Document:

Exhibit 10.28

 

LIMITED LIABILITY COMPANY AGREEMENT

OF

INLAND AMERICAN HYDE PARK, L.L.C.

 

This Limited Liability Company Agreement (together with the schedules
attached hereto, this “Agreement”) of Inland American Hyde Park, L.L.C., a
Delaware limited liability company (the “Company”), is entered into by Inland American
Real Estate Trust, Inc., a Maryland corporation, as the sole equity member
(“Member”), and Special Member, LLC, a North Carolina limited liability
company, as the Special Member. 
Initially capitalized terms used herein and not otherwise defined have
the meanings set forth on Schedule A hereto.

 

The Member formed the Company as a limited liability company pursuant
to and in accordance with the Delaware Limited Liability Company Act (Title 6,
Chapter 18 §18-101 et seq.), as amended from time to time (the “Act”) by filing
the Certificate of Formation with the Delaware Secretary of State on November 1,
2005.

 

Now, therefore, by execution of this Agreement, the Member and Special
Member hereby agree follows:

 

1.                                       Name.

 

The name of the Company is Inland American Hyde Park, L.L.C.

 

2.                                       Principal
Business Office.

 

The principal business office of the Company shall be located at 2901
Butterfield Road, Oak Brook, Illinois 60523, or such other location as may
hereafter be determined by the Member.

 

3.                                       Registered
Office.

 

The address of the registered office of the Company in the State of
Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, New Castle County, Delaware 19801.

 

4.                                       Registered
Agent.

 

The name and address of the registered agent of the Company for service
of process on the Company in the State of Delaware is The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, New Castle County,
Wilmington, Delaware 19801.

 

 

5.                                       Members.

 

a.                                       The
name and the mailing address of the Member is set forth on Schedule B
attached hereto.

 

b.                                      Subject
to Section 9(b), the Member may act by written consent of all Members.

 

c.                                       Upon
the occurrence of any event that causes the Member to cease to be a member of
the Company (other than (i) upon an assignment by the Member of all of its
limited liability company interest in the Company and the admission of the
transferee to the Company, effective immediately prior to such assignment,
pursuant to Section 21, or (ii) the resignation of the Member and the
admission of an additional member of the Company, effective immediately prior
to such resignation, pursuant to Section 22), each Person who has executed
a counterpart to this Agreement acknowledging their obligation to become a
member of the Company under certain circumstances as specifically set forth
herein (a “Special Member”) shall, without any action of any Person and
simultaneously with the Member ceasing to be a member of the Company,
automatically be admitted to the Company as a member of the Company and shall
continue the Company without dissolution. 
No Special Member may resign from the Company or transfer its rights as
Special Member unless a successor Special Member has been admitted to the
Company as Special Member by executing a counterpart to this Agreement;
provided, however, a Special Member shall automatically cease to be a member of
the Company upon the admission to the Company of a substitute Member.  A Special Member shall be a member of the
Company that has no interest in the profits, losses and capital of the Company
and has no right to receive any distributions of Company assets.  Pursuant to Section 18-301 of the Act, a
Special Member shall not be required to make any capital contributions to the
Company and shall not receive a limited liability company interest in the
Company.  A Special Member, in its
capacity as Special Member, may not bind the Company.  Except as required by any mandatory provision
of the Act, a Special Member, in its capacity as a Special Member, shall have
no right to vote on, approve or otherwise consent to any action by, or matter
relating to, the Company, including, without limitation, the merger,
consolidation or conversion of the Company. 
Prior to its admission to the Company as a member of the Company, each
Person agreeing to act as a Special Member shall not be a member of the Company
and have no rights to profits, losses or to exercise any control over the Company.  At all times while the Indebtedness is
outstanding, the Company shall have at least one Person who is willing to serve
as Special Member and has executed a counterpart hereto.

 

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6.                                       Certificates.

 

SCOTT W. WILTON, as an “authorized person” within the meaning of the
Act, has executed, delivered and filed the Certificate of Formation with the
Secretary of State of the State of Delaware. 
Upon the filing of the Certificate of Formation with the Secretary of
State, his powers as an “authorized person” ceased and the member thereupon
became the “authorized person” within the meaning of the Act.  The Member shall execute, deliver and file
any other certificates (and any amendments and/or restatements thereof)
necessary for the Company to qualify to do business in the State of New York
and in any other jurisdiction in which the Company may wish to conduct business.

 

The existence of the Company as a separate legal entity and this
Agreement shall continue until cancellation of the Certificate of Formation as
provided in the Act.

 

7.                                       Purposes.

 

Subject to Section 9(b), the purposes of the Company are to engage
in the following activities:

 

a.                                       to
acquire, own, hold, administer, service, lease, operate, repair, maintain,
manage, sell, dispose of and otherwise deal with the Property;

 

b.                                      to
incur the Indebtedness;

 

c.                                       to
execute, deliver and perform the Basic Documents and all amendments thereto;

 

d.                                      to
do such other things and carry on any other activities which are necessary,
convenient or incidental to any of the foregoing purposes.

 

8.                                       Powers.

 

Subject to Section 9(b), the Company shall have and exercise all
powers necessary, convenient or incidental to accomplish its purposes as set
forth in Section 7 conferred upon limited liability companies formed
pursuant to the Act.  The Company, by or
through the Member on behalf of the Company, may execute, deliver and perform
the Basic Documents and all documents, agreements, certificates, or financing
statements contemplated thereby or related thereto, all without any further
act, vote or approval of any other Person notwithstanding any other provision
of this Agreement or the Act.  The
foregoing authorization shall not be deemed a restriction on the powers of the
Member to enter into other agreements on behalf of the Company.

 

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9.                                       Management.

 

a.                                       Member(s).  Subject to Section 9(b), the business
and affairs of the Company shall be managed by or under the direction of the
Member.  Subject to Section 9(b),
the Member has the authority to bind the Company.

 

b.                                      Limitations
on the Company’s Activities.

 

(i)                                     This
Section 9(b) is being adopted in order to comply with certain
provisions required in order to qualify the Company as a “special purpose
entity” for the purpose of the Indebtedness. 
So long as any portion of the Indebtedness is outstanding the provisions
of this Section 9(b) shall supercede and control any other provision
hereof to the contrary.

 

(ii)                                  The
Member shall not, so long as any Indebtedness is outstanding, amend, alter,
change or repeal Sections 5(c), 7, 8, 9, 20, 21, 22, 24, 26 or 30 of this
Agreement without the written consent of Lender.

 

(iii)                               Notwithstanding
any other provision of this Agreement and any provision of law that otherwise
so empowers the Company or the Member, so long as any Indebtedness is
outstanding, neither the Company nor the Member nor any other Person shall be
authorized or empowered, nor shall they permit the Company, without the prior
written consent of the Special Member to institute proceedings to have the
Company be adjudicated bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Company or file a petition
seeking, or consent to, reorganization or relief with respect to the Company
under any applicable federal or state law relating to bankruptcy, or consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Company or a substantial part of its property,
or make any assignment for the benefit of creditors of the Company, or admit in
writing the Company’s inability to pay its debts generally as they become due,
or, to the fullest extent permitted by law, take action in furtherance of any
such action, or dissolve or liquidate the Company, or consolidate or merge the
Company with or into any Person, or sell all or substantially all of the assets
of the Company.

