Deposit shall be increased as provided in Section 33 of the First
Amendment.

 

8.                     Section
1.79 of the Management Agreement is amended by inserting “Original” after “each”
in the first line thereof.

 

9.                     Section
1.79 of the Management Agreement is hereby further amended by inserting the
following at the end thereof:

 

“Reserve Percentage” shall mean with respect to the Expansion
Hotels, the following percentages for the following periods:

 

	
  Through 12/31/06

  	
   

  	
  0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Thereafter

  	
   

  	
  5

  	
  %

  

 

2

 

10.                   Section
1.82 of the Management Agreement is deleted in its entirety and replaced with
the following:

 

1.82 “Restricted Period” shall mean, for each Original Hotel,
the period ending on third (3rd)
anniversary of the Effective Date and for each Expansion Hotel, the period ending on the third (3rd)
anniversary of the Expansion Date.

 

11.                   Section
1.87 of the Management Agreement is deleted in its entirety and the following
inserted in its place:

 

1.87 “Sites” shall mean, collectively, the parcels of real
estate more particularly described in Exhibits A-1 and A-2.

 

12.                   Section
1.90 of the Management Agreement is amended by inserting after “hotels” in the
last line thereof the following:

 

or with
respect to the Buckhead Hotel, the Buckhead Brand.

 

13.                   There
is inserted after Section 1.98 of the Management Agreement the following new
Sections:

 

1.99 “Buckhead Brand” shall mean the then hotel brand under
which the Buckhead Hotel is to be operated in accordance with Section 34(e)
of the First Amendment. 

 

1.100 “Buckhead Hotel” shall mean, the Hotel located at Pharr
Road, Atlanta, Georgia.

 

1.101 “Expansion Date” shall mean, the later of (i) October 6,
2003 and (ii) the date on which Owner delivers possession of the Expansion
Hotels to Manager.

 

1.102 “Expansion Hotel” shall mean, each Hotel located on a Site
described in Exhibit A-2.

 

1.103 “First Amendment” shall that certain First Amendment To
Management Agreement dated September 18, 2003 between Manager and Owner.

 

1.104 “Manager’s Share” shall mean a fraction, (a)the numerator
of which is the amount of Initial Working Capital and (b)the denominator 

 

3

 

of which is the sum of (i) the amount of Initial Working Capital, plus
(ii) $750,000.

 

1.105 “Original Hotel” shall mean each Hotel located on a Site
described in Exhibit A-1.

 

14.                   Section
2.1 of the Management Agreement is amended by inserting the following after the
second sentence thereof:

 

Owner acknowledges that the Expansion
Hotels are to be converted to the Brand Standards following the Expansion Date.
Manager shall complete such conversion promptly after the Expansion Date, but
in all events on or before December 31, 2008; provided, however,
Manager shall not be obligated to cause the Expansion Hotels to conform with
the requirements of the Brand Standards which have been waived as set forth on
Exhibit B to the First Amendment.

 

15.                   Section
2.6 of the Management Agreement is deleted and replaced with the following:

 

2.6  Condition of the Hotels.
Manager acknowledges receipt and delivery of possession of each Original Hotel,
and Manager accepts each Original Hotel and, subject to the terms of Sections
35, 36 and 41 of the First Amendment, each Expansion Hotel in its “as is”
condition as of, respectively, the Effective Date and the Expansion Date,
subject to the rights of parties in possession, the existing title, including
all covenants, conditions, restrictions, reservations, mineral leases,
easements and other matters of record or that are visible or apparent on the
Hotels, all applicable Legal Requirements, and such other matters which would
be disclosed by an inspection of the Hotels and the record title thereto or by
an accurate survey thereof. MANAGER REPRESENTS THAT:  IT HAS INSPECTED THE HOTELS INCLUDING THE
FF&E AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF
SATISFACTORY; AS OF THE EFFECTIVE DATE, THE ORIGINAL HOTELS ARE IN COMPLIANCE
WITH THE BRAND STANDARDS IN ALL MATERIAL RESPECTS; EXCEPT FOR CAPITAL
REPLACEMENT TO BE MADE FROM TIME TO TIME USING FUNDS TO BE DEPOSITED IN THE
RESERVE ACCOUNT PURSUANT TO SECTION 5.2(a) AND SECTION 33 OF THE FIRST
AMENDMENT, MANAGER CURRENTLY DOES