 

(iv)                              So
long as any Indebtedness is outstanding, the Company shall, and the Member
shall cause the Company to do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights (charter and
statutory) and franchises.  The Company
shall, and the Member also shall cause the Company to:

 

(1)                                  be
organized solely for the purpose of acquiring, developing, owning, holding,
selling, leasing, transferring, exchanging, managing and operating the
Property), entering into the Basic Documents with the Lender, refinancing the

 

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Property in connection with a permitted repayment of the Indebtedness,
and transacting lawful business that is incident, necessary and appropriate to
accomplish the foregoing;

 

(2)                                  not
engage in any business unrelated to the acquisition, development, ownership,
operation, leasing, repair, maintenance, management, disposal or operation of
the Property;

 

(3)                                  not
have any assets other than those related to the Property;

 

(4)                                  pay
its debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its assets as the same shall become due, and maintain
adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business operations;

 

(5)                                  not
fail to correct any known misunderstanding regarding the separate identity of
such entity;

 

(6)                                  file
its own tax returns; provided, however, that the Company’s assets and
income may be included in a consolidated tax return of its parent entities if
inclusion on such consolidated tax return is in compliance with applicable law;

 

(7)                                  maintain
its own resolutions and agreements;

 

(8)                                  not
commingle its funds or assets with those of any Person or participate in any
cash management system with any other Person, except with respect to a
custodial account maintained by the Member on behalf of Affiliates of the
Company and, with respect to funds in such custodial account, separately
account for each item of income and expense applicable to the Property and
Company;

 

(9)                                  hold
its assets in its own name;

 

(10)                            conduct
its business in its name or in a name franchised or licensed to it by an entity
other than an Affiliate of the Company;

 

(11)                            maintain
balance sheets, operating statements and other entity documents separate from
any other Person and not permit its assets to be listed as assets on the
financial statement of any other entity except as required or permitted by
GAAP; provided, however, that (A) any such consolidated financial
statement shall contain a note indicating that it maintains separate balance
sheets and operating statements for the Company and the Property; or (B) if
such Person is controlled by the Special Member, then such Person may be
included in the consolidated financial statement of the Special

 

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Member provided such consolidated financial statement contains a note
indicating that it maintains separate financial records for each Person
controlled by the Special Member;

 

(12)                            have a
sufficient number of employees in light of its contemplated business
operations, which may be none;

 

(13)                            observe
all limited liability company formalities, as applicable;

 

(14)                            have
no indebtedness (including loans (whether or not such loans are evidenced by a
written agreement) between Company and any Affiliates of the Company and
relating to the management of funds in the custodial account maintained by the
Member) other than (i) the Indebtedness, (ii) liabilities incurred in
the ordinary course of business relating to the ownership and operation of the
Property and the routine administration of the Company, which liabilities are
not more than sixty (60) days past the due date (unless disputed in accordance
with applicable law), are not evidenced by a note and are paid when due, and
which amounts are normal and reasonable under the circumstances, and (iii) such
other liabilities that are permitted pursuant to this Agreement, or the Loan
Agreement or the other Basic Documents;

 

(15)                            not
assume or guarantee or become obligated for the debts of any other Person or
hold out its credit as being available to satisfy the obligations of any other
Person except as permitted pursuant to the Loan Agreement or the other Basic
Documents;

 

(16)                            not
acquire obligations or securities of its partners, members or shareholders or
any other Affiliate;

 

(17)                            allocate
fairly and reasonably any overhead expenses that are shared with any Affiliate,
including, but not limited to, paying for shared office space and services performed
by any employee of an Affiliate;

 

(18)                            not
maintain or use invoices and checks bearing the name of any other Person,
provided, however, that Member, on behalf of such Person, maintain and use
invoices and checks bearing Member’s name;

 

(19)                            not
pledge its assets for the benefit of any other Person;

 

(20)                            hold
itself out and identify itself as a separate and distinct entity under its own
name or in a name franchised or licensed to it by an entity other than an
Affiliate of the Company and not as a division or part of any other Person
other than Member or Special Member;

 

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(21)                            maintain
its assets in such a manner that it will not be costly or difficult to
segregate, ascertain or identify its individual assets from those of any other
Person;

 

(22)                            not
make loans to any Person or hold evidence of indebtedness issued by any other
person or entity (other than cash and investment-grade securities issued by an
entity that is not an Affiliate of or subject to common ownership with such
entity);

 

(23)                            not
identify its partners, members or shareholders, or any Affiliate of any of
them, as a division or part of it, and
not identify itself as a division of any other Person other than Member or
Special Member;

 

(24)                            not
enter into or be a party to, any transaction with its partners, members,
shareholders or Affiliates except (A) in the ordinary course of its
business and on terms which are intrinsically fair, commercially reasonable and are no less favorable to it than
would be obtained in a comparable arm’s-length transaction with an unrelated
third party and/or (B) in connection with or as permitted by the Loan
Agreement or the other Basic Documents; and

 

(25)                            except
as provided in the Basic Documents, not have any of its obligations guaranteed
by any Affiliate.

 

Failure of the Company, or the Member on behalf of the Company, to
comply with any of the foregoing covenants or any other covenants contained in
this Agreement shall not affect the status of the Company as a separate legal
entity or the limited liability of the Member.

 

10.                                 INTENTIONALLY
OMITTED.

 

11.                                 INTENTIONALLY
OMITTED.

 

12.                                 Limited
Liability.

 

Except as otherwise expressly provided by the Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort
or otherwise, shall be the debts, obligations and liabilities solely of the
Company, and no Member, Special Member or other Person shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member or Special Member of the Company.

 

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13.                                 Capital
Contributions.

 

The Member is deemed admitted to the Company as the member of the
Company upon the execution and delivery of this Agreement.  The Member has contributed the amount of cash
to the Company listed on Schedule B attached hereto.

 

14.                                 Additional
Contributions.

 

The Member is not required to make any additional capital contribution
to the Company.  However, a Member may
make additional capital contributions to the Company at any time.  To the extent that the Member makes an
additional capital contribution to the Company, the Member shall revise Schedule B
of this Agreement.  The provisions of
this Agreement, including this Section 14, are intended solely to benefit
the Member and, to the fullest extent permitted by law, shall not be construed
as conferring any benefit upon any creditor of the Company (and no such
creditor of the Company shall be a third-party beneficiary of this Agreement)
and no Member shall have any duty or obligation to any creditor of the Company
to make any contribution to the Company or to issue any call for capital
pursuant to this Agreement.

 

15.                                 Allocation
of Profits and Losses.

 

The Company’s profits and losses shall be allocated solely to the
Member.

 

16.                                 Distributions.

 

Distributions shall be made at the times and in the aggregate amounts
determined by the Member. 
Notwithstanding any provision to the contrary contained in this
Agreement, the Company shall not make a distribution to any Member on account
of its interest in the Company if such distribution would violate Section 18-607
of the Act or any other applicable law or the Basic Documents.

 

17.                                 Books
and Records.

 

The Member shall keep or cause to be kept complete and accurate books
of account and records with respect to the Company’s business.  The books of the Company shall at all times
be maintained by the Member.  Each
Member, if more than one, and its duly authorized representatives shall have
the right to examine the Company books, records and documents during normal
business hours.  The Company shall not
have the right to keep confidential from the Member any information which it
would otherwise be permitted to keep confidential from the Member pursuant to Section 18-305(c) of
the Act.  The Company’s books of account
shall be kept using the method of accounting determined by the Member.  The Company’s independent auditor shall be an
independent public accounting firm selected by the Member.

 

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18.                                 Reports.

 

So long as any Indebtedness is outstanding, Member shall:

 

a.                                       Within
sixty (60) days after the end of each fiscal quarter, cause to be prepared an
unaudited report setting forth as of the end of such fiscal quarter:

 

(i)                                     unless
such quarter is the last fiscal quarter, a balance sheet of the Company; and

 

(ii)                                  unless
such quarter is the last fiscal quarter, an income statement of the Company for
such fiscal quarter; and

 

b.                                      Within
ninety (90) days after the end of each fiscal year, cause to be prepared an
audited or unaudited report setting forth as of the end of such fiscal year:

 

(i)                                     a
balance sheet of the Company;

 

(ii)                                  an
income statement of the Company for such fiscal year; and

 

(iii)                               a
statement of such Member’s capital account.