 

4

 

NOT ANTICIPATED THE NEED TO MAKE CAPITAL REPLACEMENTS DURING THE FIRST
FIVE YEARS OF THE TERM (PROVIDED, HOWEVER, SUCH REPRESENTATION IS
NOT A GUARANTY OR WARRANTY THAT NO SUCH CAPITAL REPLACEMENT WILL BE REQUIRED);
AND, EXCEPT AS PROVIDED IN SECTION 36 OF THE FIRST AMENDMENT, IT IS NOT RELYING
ON ANY REPRESENTATION OR WARRANTY OF OWNER, PURCHASER OR ANY OF THEIR AGENTS OR
EMPLOYEES WITH RESPECT TO ANY OF THE MATTERS SET FORTH IN THIS SECTION. SUBJECT
TO THE TERMS OF SECTION 36 AND SECTION 37 OF THE FIRST AMENDMENT, MANAGER
WAIVES ANY CLAIM OR ACTION AGAINST OWNER AND PURCHASER WITH RESPECT TO THE
CONDITION OF THE HOTELS. EXCEPT AS PROVIDED IN SECTION 36 OF THE FIRST
AMENDMENT, PURCHASER AND OWNER MAKE NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, WITH RESPECT TO THE HOTELS OR ANY PART THEREOF, EITHER AS TO ITS
FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR
OTHERWISE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT
OR PATENT.

 

16.                   For
purposes of determining whether Owner and its Affiliates own or lease at least
fifty (50%) percent of the hotels comprising the Brand under Section 6.1 of the
Management Agreement, the Expansion Hotels shall be excluded as though
Expansion Hotels were neither owned or leased by Owner or its Affiliates and as
though the Expansion Hotels were not a portion of the hotels comprising the
brand.

 

17.                   The
first sentence of Section 5.1 of the Management Agreement is deleted and
replaced with the following:

 

Manager shall (a) contribute to the Working Capital for the Hotels an
amount reasonably sufficient to pay (i) Operating Costs for the Original Hotels
for the first thirty (30) days of operating the same following the Effective
Date and (ii) Operating Costs for the Expansion Hotels for the first thirty
(30) days of operating the same following the Expansion Date to the extent such
Operating Costs for the Expansion Hotels for such period exceeds $750,000
collectively, the “Initial Working Capital”) and (b) upon the execution
and delivery hereof, pay to Owner the monthly 

 

5

 

installment of Owner’s Priority for the month in which the Effective
Date occurs.

 

18.                   On
the Expansion Date Owner shall advance to Manager an amount equal to the excess
of $750,000 over the actual Working Capital of the Expansion Hotels delivered
to Manager on the Expansion Date. The amount so advanced shall be added to the
Working Capital of the Hotels and used to pay Operating Costs as they come due.

 

19.                   The
last sentence of Section 5.1 of the Management Agreement is deleted and
replaced with the following:

 

Upon the expiration or earlier termination of the Term, the Working
Capital of the Hotels shall be applied to pay all Operating Costs and all
amounts owned to Owner to the extent Gross Revenues are insufficient. Thereafter,
any remaining Working Capital shall be applied as follows:  (i) first, provided there is no uncured
Manager Default, to Manager, Manager’s Share of any remaining Working Capital;
and (ii) to Owner, the balance of the Working Capital.

 

20.                   Section
7.5 of the Management Agreement is amended by inserting at the
end thereof the following:

 

Notwithstanding the foregoing, the
Buckhead Hotel shall be included in the Reservation System for the Buckhead
Brand, and Owner acknowledges that the other Expansion Hotels shall be added to
the Reservation System as soon as practicable after the Expansion Date.

 

21.                   Section
7.7(a) of the Management Agreement is amended by inserting “and
Section 33 of the First Amendment” after “7.7(b)” in the first line
thereof.