 

c.                                       The
Member shall, after the end of each fiscal year, use reasonable efforts to
cause the Company’s independent accountants to prepare and transmit to each
Member as promptly as practicable such tax information as may be reasonably
necessary to enable such Member to prepare its federal, state and local income
tax returns relating to such fiscal year.

 

19.                                 Other
Business.

 

The Member, the Special Member and any Affiliate of the Member or the
Special Member may engage in or possess an interest in other business ventures
of every kind and description and unconnected with the Company, independently
or with others.  The Company shall not
have any rights in or to such independent ventures or the income or profits
therefrom by virtue of this Agreement.

 

20.                                 Exculpation
and Indemnification.

 

a.                                       To
the fullest extent permitted by applicable law, no Member, Special Member,
manager, employee or agent of the Company and no director, officer, employee,
representative, agent or Affiliate of the Member and/or Special Member
(collectively, the “Covered Persons”) shall be liable to the Company or any
other Person who has an

 

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interest in or claim against the Company for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such Covered
Person with respect to the Property, the Company and/or the Indebtedness in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of the authority conferred on such Covered Person by this
Agreement, except that a Covered Person shall be liable for any such loss,
damage or claim incurred by reason of such Covered Person’s gross negligence or
willful misconduct.

 

b.                                      To
the fullest extent permitted by applicable law, a Covered Person shall be
entitled to indemnification from the Company for any loss, damage or claim
incurred by such Covered Person by reason of any act or omission performed or
omitted by such Covered Person with respect to the Property, the Company and/or
the Indebtedness in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of the authority conferred on such
Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Covered Person by reason of such Covered Person’s gross negligence or
willful misconduct with respect to such acts or omissions; provided, however,
that any indemnity under this Section 20 shall be provided out of and to
the extent of Company assets only, and no Member shall have personal liability
on account thereof.

 

c.                                       To
the fullest extent permitted by applicable law, expenses (including reasonable
legal fees) incurred by a Covered Person defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Company prior
to the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Covered Person
to repay such amount if it shall be determined that the Covered Person is not
entitled to be indemnified as authorized in this Section 20.

 

d.                                      A
Covered Person shall be fully protected in relying in good faith upon the
records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such other Person’s professional or
expert competence and who has been selected with reasonable care by or on
behalf of the Company, including information, opinions, reports or statements
as to the value and amount of the assets, liabilities, or any other facts
pertinent to the existence and amount of assets from which distributions to the
Member might properly be paid.

 

e.                                       To
the extent that, at law or in equity, a Covered Person has duties (including
fiduciary duties) and liabilities relating thereto to the Company or to any
other Covered Person, a Covered Person acting under this Agreement shall, to
the fullest extent permitted by applicable law, not be liable to the Company or
to any other Covered Person

 

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for its good faith reliance on the provisions of this Agreement or any
approval or authorization granted by the Company or any other Covered
Person.  The provisions of this
Agreement, to the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are agreed by the Member
to replace such other duties and liabilities of such Covered Person.

 

f.                                         The
foregoing provisions of this Section 20 shall survive any termination of
this Agreement.

 

21.                                 Assignments.
Without the prior written consent of Lender, neither Company nor its Member,
except as permitted under the Loan Agreement or the other Basic Documents,
shall:

 

(i)                                     directly
or indirectly sell, transfer, convey, mortgage, pledge, or assign the Property,
any part thereof or any interest therein (including any ownership interest in
Company or Member),

 

 (ii)                               further
encumber, alienate, grant a lien or grant any other interest in the Property or
any part thereof (including any ownership interest in Company and the Member)
whether voluntarily or involuntarily,  or

 

(iii)                               enter
into any easement or other agreement granting rights in or restricting the use
or development of the Property.

 

If the Member transfers all of its limited liability company interest
in the Company pursuant to this Section 21, the transferee shall be
admitted to the Company as a member of the Company upon its execution of an
instrument signifying its agreement to be bound by the terms and conditions of
this Agreement, which instrument may be a counterpart signature page to
this Agreement.  Such admission shall be
deemed effective immediately prior to the transfer, and, immediately following
such admission, the transferor Member shall cease to be a member of the
Company.   Notwithstanding anything in
this Agreement to the contrary, any successor to a Member by merger or
consolidation in compliance with the Basic Documents shall, without further
act, be a Member hereunder, and such merger or consolidation shall not
constitute an assignment for purposes of this Agreement and the Company shall
continue without dissolution.

 

22.                                 Resignation.  So long as any Indebtedness is outstanding,
the Member may not resign as a member unless consistent with the transfer and
substitution provisions of the Loan Agreement. 
If a Member is permitted to resign pursuant to this Section 22, an
additional member of the Company shall be admitted to the Company upon its
execution of an instrument signifying its agreement to be bound by the terms
and conditions of this Agreement, which instrument may be a counterpart
signature page to this Agreement. 
Such admission shall be deemed effective immediately prior to the
resignation, and,

 

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immediately following such admission, the resigning Member shall cease
to be a member of the Company.

 

23.                               INTENTIONALLY
OMITTED.

 

24.                                 Dissolution.

 

a.                                       Subject
to Section 9(b), the Company shall be dissolved, and its affairs shall be
wound up upon the first to occur of the following: (i) the retirement,
resignation or dissolution of the last remaining member of the Company or the
occurrence of any other event which terminates the continued membership of the
last remaining member of the Company in the Company unless the business of the
Company is continued in a manner permitted by the Act or this Agreement or (ii) the
entry of a decree of judicial dissolution under Section 18-802 of the Act.
Upon the occurrence of any event that causes the last remaining member of the
Company to cease to be a member of the Company, to the fullest extent permitted
by law, the personal representative of such member is hereby authorized to, and
shall, within 90 days after the occurrence of the event that terminated the
continued membership of such member in the Company, agree in writing (i) to
continue the Company and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of the Company, effective as of the occurrence of the event that
terminated the continued membership of the last remaining member of the Company
in the Company.

 

b.                                      Notwithstanding
any other provision to the contrary, the Bankruptcy of the Member or a Special
Member shall not cause the Member or Special Member respectively to cease to be
a member of the Company and upon the occurrence of such an event, the business
of the Company shall continue without dissolution.  Notwithstanding any other provision of this
Agreement, the Member and each Special Member waives any right it might have
under the Act to agree in writing to dissolve the Company upon the Bankruptcy
of the Member or a Special Member or the occurrence of an event that causes a
Member or a Special Member to cease to be a member of the Company.

 

c.                                       In
the event of dissolution, the Company shall conduct only such activities as are
necessary to wind up its affairs (including the sale of the assets of the
Company in an orderly manner), and the assets of the Company shall be applied
in the manner, and in the order of priority, set forth in Section 18-804
of the Act.

 

d.                                      The
Company shall terminate when (i) all of the assets of the Company, after
payment of or due provision for all debts, liabilities and obligations of the
Company, shall have been distributed to the Member in the manner provided for
in this Agreement and (ii) the Certificate of Formation shall have been
canceled in the manner required by the Act.

 

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25.                                 Waiver
of Partition; Nature of Interest.

 

Except as otherwise expressly provided in this Agreement, to the
fullest extent permitted by law, each Member and Special Member hereby
irrevocably waives any right or power that such Member or Special Member might
have to cause the Company or any of its assets to be partitioned, to cause the
appointment of a receiver for all or any portion of the assets of the Company,
to compel any sale of all or any portion of the assets of the Company pursuant
to any applicable law or to file a complaint or to institute any proceeding at
law or in equity to cause the dissolution, liquidation, winding up or
termination of the Company.  No Member
shall have any interest in any specific assets of the Company, and no Member
shall have the status of a creditor with respect to any distribution pursuant
to Section 16 hereof.  The interest
of the Member in the Company is personal property.

 

26.                                 Benefits
of Agreement; No Third-Party Rights.

 

None of the provisions of this Agreement shall be for the benefit of or
enforceable by any creditor of the Company or by any creditor of any
Member.  Nothing in this Agreement shall
be deemed to create any right in any Person (other than Covered Persons) not a
party hereto, and this Agreement shall not be construed in any respect to be a
contract in whole or in part for the benefit of any third Person.

 

27.                                 Severability
of Provisions.

 

Each provision of this Agreement shall be considered severable and if
for any reason any provision or provisions herein are determined to be invalid,
unenforceable or illegal under any existing or future law, such invalidity,
unenforceability or illegality shall not impair the operation of or affect
those portions of this Agreement which are valid, enforceable and legal.

 

28.                                 Entire
Agreement.

 

This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof.

 

29.                                 Governing
Law.

 

This Agreement shall be governed by and construed under the laws of the
State of Delaware (without regard to conflict of laws principles), all rights
and remedies being governed by said laws.

 

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30.                                 Amendments.

 

Subject to Section 9(b), this Agreement may not be modified,
altered, supplemented or amended except pursuant to a written agreement
executed and delivered by the Member.

 

31.                                 Counterparts.

 

This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original of this Agreement and all of which together
shall constitute one and the same instrument.

 

32.                                 Notices.

 

Any notices required to be delivered hereunder shall be in writing and
personally delivered, mailed or sent by telecopy, electronic mail, or other
similar form of rapid transmission, and shall be deemed to have been duly given
upon receipt (a) in the case of the Company, to the Company at its address
in Section 2, (b) in the case of a Member, to such Member at its
address as listed on Schedule B attached hereto and (c) in the
case of either of the foregoing, at such other address as may be designated by
written notice to the other party.

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have duly executed this Agreement as of the 1st day of November, 2005.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  INLAND AMERICAN HYDE PARK, L.L.C., a Delaware

  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  INLAND AMERICAN HYDE PARK MEMBER,

  L.L.C., a Delaware limited liability company, its sole member,

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  INLAND AMERICAN HYDE PARK MEMBER II,

  L.L.C., a Delaware limited liability company, its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  INLAND AMERICAN REAL ESTATE TRUST,

  INC., a Maryland corporation, its sole member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Valerie Medina

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Valerie Medina

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Assistant Secretary

  
							

 

14

 

	
   

  	
  MEMBER:

  
	
   

  	
   

  
	
   

  	
  INLAND AMERICAN REAL ESTATE TRUST, INC., a

  Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Valerie Medina

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Valerie Medina

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPECIAL MEMBER:

  
	
   

  	
  SPECIAL MEMBER, LLC, a North Carolina limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Aberjona Investments, LLC, a North Carolina limited liability
  company, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John R. Hosmer, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
  John R. Hosmer, Jr., Manager

  
							

 

15

 

CERTIFICATE

 

Attached hereto is a true, correct and
complete copy of the resolution of Inland Western Retail Real Estate Trust,
Inc., a Maryland corporation, which was passed on November 22, 2005 and which
has not been amended, modified or terminated.

 

Dated:  November 22, 2005

 

	
   

  	
  INLAND WESTERN RETAIL REAL ESTATE TRUST, INC., a Maryland corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gary Pechter

  	
   

  
	
   

  	
   

  	
  Gary Pechter

  Secretary

  

 

 

The Board of Directors of Inland Western Retail Real Estate Trust,
Inc., a Maryland corporation (“IWEST”), adopted the following resolutions in
connection with the normal and customary carve outs to the nonrecourse
provisions for Inland American Real Estate Trust, Inc. (“IARETI”) financings,
directly or indirectly through one or more wholly-owned entities now existing
or hereafter created (the “Subsidiaries”) and the incurrence of indebtedness by
IARETI or any Subsidiaries:

 

RESOLUTON FOR CARVE OUT INDEMNITY

 

IWEST shall be directly liable for the normal and customary carve out
exceptions to the nonrecourse provisions for IARETI financings, provided that
IARETI shall be substituted for IWEST under such carve out indemnity upon
IARETI obtaining a net worth of at least $300,000,000 and satisfaction of
lender’s reasonable release conditions.

 

 

SCHEDULE A

 

Definitions

 

A.                                   Definitions

 

When used in this Agreement, the following terms not otherwise defined
herein have the following meanings:

 

“Act” has the meaning set forth in the preamble to this
Agreement.

 

“Affiliate” has the meaning set forth in the Loan Agreement.

 

“Agreement” means this Limited Liability Company Agreement of
the Company, together with the schedules attached hereto, as amended, restated
or supplemented form time to time.

 

“Bankruptcy” means, with respect to any Person, if such Person (i) makes
an assignment for the benefit of creditors, (ii) files a voluntary
petition in bankruptcy, (iii) is adjudged as bankrupt or insolvent, or has
entered against it an order for relief, in any bankruptcy or insolvency
proceeding, (iv) files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, (v) files
an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against it in any proceeding of this nature, (vi) seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator of the Person or of all or any substantial part of its properties,
or (vii) if 120 days after the commencement of any proceeding against the
Person seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
regulation, if the proceeding has not been dismissed, or if within 90 days
after the appointment without such Person’s consent or acquiescence of a
trustee, receiver or liquidator of such Person or of all or any substantial
part of its properties, the appointment is not vacated or stayed, or within 90
days after the expiration of any such stay, the appointment is not
vacated.  The foregoing definition of “Bankruptcy”
is intended to replace and shall supersede and replace the definition of “Bankruptcy”
set forth in Sections 18-101(1) and 18-304 of the Act.

 

“Basic Documents” means Loan Agreement, Consolidated, Amended
and Restated Promissory Note, Consolidated, Amended and Restated Mortgage and
Security Agreement (or similar security instrument), Indemnity Agreement and
any other loan documents executed by the Company in favor of the Lender
evidencing or securing the Indebtedness.

 

16

 

“Certificate of Formation” means the Certificate of Formation of
the Company filed with the Secretary of State of the State of Delaware on November 1,
2005, as amended or amended and restated from time to time.

 

“Company” means Inland American Hyde Park,  L.L.C., a Delaware limited liability company.

 

“Control” means the possession, directly or indirectly, or the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities or general
partnership or managing member interests, by contract or otherwise.  “Controlling” and “Controlled” shall have
correlative meanings.  Without limiting
the generality of the foregoing, a Person shall be deemed to Control any other
Person in which it owns, directly or indirectly, a majority of the ownership
interests.

 

“Covered Persons” has the meaning set forth in Section 20a.

 

“GAAP” means generally accepted accounting
principals.

 

“Indebtedness” means the obligations of the Company evidenced by
the Note.

 

“Indemnity Agreement” means that certain Indemnity Agreement
between the Company, Inland Western Retail Real Estate Trust, Inc. and Bears
Stearns Commercial Mortgage, Inc.

 

“Lender” means Bears Stearns Commercial Mortgage, Inc. and
its nominees, successors and assigns.

 

“Loan Agreement” means that certain Loan Agreement by and between
the Company and Bears Stearns Commercial Mortgage, Inc.

 

“Member” means Inland American Real Estate Trust, Inc., a
Maryland corporation, as the initial member of the Company, and includes any
Person admitted as an additional member of the Company or a substitute member
of the Company pursuant to the provisions of this Agreement, each in its
capacity as a member of the Company; provided, however, the term “Member” shall
not include the Special Member.

 

“Note” shall mean that certain promissory note made by Company
in the original principal amount of $8,100,000.00 in favor of Bears Stearns
Commercial Mortgage, Inc., as the same may be amended, restated, replaced,
supplemented, or otherwise modified from time to time.

 

17

 

“Officer’s Certificate” has the meaning assigned to that term in
the Loan Agreement.

 

“Property” means that property listed on Schedule C.

 

“Person” means any individual, corporation, partnership, joint
venture, limited liability company, limited liability partnership, association,
joint-stock company, trust, unincorporated organization, or other organization,
whether or not a legal entity, and any governmental authority.