 

22.                   Section
8.2(a) of the Management Agreement is amended by inserting the following after
the first sentence thereof:

 

Notwithstanding
the foregoing, (i) Manager shall not be obligated to prepare or deliver Yearly
Budgets for the Expansion Hotels for the 2003 and 2004 Fiscal Years; (ii)
Manager shall deliver to Owner, each month until January, 2005, Manager’s then
most current forecast of the Expansion Hotels for the next twelve (12) months,
which forecasts shall be 

 

6

 

in
Manager’s customary form; and (iii) on or before December 15, 2003, Manager
shall provide to Owner a month-by-month schedule of the draws from the Reserve
Account which Manager anticipates to make during the 2004 and 2005 fiscal year
in connection with renovating the Expansion Hotels; and (iv) Manager shall
periodically provide Owner with updates to such schedule consistent with good
management and construction practices.

 

23.                   There
is inserted at the end of Section 9.1(a) of the Management Agreement, the
following:

 

Notwithstanding anything contained herein to the contrary, to the
extent that Base Management Fees for the Expansion Hotels for any Fiscal Year
up to and including the Fiscal Year ending on December 31, 2008 are not paid in
accordance with the terms hereof, the same shall not accrue from year to year,
and Manager shall not be entitled to receive the payment thereof from the Gross
Revenues of any subsequent Fiscal Year. For purpose of this Section 9.1(a),
the Gross Revenues of the Expansion Hotels and the applications thereof shall
be calculated separately from the calculations of the Gross Revenues and
applications thereof of the Original Hotels.

 

24.                   The
following is inserted at the end of the first sentence of Section 9.2 of the
Management Agreement:

 

provided, however,
Manager shall pay as Operating Costs, only the service fees (excluding
franchise fees) generally payable by franchisees of the Buckhead Brand.

 

25.                   Section
10.1(c) is deleted in its entirety and replaced with the following:

 

(c)           Third, to Owner, first,
all Owner’s Priority then due and payable and then all accrued but unpaid Owner’s
Priority which accrued pursuant to the terms of Section 10.3 during the
Fiscal Year to which such Gross Revenues pertain;

 

26.                   The
following is inserted after the first sentence of Section 10.3:

 

7

 

Notwithstanding anything contained herein to the contrary, to the
extent that for any Fiscal Month prior to January, 2006 Operating Profits
attributable to the Expansion Hotels for such month are insufficient to pay the
portion of Owner’s Priority attributable to such Hotels for such month, Manager
may defer paying up to $333,333 of such portion of Owner’s Priority for such
month. Amounts which are so deferred shall nevertheless be deemed accrued; provided,
however, Owner shall not be entitled to payment of any amounts so
deferred except as provided in Section 10.1(c) (i.e., the same shall not accrue
from year to year but shall only be payable out of Gross Revenues of the Fiscal
Year to which such deferred amounts pertain).

 

27.                   Section
17.3 of the Management Agreement is amended by changing the title thereof to “Owner
Events of Default and Remedies for Owner Defaults” and inserting “any
representation or warranty made by Owner in this Agreement proves to be untrue
when made in any material respect or” after the word “event” in the first line
thereof.

 

28.                   The
phrase “Fifty Million Dollars ($50,000,000)” in Section 17.2 of the Management
Agreement is hereby deleted in its entirety and is replaced with “Seventy
Million Dollars ($70,000,000).”  Manager
acknowledges and agrees that but for the liquidated damages clause contained in
the Management Agreement as modified hereby, Owner would not enter into this
Amendment.

 

29.                   Section
24.18 of the Management Agreement is deleted and replaced with:

 

Nonliability of Trustees.
EACH DECLARATION OF TRUST ESTABLISHING EACH ENTITY COMPRISING PURCHASER, A COPY
OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (EACH, A “DECLARATION”), IS DULY
FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,
PROVIDES THAT, AND MANAGER HEREBY AGREES THAT, THE NAMES “HPT IHG PROPERTIES
TRUST” AND “HPTSHC PROPERTIES TRUST” REFER TO THE TRUSTEES UNDER THE APPLICABLE
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF ANY ENTITY
COMPRISING PURCHASER 

 

8

 

SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY
OBLIGATION OF, OR CLAIM AGAINST, SUCH ENTITY. ALL PERSONS DEALING WITH ANY
ENTITY COMPRISING PURCHASER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SUCH
ENTITY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

 

30.                   Exhibit
A to the Management Agreement is hereby amended by renaming it Exhibit A-1.
Exhibit A to this Amendment is inserted as Exhibit A-2 to the
Management Agreement after such Exhibit A-1.