 

“Rating Agency” has the meaning assigned to that term in the
Loan Agreement.

 

“Special Purpose Entity” has the meaning assigned to that term
in the Loan Agreement.

 

“Special Member” means Special Member, LLC, a North Carolina
limited liability company, as the initial Special Member of the Company, and
includes any Person admitted as a successor special member pursuant to the
provisions of this Agreement.

 

B.                                     Rules of
Construction

 

Definitions in this Agreement apply equally to both the singular and
plural forms of the defined terms.  The
words “include” and “including” shall be deemed to be followed by the phrase “without
limitation.”  The terms “herein,” “hereof”
and “hereunder” and other words of similar import refer to this Agreement as a
whole and not to any particular Section, paragraph or subdivision.  The Section titles appear as a matter of
convenience only and shall not affect the interpretation of this
Agreement.  All Section, paragraph,
clause, Exhibit or Schedule references not attributed to a particular
document shall be references to such parts of this Agreement.

 

18

 

SCHEDULE B

 

Member(s)

 

	
  Name and Mailing Address

  	
   

  	
  Agreed Value of

  Capital Contribution

  	
   

  	
  Percentage

  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Inland
  American Real Estate Trust, Inc.
2901 Butterfield Road

  Oak Brook, Illinois 60523

  	
   

  	
  $

  	
  1,000.00

  	
   

  	
  100

  	
  %

  
							

 

19

 

SCHEDULE C

 

The Property

 

Commonly known as: Stop & Shop, Hyde Park, New York

 

20EXHIBIT 10.1

 

AMENDED AND RESTATED MANAGEMENT AGREEMENT

 

BY AND BETWEEN

 

HPT TRS IHG-2, INC.

 

AND

 

IHG MANAGEMENT (MARYLAND) LLC

 

AND

 

INTERCONTINENTAL HOTELS GROUP (CANADA), INC.

 

 

AMENDED AND RESTATED MANAGEMENT
AGREEMENT

 

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

 

W
I  T  N  E  S  S  E  T  H

 

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

 

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

 

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

 

ARTICLE 1

 

DEFINITIONS

 

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

 

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

 

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

 

 

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

 

1.4           “Agreed
Upon Procedure Letter”  shall mean a
letter from Ernst & Young or another firm of independent certified
public accountants (the “auditor”) selected by Manager and approved by Owner
(which approval shall not be unreasonably withheld or delayed) which letter
shall, subject to the limitations and conditions imposed by the auditor,
address the following components and such other reasonable matters as Owner and
the auditor shall reasonably agree:

 

(a)           That
auditor has tested Manager’s systems of internal controls.

 

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

 

(c)           That
auditor has verified the mathematical accuracy of the 8.1(c) Statement.

 

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

 

(e)           That
auditor has confirmed that the Hotels are subjected to audit procedures by
Manager’s internal audit department, if any, and reviewed work papers provided
in connection therewith.  If auditor has
performed hotel level audit procedures at any Hotel, auditor shall identify
those Hotels and list the procedures performed and results obtained.  In any event at least three (3) of the
Pooled FF&E Hotels shall be subjected to audit procedures each Fiscal Year
by either internal audit or the auditor.

 

1.5           “Agreement”  shall mean this Amended and Restated
Management Agreement, together with all of the Exhibits attached 

 

2

 

hereto, as it and they
may be amended from time to time in accordance with the terms hereof.

 

1.6           “Anaheim
Condemnation”  shall mean any
Condemnation pursuant to, or in connection with, the Future Street Dedication
in accordance with the City of Anaheim Master Plan of Streets (as the same may
be amended, altered or replaced from time to time) referred to on the survey
entitled “ALTA/ACSM Land Title Survey prepared for InterContinental Hotels
Group,” prepared by Millman Surveying, Inc., dated August 16, 2004,
last revised January 27, 2005.

 

1.7           “Arbitration”  shall mean an arbitration conducted in
accordance with the terms of Section 24.20.

 

1.8           “Austin
Hotel”  shall mean the Hotel having a
street address at 701 Congress Avenue, Austin, Texas and located on the Site described
on Exhibit A-12 attached hereto.

 

1.9           “Authorized
Mortgage”  shall mean (a) any
first mortgage, charge, debenture, first deed-of-trust or first deed to secure
debt, and other related security documents granted in connection therewith, now
or hereafter granted by Purchaser to secure a loan to, or other debt of,
Purchaser or its Affiliates which is made by an institutional lender,
investment bank, publicly traded investment fund or other similar Person
regularly making loans secured by hotels, or incurred in connection with the
issuance of a mortgage backed security, which loan or debt provides for (i) level
payments of interest and principal and (ii) amortization and other terms
which are commercially reasonable and/or (b) the deed of trust granted by
Purchaser to its Affiliate in connection with Purchaser’s acquisition of the
hotel in Tennessee.

 

1.10         “Award”  shall have the meaning given such term in the
Lease.

 

1.11         “Baltimore
Central Plant”  shall have the
meaning given the term “Central Plant” in the Baltimore Declaration.

 

1.12         “Baltimore
Declaration”  shall mean that certain
Amended and Restated Declaration of Easements, Covenants, Conditions and
Restrictions, dated April 9, 1986, made by Harbor Court Associates and
recorded with the Land Records of Baltimore City, Maryland in Liber 893, Page 406,
as the same has been amended to date and as the same may hereafter be amended
from time to time in accordance with the terms of this Agreement.

 

3

 

1.13         “Baltimore
Employee Parking License”  shall have
the meaning given such term in Section 24.26(c).

 

1.14         “Baltimore
Employee Parking License Fees”  shall
have the meaning given such term in Section 24.26(c).

 

1.15         “Baltimore
General Parking License”  shall have
the meaning given such term in Section 24.26(b).

 

1.16         “Baltimore
General Parking License Fees”  shall
have the meaning given such term in Section 24.26(b).

 

1.17         “Baltimore
Health Club”  shall have the meaning
given the term “Health Club” in the Baltimore Declaration.

 

1.18         “Baltimore
Hotel”  shall mean the hotel having
an address at 550 Light Street, Baltimore, Maryland and located on the
Baltimore Site; for the avoidance of doubt, the term “Baltimore Hotel” shall
include the “Hotel” (this and other capitalized terms used within quotation
marks in this definition having the meanings ascribed to such terms in the
Baltimore Declaration), the Baltimore Health Club, the Baltimore Central Plant,
the Baltimore Valet Parking Areas and the non-exclusive right to use and enjoy
all easements and appurtenances related thereto as further described in the
Baltimore Declaration but shall otherwise exclude the “Condo Project”, the “Office
Building”, the “Condo Parking”, and the Baltimore Parking Garage (other than the
Baltimore Valet Parking Areas).

 

1.19         “Baltimore
Maintenance Memorandum”  shall mean
that certain Amended and Restated Harbor Court Maintenance Memorandum, dated April 9,
1986, by Harbor Court Associates, as the same has been amended to date and as
the same may hereafter be amended from time to time in accordance with the
terms of this Agreement.

 

1.20         “Baltimore
Parking Garage”  shall have the
meaning given the term “Parking Garage” in the Baltimore Declaration.

 

1.21         “Baltimore
Purchase Agreement”  shall mean that
certain Agreement of Sale and Purchase, dated as of November 18, 2005,
entered into by Baltimore Seller and Owner’s Affiliate with respect to the
Baltimore Hotel (among other properties), as the same has been amended to date.

 

1.22         “Baltimore
Rebranding Amounts”  shall mean,
collectively, the amounts referred to in Section 5.2(h).

 

4

 

1.23         “Baltimore
Seller”  shall mean the “Seller”
under the Baltimore Purchase Agreement.

 

1.24         “Baltimore
Site”  shall mean the Site described
on Exhibit A-13 attached hereto.