 

31.                   Exhibit
C to the Management Agreement is deleted in its entirety and replaced with Exhibit
C attached hereto.

 

32.                   There
is added to the end of Exhibit D to the Management Agreement the maps showing,
or other descriptions of, the Restricted Areas for the Expansion Hotels set
forth in Exhibit D hereto.

 

33.                   Manager
agrees to increase the Deposit by Twenty Million Dollars ($20,000,000), and
Owner agrees to, or cause Purchaser to, advance up to Thirty Million Dollars
($30,000,000) in the aggregate into the Reserve Account, all on the following
terms and conditions:

 

(a)           On
or before the Expansion Date, Owner or Purchaser shall deposit in the Reserve
Account Ten Million Dollars ($10,000,000), and Manager shall deliver to Owner
Ten Million Dollars ($10,000,000) which shall be added to and be a part of the
Deposit.

 

(b)           On
or before December 31, 2006, Manager shall deliver to Owner, in the aggregate,
under this Section 33(b) and Section 33(e),an additional Ten
Million Dollars ($10,000,000) which shall be added to and be a part of the
Deposit.

 

(c)           If,
at any times prior to December 31, 2006, the funds in the Reserve Account shall
be insufficient for the purposes for which the Reserve Account is maintained in
Manager’s sole judgment, Manager shall give Owner written notice thereof, which
notice shall set forth, in reasonable detail, the calculation of such
insufficiency and such other information with respect thereto as Owner may
reasonably require. Provided that there is then no uncured Manager Default,
Owner shall, within twenty (20) Business Days after such notice, advance (or
cause Purchaser to advance) the amount of such insufficiency to Manager for 

 

9

 

deposit into the Reserve Account. Owner
hereby consents to the Material Repairs to be made by Manager, and expenditures
made from the Reserve Account in connection therewith, prior to December 31,
2006 to cause the Expansion Hotels to comply with applicable Brand Standards or
to correct any deferred maintenance thereto.

 

(d)           There
shall be no adjustment to Owner’s Priority on account of the first Twenty
Million Dollars ($20,000,000) advanced by Owner or Purchaser pursuant to this Section
33. However, the annual amount of Owner’s Priority shall be increased by
ten percent (10%) of the excess of the aggregate amount advanced under this Section
33 over Twenty Million Dollars ($20,000,000). Such increase shall be
effective as of the dates on which such excess advances are made. Except as
provided herein, there shall be no adjustment to Owner’s Priority on account of
advances made pursuant to this Section 33.

 

(e)           Unless
and until the Deposit shall have been increased by Twenty Million Dollars
($20,000,000) in the aggregate under Sections 33(a)and 33(b), the
aggregate amount to be advanced by Owner or Purchaser pursuant to Sections
33(a)and 33(c) shall not exceed such aggregate increase to the
Deposit.

 

(f)            The
maximum aggregate amount to be advanced pursuant to Sections 33(a)and 33(c)
is Thirty Million Dollars ($30,000,000), and Owner shall not be obligated to,
or to cause Purchaser to, advance any amounts under this Section 33 in
excess of such maximum aggregate amount.

 

(g)           No
advances shall be requested under this Section 33 after December 31,
2006.

 

34.   The
following terms shall apply to the Buckhead Hotel:

 

(a)           The
Buckhead Hotel will be operated as a Buckhead Brand hotel. Accordingly,
notwithstanding anything contained in the Management Agreement, any reference
to “Staybridge Suites” or the “Brand” in the Management Agreement shall with
respect to the Buckhead Hotel only be deemed to refer to the Buckhead Brand.

 

(b)           Manager
may market the Buckhead Hotel for sale until December 31, 2009. If prior to
such date Manager receives a bona fide arm’s-length binding unconditional offer
to purchase the Buckhead Hotel from an unrelated third party having the
financial capacity to implement the terms of such offer for a purchase price
acceptable to Manager and otherwise on customary terms (an “Offer”),
Manager shall 

 