 

1.25         “Baltimore
Vacant Parcels”  shall mean Areas 1A
and 1B of Parcel 1, as shown on Sheet No. 1 of the Amended Subdivision
Plan of Harbor Court recorded among the Land Records of Baltimore City in Plat
Pocket Folder S.E.B. No. 3067 on January 29, 1986.

 

1.26         “Baltimore
Valet License Fee”  shall have the
meaning given such term in Section 24.26(a).

 

1.27         “Baltimore
Valet Parking Areas”  shall mean the
area located on the bottom floor of the Baltimore Parking Garage containing
approximately thirty (30) parking spaces that are being used for valet parking
by the Baltimore Hotel as of the Effective Date, together with those areas
within the Parking Garage that provide exclusive vehicular ingress to and
egress from such parking spaces and a non-exclusive easement for purposes of
ingress to and egress from such spaces over such other areas of the Baltimore
Parking Garage as are reasonably necessary for such ingress and egress.

 

1.28         “Bank
Accounts”  shall mean one or more
bank accounts established for the operation of the Hotels in Owner’s name at a
bank selected by Manager and approved by Owner.

 

1.29         “Base
Management Fee”  shall mean three
percent (3%) of the aggregate Gross Revenues at the Hotels in each Fiscal Year
during the Term.

 

1.30         “Base
Priority Amount”  shall initially
mean the following annual amounts with respect to the corresponding periods:

 

	
  Period

  	
   

  	
  Annual Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  February 16, 2005 – May 31, 2005

  	
   

  	
  $

  	
  26,018,731.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 1, 2005 – December 31, 2005

  	
   

  	
  $

  	
  28,900,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1, 2006 – January 5, 2006

  	
   

  	
  $

  	
  30,706,250.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 6, 2006 – December 31, 2006

  	
   

  	
  $

  	
  35,506,250.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thereafter

  	
   

  	
  $

  	
  35,806,250.00

  	
   

  

 

5

 

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

 

1.31         “Base
Year”  shall mean the 2006 Fiscal Year
with respect to all Hotels other than the Baltimore Hotel, for which the “Base
Year” shall mean the 2007 Fiscal Year; provided, however, if
there shall occur a casualty, condemnation or other force majeure event with
respect to a Hotel which causes a material decline in Gross Revenues for such
Hotel or a force majeure event as described in Section 23.1 in
Canada, the United States or Caribbean Region or in any relevant market that
results in a ten percent (10%) annual decline in REVPAR for the Upscale segment
with respect to the Staybridge Hotels, the Luxury segment with respect to the
InterContinental Hotels, the Upscale segment with respect to Crowne Plaza
Hotels and Mid-Scale with F and B segment with respect to the Holiday Inn
Hotels, or other appropriate segment, as determined by Smith Travel Research,
in Canada, the United States or Caribbean Region or in the relevant market,
which, in either case, causes a material decline in Gross Revenues for such
Hotel for the 2006 Fiscal Year (except as to the Baltimore Hotel where such
time period shall be the 2007 Fiscal Year), the Base Year for such Hotel shall
be adjusted to be the first full Fiscal Year of operation of such Hotel after
the resolution of any such casualty, condemnation or force majeure event and
the return of such Hotel to its substantially normal status.

 

1.32         “Brand”  shall mean: with respect to the Staybridge
Hotels, the Staybridge Suites hotel service marks; with respect to the
InterContinental Hotels, the InterContinental hotel service marks; with respect
to the Crowne Plaza Hotels, the Crowne Plaza hotel service marks; and with
respect to the Holiday Inn Hotels, the Holiday Inn hotel service marks,
excluding any separate Holiday Inn Express service marks; together with, in
each instance, the applicable Brand Standards, and all of the attributes and
features customarily associated with, as applicable, Staybridge Suites hotels,
InterContinental hotels, Crowne Plaza hotels and the Holiday Inn hotels in
North America from time to time.

 

1.33         “Brand
Standards”  shall mean the standards
of operation, as amended from time to time, in effect at 

 

6

 

substantially all hotels
which are operated under, as applicable, the Staybridge Suites, InterContinental,
Crowne Plaza or Holiday Inn name as may be specified in manuals and other
guidelines provided by the owner of the System Marks or its Affiliates.

 

1.34         “Buildings”  shall mean, except as hereinafter described
with respect to the Baltimore Hotel, collectively, all buildings, structures
and improvements now or hereafter located on the Sites, and all fixtures and
equipment attached to, forming a part of and necessary for the operation of
such buildings, structures and improvements as a hotel (including, without
limitation, heating, lighting, sanitary, air-conditioning, laundry,
refrigeration, kitchen, elevator and similar items) having guest sleeping
rooms, each with bath, and such (i) restaurants, bars, banquet, meeting
and other public areas; (ii) commercial space, including concessions and
shops; (iii) parking facilities and areas; (iv) storage and service
areas; (v) recreational facilities and areas; (vi) permanently
affixed signage; (vii) public grounds and gardens; and (viii) other
facilities and appurtenances, as may hereafter be attached to and form a part
of such building, structures and improvements in accordance with this
Agreement.; provided, however, for the avoidance of doubt with
respect to the Baltimore Hotel only, the term “Buildings” shall only include
the foregoing to the extent the same are located within the Baltimore Site
(including, without limitation, the Baltimore Central Plant) and it shall
exclude any of the foregoing to the extent the same are located within the
Condo Space, the Office Space or the Parking Space (as such terms are defined
in the Baltimore Declaration) other than the Baltimore Valet Parking Areas.

 

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

 

1.36         “Canadian
Consumer Price Index”  shall mean the
Consumer Price Index (All Items for Ontario, base year 1992-=100) published by
Statistics Canada or if such index is no longer published, such other index as
is published in substitution therefor.

 

1.37         “Canadian
Hotel”  shall mean a Hotel located in
Canada.

 

1.38         “Canadian
Manager”  shall have the meaning
given such term in Section 21.1(b).

 

7

 

1.39         “Canadian
Services”  shall have the meaning
given such term in Section 21.1(b).

 

1.40         “Capital
Replacements”  shall mean,
collectively, replacements and renewals to the FF&E and Repairs which are
normally capitalized under the Accounting Principles.

 

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

 

1.42         “Closing”  shall mean the Closing under the Purchase
Agreement.

 

1.43         “Code”  shall mean the United States Internal Revenue
Code of 1986 and the Treasury Regulations promulgated thereunder, each as from
time to time amended, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.

 

1.44         “Collateral
Agency Agreement”  shall have the
meaning given such term in the Guaranty.

 

1.45         “Collateral
Agent”  shall have the meaning given
such term in the Guaranty.

 

1.46         “Competitor”  shall mean any Person (other than Manager and
its Affiliates) which owns directly or through an Affiliate a hotel brand,
trade name, system, or chain having at least fifteen (15) hotels (excluding a
mere franchisee or mere passive investor).

 

1.47         “Condemnation”  shall have the meaning given such term in the
Lease.

 

1.48         “Condemnor”  shall have the meaning given such term in the
Lease.

 

1.49         “Consolidated
Financials”  shall mean for any
fiscal year or any interim period of any Person, annual or interim financial
statements of such Person prepared on a consolidated basis, including such
Person’s consolidated balance sheet and the related statements of income and
cash flows, all in reasonable detail, and setting forth in comparative form the
corresponding figures for the corresponding period in the 

 

8

 

preceding fiscal year of
such Person, and prepared in accordance with the Accounting Principles
throughout the periods reflected or if such Person’s principal place of
business is the United Kingdom, in accordance with generally accepted
accounting principles, as adopted in the United Kingdom, consistently applied
throughout the periods reflected provided that any such financial statement
which is audited shall contain a reconciliation of any differences between such
accounting principles and Accounting Principles.

 

1.50         “Consumer
Price Index”  shall mean the Consumer
Price Index for all Urban Consumers, U.S. City Average, published by the United
States Bureau of Labor Statistics or if such index is no longer published, such
other index as is published in substitution therefor.

 

1.51         “Crowne
Plaza Hotels”  shall mean the Hotels
that are operated as of the date hereof as Crowne Plaza hotels.

 

1.52         “Debt
Service Coverage Ratio”  shall mean,
with respect to any loan or other debt secured by an Authorized Mortgage, the
quotient obtained by dividing (a) the NOI of the properties securing such
loan or other debt for the twelve (12) months ending on the date on which such
Authorized Mortgage is granted by (b) regularly scheduled interest and
principal payments projected to be paid thereunder during the first (1st)
twelve (12) months after the first day of the month next after such date.

 

1.53         “Deposit” 
shall have the meaning given such term in the Deposit Agreement.

 

1.54         “Deposit Agreement”  shall mean that certain Deposit Agreement,
dated as of January 6, 2006, among Owner, HPT TRS IHG-1, Inc., HPT
IHG PR, Inc., Intercontinental Hotels Group Resources, Inc. and
Manager as the same may be amended, supplemented or replaced from time
to time in accordance with the terms thereof.

 

1.55         “Disbursement
Rate”  shall mean a per annum rate
equal to the greater of (i) the sum of the per annum rate for fifteen (15)
year U.S. Treasury Obligations as published in The Wall Street Journal,
plus four hundred thirty (430) basis points and (ii) nine and five-tenths
percent (9.5%).

 

1.56         “Effective
Date”  shall mean February 16,
2005 with respect to all Hotels other than the Austin Hotel, for which the “Effective
Date” shall mean May 31, 2005, and the Baltimore 

 

9

 

Hotel, for which the “Effective
Date” shall mean January 6, 2006.

 

1.57         “Environmental
Notice”  shall have the meaning given
such term in Section 24.2(a).

 

1.58         “Expiration
Date”  shall mean the date on which
the Term shall expire.

 

1.59         “Fiscal
Month”  shall mean each calendar
month in the Term or each partial calendar month in the Term.

 

1.60         “Fiscal
Year”  shall mean each calendar year
in the Term and each partial calendar year in the Term.

 

1.61         “Furniture,
Fixtures and Equipment” or “FF&E”  shall mean, collectively, all furniture,
furnishings and equipment (except Operating Equipment and real property
fixtures included in the definition of Buildings) now or hereafter located and
installed in or about the Hotels which are used in the operation thereof as
hotels in accordance with the standards set forth in this Agreement, including,
without limitation (i) office furnishings and equipment; (ii) specialized
hotel equipment necessary for the operation of any portion of the Building as a
Staybridge Suites, InterContinental, Crowne Plaza or Holiday Inn, as
applicable, hotel, including equipment for kitchens, laundries, dry cleaning
facilities, bars, restaurants, public rooms, commercial space, parking areas,
and recreational facilities; (iii) all portions of the Baltimore Central
Plant as are not included in the definition of Buildings with respect to the
Baltimore Hotel; and (iv) all other furnishings and equipment hereafter
located and installed in or about the Buildings which are used in the operation
of the Buildings as hotels in accordance with the standards set forth in this
Agreement.

 

1.62         “Government
Agencies”  shall mean any court,
agency, authority, board (including, without limitation, environmental
protection, planning and zoning), bureau, commission, department, ministry,
regulatory body, office or instrumentality of any nature whatsoever of any
governmental or quasi-governmental unit of the United States or Canada or any
state, province, county, municipality or any political subdivision of any of
the foregoing, whether now or hereafter in existence, having jurisdiction over
Owner, any of the Sites or any of the Hotels.

 

10

 

1.63         “Gross
Revenues”  shall mean for any period
with respect to each Hotel, all revenues and income of any nature derived
directly or indirectly from such Hotel or from the use or operation thereof,
whether or not such revenues and income are derived from goods and services
provided at the Hotel or off-site, including, without limitation: room sales;
food and beverage sales (regardless of whether Owner, Manager or any of their
Affiliates own the items being sold); telephone, telegraph, fax and internet
revenues; rental or other payments from lessees, subleases, concessionaires and
others occupying or using space or rendering services at such Hotel (but not
the gross receipts of such lessees, subleases or concessionaires); the actual
cash proceeds of business interruption, use, occupancy or similar insurance;
and all revenue generated from or in connection with Manager’s or Owner’s
operation or use of the Baltimore Valet Parking Areas, the Baltimore Vacant
Parcels, the Baltimore Employee Parking License, the Baltimore General Parking
License and any additional parking privileges negotiated or obtained by Manager
as contemplated by Section 24.26(b) and/or Section 24.26(d);
provided, however, that Gross Revenues shall not include the
following (and there shall be appropriate deductions made in determining Gross
Revenues for):  gratuities or service
charges in the nature of a gratuity added to a customer’s bill; Sales Tax or
any other taxes collected directly from patrons or guests or included as part
of the sales price of any goods or services sold to patrons or guests; any refunds
of GST or any similar value added tax that is refundable; interest received or
accrued with respect to the funds in the Reserve Account or (other than for
purposes of calculating the Incentive Management Fee and the Residual
Distribution) the other operating accounts of the Hotels; any refunds, rebates,
discounts and credits of a similar nature, given, paid or returned in the
course of obtaining Gross Revenues or components thereof; insurance proceeds
(other than proceeds from business interruption or other loss of income
insurance); condemnation proceeds (other than for a temporary taking); credits
or refunds made to customers, guests or patrons; sums and credits received by
Owner for lost or damaged merchandise; proceeds from the sale or other disposition
of a Hotel, any part thereof, of FF&E or any other assets of the Hotels;
proceeds of any financing or re-financing; the Initial Working Capital; any
reimbursements related to costs incurred in connection with the operation of
the Baltimore Central Plant (other than administrative fees collected in
accordance with the terms and conditions of the Baltimore Maintenance
Memorandum); and any other matters specifically excluded from Gross Revenues
pursuant to this Agreement.

 

11

 

1.64         “GST”  shall mean goods and services taxes imposed
pursuant to Part IX of the Excise Tax
Act (Canada) and any other similar value added tax that is
refundable.

 

1.65         “Guarantor”  shall mean the Guarantor under the Guaranty.

 

1.66         “Guaranty”  shall mean that certain Amended and Restated
Consolidated Guaranty Agreement, dated as of February 16, 2005, made by
IHG for the benefit of, inter  alia, Owner, as the same has been
or may be amended, supplemented or replaced from time to time, but specifically
excluding any New Guaranty (as defined in the Guaranty) given pursuant to the
Guaranty as the same may be amended, supplemented or replaced from time to
time.

 

1.67         “Hazardous
Substances”  shall mean any
substance:

 

(a)           the
presence of which requires or may hereafter require notification, investigation
or remediation under any Legal Requirement; or

 

(b)           which is
or becomes defined as a “hazardous waste,” “hazardous material” or “hazardous
substance” or “pollutant” or “contaminant” under any present or future Legal
Requirement including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et
seq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et  seq.) and the regulations promulgated thereunder; or

 

(c)           which is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is or becomes regulated by any Government
Agency; or

 

(d)           the
presence of which at a Hotel causes or materially threatens to cause an
unlawful nuisance upon such Hotel or to adjacent properties or poses or
materially threatens to pose a hazard to such Hotel or to the health or safety
of persons; or

 

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

 

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

 

12

 

(g)           without
limitation, which contains or emits radioactive particles, waves or material;
or

 

(h)           without
limitation, which constitutes materials that are now or may hereafter be
subject to regulation pursuant to the Medical Waste Tracking Act of 1988, or
any requirement promulgated by any Government Agencies.

 

1.68         “Holiday
Inn Hotels”  shall mean the Hotels
that are operated as of the date hereof as Holiday Inn hotels.