10

 

give Owner and Purchaser notice thereof,
which notice shall include a copy of the Offer executed by such third party. In
the event that Owner and Purchaser shall fail to accept or reject such Offer
within thirty (30) days after receipt of such notice, such Offer shall be
deemed to be rejected by them. If Owner and Purchaser shall either sell the
Buckhead Hotel pursuant to such Offer, or reject such Offer, effective as of
the date of such sale or, if the Offer was rejected or deemed rejected, the
proposed date of sale contained in such Offer, as the case may be, this
Agreement shall terminate with respect to the Buckhead Hotel, and the Owner’s
Priority shall be reduced by an amount equal to ten percent (10%) of the net
proceeds of sale received by Owner or Purchaser or, in the case of such a
rejection, the projected net proceeds determined by reference to such Offer. If
any Offer is accepted by Purchaser and Owner, but the sale pursuant thereto is
not consummated, Manager shall continue to have the right to market the
Buckhead Hotel on the foregoing terms.

 

(c)           The
terms of Sections 4.4 and 4.7 of the Management Agreement shall not apply to
any sale of the Buckhead Hotel made pursuant to an Offer delivered by Manager.

 

(d)           If the Management
Agreement with respect to the Buckhead Hotel shall expire or terminate other
than in connection with the sale thereof as herein contemplated, Owner shall be
entitled (but not obligated) to operate the Buckhead Hotel under the Buckhead Brand
name for a period of one (1) year following such termination in accordance with
the terms of the Management Agreement and the payment of any applicable
Services Fee; provided, however, Owner shall not be obligated to
incur any additional cost or expense in connection with any Capital Replacement
to or at the Buckhead Hotel to the extent attributable solely to complying with
the Buckhead Brand standards.

 

(e)           Manager
shall elect, by notice given to Owner promptly after the date hereof, the hotel
brand under which the Buckhead Hotel shall be operated. From time to time, with
the prior written consent of Owner (which consent shall not be unreasonably
withheld), Manager may elect to change the hotel brand under which the Buckhead
Hotel will be operated.

 

35.   Owner shall, or shall cause Purchaser to, promptly after the date hereof
give Candlewood Management, Inc. (“Candlewood”) a notice terminating the
existing management agreement with Candlewood (the “Candlewood Management
Agreement”) with respect to the Expansion Hotels in accordance with the
terms of Section 7.2 thereof. In connection therewith, Owner shall direct
Candlewood to (a) 

 

11

 

reasonably cooperate with Manager in order to
effectuate a smooth turnover of the management and operations of the Expansion
Hotels; (b) provide Manager full access to the Expansion Hotels from and after
the date hereof through and including the Expansion Date; (c) on the Expansion
Date transfer to Manager all FF&E reserves and capital replacement reserves
held by Candlewood; (d) on the Expansion Date transfer to Manager any and all
reservations fees, advanced deposits and similar prepaid items; (e) on the
Expansion Date transfer all telephone numbers used in connection with the
operation of the Expansion Hotels; (f) cooperate with Manager in Manager’s
efforts to engage employees of the Expansion Hotels; (g) on the Expansion Date
deliver to Manager all books and records of the Expansion Hotels, provided that
Candlewood may retain copies of any of the same for Candlewood’s records; (h)
on the Expansion Date, deliver possession of the Expansion Hotels, together
with any and all keys or other access devices to Manager; (i) effective as of
the Expansion Date, assign to Manager all booking, reservation, service and
operating contracts relating to exclusively to the occupancy or operation of
the Expansion Hotels and entered into in the ordinary course of business by
Candlewood; (j) effective as of the Expansion Date, assign to Manager any
assignable licenses and permits pertaining to the Expansion Hotels and
otherwise reasonably cooperate with Manager as may be necessary for the
transfer of any and all hotel licenses and permits to Manager. Neither Owner
nor Purchaser shall have any liability to Manager for Candlewoods failure to do
any of the foregoing; provided, however, Owner shall, or shall
cause Purchaser to, use its reasonable efforts to enforce the terms of said
management agreement and attempt to cause Candlewood to do the foregoing.

 

36.   HPTSHC
Properties Trust (“HPTSHC”) warrants and represents that: its
investigation of the Expansion Hotels made in connection with the acquisition of the Expansion Hotels was
conducted in a manner consistent in all material respects with the standards
generally employed by HPTSHC, Owner and their Affiliates(collectively, the “HPT
Group”) in connection with their acquisitions of hotel properties; and,
based on such investigation, when HPTSHC acquired the Expansion Hotels it
believed that the statements in Exhibit E (other than the statement in
paragraph Error! Reference source not found.
thereof) were true in all material respects except as disclosed in the materials previously furnished or obtained by
Manager or otherwise disclosed in writing to, or known by, Manager. Manager
shall have the right, subject to the receipt of any required consents and the
terms of any applicable agreement, to pursue, in the name of HPTSCH, any and
all rights HPTSCH may have under or 

 

12

 

with respect to any title insurance policy, engineering report, survey,
zoning opinion or report or environmental study obtained by HPTSHC in
connection with such acquisition. The terms of Section 40 shall apply to
any recovery by Manager in connection therewith.

 

37.                   Each
of HPTSHC and Owner warrants and
represents to Manager that, except as disclosed in the materials previously
furnished or obtained by Manager or otherwise disclosed in writing to, or known
by, Manager: it has not done anything
since the date of its acquisition of the Expansion Hotels to cause any of the
statements in Exhibit E to be untrue in any material respect on the
Expansion Date; and to Owner’s Knowledge the statements in Exhibit E are
true in all material respects as
of the date hereof. HPTSHC and Owner shall not between the date hereof
and the Expansion Date do anything which causes the statements in Exhibit E
to be untrue in any material respect on the Expansion Date.

 

38.                   The
representations and warranties made in this Agreement by Owner and HPTSHC are
made as of the date hereof. All representations and warranties made in this
Agreement by HPTSHC and Owner shall survive the Expansion Date.

 

39.                   As
used herein, the term “Owner’s Knowledge” shall mean the actual (and not
the imputed or constructive) knowledge of John Murray without any inquiry of
other personnel employed by the HPT Group. HPTSHC and Owner warrant and represent to Manager that John
Murray is the officer of the HPT Group to whom any condition which would
render any of the statements in Exhibit E untrue in any material respect
should be reported by any employee of the HPT Group that first discovers such
condition and that the HPT Group has in place, either formally or informally,
systems designed to make sure that John Murray receives such reports.

 

40.                   Any
amounts recovered during the Term by Owner or Manager from any third party
(other than from or in respect of any claim of the HPT Group against Wyndham International, Inc., Summerfield HPT
Lease Company, L.P. or any of their Affiliates) with respect a defective
condition at any of the Expansion Hotels in excess of the cost of recovering
the same (including, without limitation, attorneys’ fees) shall be deposited
into the Reserve Account or applied as the parties reasonably agree.

 

41.                   Owner shall be responsible for any and all
costs or expenses of owning and operating the Expansion Hotels prior to the
Expansion Date (including, without limitation, 

 

13

 

all applicable real and personal
property, sales, hotel-motel, excise, gross receipts and use taxes and
assessments and any accrued unpaid vacation, sick leave and similar benefits
owed to existing employees of the Expansion Hotels who are employed at the Expansion
Hotels on the Expansion Date. Owner shall pay when due such costs and expenses
itself or timely advance funds to Manager to pay such costs and expenses. Owner
shall file or cause to be filed all returns for any tax periods prior to the
tax period in which the Expansion Date occurs.

 

42.                   Except to the extent solely attributable to
matters pertaining to or arising from or in connection with any act or omission
of Manager or its Affiliates, Owner shall indemnify, defend and hold harmless
Manager and its Affiliates for, from and against any cost, loss, damage or
expense including, but not limited to, reasonable attorneys’ fees and all court
costs and other expenses of litigation, whether or not taxable under local law
(each, a “Loss and Expense”) for any claims of any nature whatsoever made by
each of Candlewood, Wyndham International, Inc., Summerfield HPT Lease Company,
L.P. or any of their respective Affiliates pertaining to the Expansion Hotels.
Such indemnity is subject to the following terms and conditions:

 

(a)           If Manager or its Affiliate suffer or incur
any Loss and Expense or any action is commenced against, or claim is made or
threatened against, Manager or its Affiliate against which Owner is to
indemnify Manager or its Affiliate, Manager or its Affiliate shall give Owner
notice thereof within thirty (30) days of becoming aware that it has suffered
such Loss and Expense or of such action or claim.

 

(b)           Owner shall conduct and control, through
counsel of its own choosing, reasonably acceptable to Manager or its Affiliate,
any third party action or claim, but the indemnified party may, at its
election, participate in the defense thereof at its sole cost and expense. Manager
and its Affiliates shall cooperate with Owner in defending any claim or action
for which indemnity is sought hereunder. Such cooperation shall include access
during normal business hours afforded to Owner to, and reasonable retention by
Manager and its Affiliates of, records and information which are reasonably
relevant to such action or claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.

 

(c)           If Owner shall fail to defend any action or
claim, then Manager or its Affiliate may defend, through counsel of its 

 

14

 

own choosing, such action or
claim, and (so long as it gives Owner at least fifteen (15) days’ notice of the
terms of the proposed settlement thereof and permits Owner to then undertake
the defense thereof) settle such action or claim and to recover from Owner or
HPTSHC the amount of such settlement or of any judgment and the reasonable
costs and expenses of such defense.

 

(d)           Owner shall be entitled to compromise or
settle any such action or claim without the prior written consent of Manager,
provided it or HPTSHC pays all amounts due under this Section 42 and the
terms and conditions of such
compromise or settlement:(i) include a full release of Manager and its affected
Affiliates from the action or claim which is the subject of the settlement
proposal; and (ii) do not include any term or condition which would restrict in
any material manner the continued management and operations of the Expansion
Hotels in substantially the manner then being managed and operated by Manager
or which would impose any continuing obligations or liability of any nature on
Manager or its Affiliates.

 

43.                   Manager
hereby consents to the amendment to the Lease of even date herewith pursuant to
which Owner leases the Expansion Hotels from HPTSHC.

 

44.                   All
references in the Management Agreement to the Management Agreement shall be
deemed to be references thereto as amended hereby.

 

45.                   If the Expansion Date does not occur on or
before December 31, 2003, this Amendment shall terminate and be of no further
force or effect. Such termination shall not release or relieve either party
from any breach hereof theretofore accruing.

 

46.                   As
modified hereby, the Management Agreement is in full force and effect and is
hereby ratified and confirmed.

 

47.                   This
Amendment may be executed in one or more counterparts, all of which
counterparts shall constitute but one and the same document.

 

15

 

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

 

	
   

  	
  OWNER:

  
	
   

  	
   

  
	
   

  	
  HPT TRS IHG-1, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
   

  	
  Name:

  	
  John G. Murray

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MANAGER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERCONTINENTAL HOTELS 

  
	
   

  	
  GROUP RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stevan D. Porter

  	
   

  
	
   

  	
  Name:

  	
  Stevan D. Porter

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
								

 

16

 

Purchaser in consideration of good and
valuable consideration, joins in the foregoing Amendment to evidence its
agreement to be bound by the terms of Section 34(b). In addition, HPTSHC
Properties Trust joins in the foregoing Amendment to evidence its agreement to
be bound by the terms of Sections 36 through and including 40 and
Sections 4.1 through and including 4.7 of the Management Agreement and Articles
15 and 16 thereof subject to the terms of Section 24.18 thereof.

 

	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  HPT IHG PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
   

  	
  Name:

  	
  John G. Murray

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date of Execution:

  
	
   

  	
   

  
	
   

  	
  HPTSHC PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
   

  	
  Name:

  	
  John G. Murray

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date of Execution:

  
						

 

17

 

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

 

	
  Exhibit

  	
   

  	
  Document

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Exhibit A-2 to the Management Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit A-2

  	
   

  	
  Legal Descriptions

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Waiver of Brand Standards for
  the Expansion

  
	
   

  	
   

  	
  Hotels

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Substitute Exhibit C to the
  Management Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Restricted Areas for the
  Expansion Hotels

  
	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Condition of the Expansion
  HotelsExhibit 10.19

 

SECOND AMENDMENT TO MANAGEMENT AGREEMENT

 

THIS SECOND AMENDMENT TO MANAGEMENT AGREEMENT (this “Amendment”) is
made as of March    , 2004 by and between INTERCONTINENTAL
HOTELS GROUP RESOURCES, INC., a Delaware corporation (“Manager”), and HPT TRS
IHG-1, INC., a Maryland corporation (“Owner”).

 

WITNESSETH:

 

WHEREAS Owner and Manager have entered into that certain Management
Agreement dated as of July 1, 2003 (the “Original Management Agreement”),
as amended by First Amendment to Management Agreement dated as of
September 18, 2003 (the “First Amendment”; the Original Management
Agreement as so amended, the “Management Agreement”); and

 

WHEREAS the Management Agreement contemplated the possible sale of the
Buckhead Hotel (as defined in the Management Agreement); and

 

WHEREAS Manager has requested that Owner and HPTSHC Properties Trust (“HPT”)
enter into a certain Agreement of Purchase and Sale with Manager and Pharr
Lodge, LLC with respect to the Buckhead Hotel (the “Contract”); and

 

WHEREAS, Owner and HPT are willing to enter into the Contract only if
this Amendment is executed and delivered by Manager.

 

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

 

1.     If
the Closing under the Contract shall occur, Owner’s Priority (as defined in the
Management Agreement) shall be reduced as provided in Section 34(b) of the
First Amendment and the phrase “net proceeds of sale received by Owner or
Purchaser” as used in said Section 34(b) shall mean the actual amount received
by Owner and HPT under the Contract by wire transfer of immediately available
funds net of (without duplication) closing costs charged to, paid or to be paid
by Owner or HPT (including, without limitation, those specified in Section
12.03 of the Contract). Further to the foregoing, the parties acknowledge and
agree that to the extent such actual amount received by Owner and HPT is
increased or decreased by reason of the closing adjustments required under the
Contract (including, without limitation, those specified in Article IV and
Section 10.02 of the Contract), said “net proceeds of sale received by Owner or
Purchaser” will be adjusted.

 

2.     All
post-Closing adjustments to closing adjustments under the Contract shall be for
the account of Manager. Accordingly, Manager shall be entitled to any amounts
payable by Buyer on account of post-Closing adjustments and shall pay (out of
its own funds) any post-Closing adjustments due to Buyer.

 

3.     If
any adjustment to Owner’s Priority on account of the sale of the Buckhead Hotel
shall occur other than on the first day of a month, the monthly installment of
Owner’s Priority 

 

 

        for the month in which
such adjustment occurs shall be prorated on a daily basis. Owner’s Priority
shall be adjusted on account of the sale of the Buckhead Hotel effective as of
the date Owner or HPT receives the sale proceeds therefrom if such proceeds are
received prior to 2:00 P.M. Eastern Standard Time on a Business Day (as defined
in the Management Agreement) or on the next succeeding Business Day.

 

4.     From
and after such Closing, Manager shall indemnify Owner for any claims relating
to (a) Buyer failing to perform the obligations under the Operating Agreements
(as defined in the Contract) assumed by it and (b) the Buckhead Hotel for which
Manager is responsible under the Management Agreement (determined without
regard to any termination thereof in its entirety or in part).

 

5.     Before
and after the Closing, Manager shall indemnify Owner and HPT for any claims
made by Buyer relating to any matter for which Manager is responsible under the
Contract or the Management Agreement (determined without regard to any
termination thereof in its entirety or in part).

 

6.     Owner
shall be responsible for termination of the existing franchise/license
agreement pursuant to which the Hotel is currently operated as a Summerfield
Suite Hotel effective as of the Closing.

 

7.     All
references in the Management Agreement to the Management Agreement shall be
deemed to be references thereto as amended hereby.

 

8.     As
modified hereby, the Management Agreement is in full force and effect and is
hereby ratified and confirmed.

 

9.     This
Amendment may be executed in one or more counterparts, all of which
counterparts shall constitute but one and the same document.

 

 

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

 

	
   

  	
  MANAGER: 

  
	
   

  	
   

  
	
   

  	
  INTERCONTINENTAL HOTELS GROUP 

  
	
   

  	
  RESOURCES, INC. 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stevan Porter

  
	
   

  	
  Its:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  OWNER: 

  
	
   

  	
   

  
	
   

  	
  HPT TRS IHG-1, INC. 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray 

  
	
   

  	
  Its: 

  	
  Vice President

  
				

 

Each of the undersigned by their execution hereof evidence their
consent to the foregoing and ratify and confirm their respective guaranties
given in connection with the Management Agreement.

 

	
   

  	
  HOSPITALITY  PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERCONTINENTAL HOTELS GROUP PLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stevan Porter

  	
   

  
	
   

  	
  Its:

  	
  Director

  	
   

  

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]