 

1.69         “Hotel”  shall mean each hotel located at a Site
including all of the Owner’s interest in such Site, the Building there, the
Furniture, Fixtures and Equipment there, the Operating Equipment there and the
Operating Supplies there, and, for the avoidance of doubt, the term “Hotel”
shall, with respect to the Site in Baltimore, mean the Baltimore Hotel; provided,
however, upon the termination of the Agreement with respect to less than
all of the Hotels, pursuant to the terms hereof or otherwise, the term “Hotel”
shall, with respect to the obligation of the parties thereafter accruing, only
refer to a Hotel with respect to which this Agreement is in full force and
effect.

 

1.70         “HPT”  shall mean Hospitality Properties Trust, a
Maryland real estate investment trust, together with its successors and
permitted assigns.

 

1.71         “IHG”  shall mean InterContinental Hotels Group PLC,
its successors and assigns.

 

1.72         “IHG
Canada”  shall have the meaning given
such term in the preamble to this Agreement.

 

1.73         “IHG
Maryland”  shall have the meaning
given such term in the preamble to this Agreement.

 

1.74         “Incentive
Management Fee”  shall mean for any
Fiscal Year, fifty percent (50%) of the excess, if any, of (i) Gross
Revenues from all of the Hotels over (ii) the applications thereof made
pursuant to Sections 10.1(a) through and including 10.1(r).

 

1.75         “Initial
Term”  shall mean the period
commencing on the Effective Date and ending on December 31, 2029.

 

1.76         “Initial
Working Capital”  shall have the
meaning given to such term in Section 5.1.

 

13

 

1.77         “Insurance
Requirements”  shall mean all terms
of any insurance policy required by this Agreement and all requirements of the
issuer of any such policy and all orders, rules and regulations and any
other requirements of the National Board of Fire Underwriters (or any other
body exercising similar functions) binding upon the Hotels.

 

1.78         “Intellectual
Property”  shall have the meaning
given to such term in Section 12.4.

 

1.79         “InterContinental
Hotels”  shall mean the Hotels that
are operated as of the date hereof as InterContinental hotels, including,
without limitation, the Baltimore Hotel.

 

1.80         “Interest
Rate”  shall mean a rate, not to
exceed the maximum legal interest rate, equal to the greater of (a) twelve
percent (12%) per annum and (b) two percent (2%) per annum in excess of
the Disbursement Rate determined as of the first day that interest accrues on
any amount to which such Interest Rate is to be applied.

 

1.81         “Lease”  shall mean, collectively, the one or more
Lease Agreements pursuant to which Owner leases the Hotels from Purchaser or
certain of its Affiliates as in effect on the date hereof, as the same may be
amended from time to time in accordance with the terms of this Agreement.

 

1.82         “Legal
Requirements”  shall mean all federal
(United States and Canada), state, provincial, county, municipal, local and
other governmental statutes, laws, rules, orders, regulations, by-laws,
ordinances, judgments, decrees, injunctions and requirements affecting Owner
(excluding any requirements which affect Owner’s status as a real estate
investment trust), Purchaser, Manager, a Hotel or the maintenance,
construction, alteration, management or operation thereof, whether now or
hereafter enacted or in existence, including, without limitation, (a) all
permits, licenses, authorizations, certificates and regulations necessary to
operate a Hotel, (b) all covenants, agreements, ground leases,
restrictions and encumbrances, (c) the outcome of any Arbitration and (d) any
collective bargaining agreement or other agreement or legal requirement
pertaining to any union representing employees of a Hotel.

 

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

 

14

 

1.84         “Manager”  shall have the meaning given such term in the
preamble to this Agreement.

 

1.85         “Manager
Default”  shall mean a Manager Event
of Default or any other circumstances which with the giving of notice, the
passage of time or both would constitute a Manager Event of Default or
otherwise entitle Owner to terminate this Agreement in its entirety pursuant to
the terms hereof.

 

1.86         “Manager
Event of Default”  shall have the
meaning given such term in Section 17.1.

 

1.87         “Material
Repair”  shall mean a Repair the cost
of which exceeds $250,000; provided, however, on January 1
of each year starting in 2006 said $250,000 shall be adjusted to reflect the
percentage change in the Consumer Price Index since the prior January 1.

 

1.88         “New
Management Agreement”  shall have the
meaning given to such term in Section 24.17.

 

1.89         “NOI”  shall mean, with respect to any property, for
any period, the Gross Operating Profit (as defined in the Uniform System of
Accounts) of such property for such period net of, for such period and such
property, real and personal property taxes and casualty and liability insurance
premiums, an imputed reserve for capital replacements equal to five percent
(5%) of gross revenues and an imputed management fee equal to three percent
(3%) of gross revenues.  To the extent
that any amount (or portion thereof) used to calculate NOI is denominated in
any currency other than United States Dollars, the same shall be converted to
United States dollars using a reasonable method consistent with the Accounting
Principles then employed by Manager and its Affiliates when accounting for
foreign currencies.

 

1.90         “Non-Economic Hotel”  shall mean any Hotel
which has been designated a Non-Economic Hotel pursuant to the terms hereof (so
long as such designation has not been deemed withdrawn pursuant to the terms of
Section 2.7(a)).

 

1.91         “Offer”  shall mean a bona fide arm’s-length binding
unconditional offer to purchase a Non-Economic Hotel free and clear of any
rights of Manager hereunder made by an unrelated third party having the
financial capacity to implement the terms of such offer which provides for an
all cash purchase price acceptable to Manager and is otherwise on customary
terms.

 

15

 

1.92         “Officer’s
Certificate”  shall mean as to any
Person, a certificate of the chief executive officer, chief financial officer
or chief accounting officer of such Person, duly authorized, accompanying the
financial statements required to be delivered by such Person pursuant to Sections
8.1, 8.4 or 17.4 or otherwise pursuant to the PR Guaranty, in
which such officer shall certify to such officer’s best knowledge (a) that
such statements have been properly prepared in accordance with the Accounting
Principles, (b) in the event that the certifying party is an officer of
IHG or another Guarantor, that such statements are true, correct and complete
in all material respects and fairly present the consolidated financial
condition of such Person at and as of the dates thereof and the results of its
and their operations for the periods covered thereby and that there is no
default on the part of the Guarantor under the Guaranty, and (c) in the
event that the certifying party is an officer of Manager and the certificate is
being given in such capacity, that such statements fairly present the financial
operation of the Hotels.

 

1.93         “Operating
Costs”  shall mean, collectively, all
costs and expenses of the Hotels (regardless of whether the same are incurred
by Owner, Purchaser or Manager) that are normally charged as an operating
expense under Accounting Principles, including, without limitation:

 

(i)         the cost of Operating
Supplies, wages, salaries and employee fringe benefits, advertising and
promotional expenses, the cost of personnel training programs, utility and
energy costs, operating licenses and permits, maintenance costs, and equipment
rentals;

 

(ii)        all expenditures made for
maintenance and repairs to keep the Hotel in good condition and repair (other
than Capital Replacements);

 

(iii)       premiums for insurance
required hereunder;

 

(iv)       the System Fees, the
Baltimore Valet License Fee, and the Baltimore General Parking License Fees and
any additional costs incurred by Manager for any additional parking privileges
negotiated or obtained by Manager as contemplated by Section 24.26(b);

 

(v)        real estate and personal
property taxes and expenses except to the extent expressly specified otherwise
herein;

 

16

 

(vi)       audit, legal and accounting
fees and expenses except to the extent expressly specified otherwise herein;

 

(vii)      rent or lease payments under
ground leases or for equipment used at the Hotels in the operation thereof; and

 

(viii)     Sales
Taxes (except as provided below) payable on or in respect of Operating Costs (including those Operating Costs
which are reimbursed hereunder).

 

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

Section 2.8(b); (p) GST
payable on or in respect of Operating Costs 

 

17

 

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

 

1.94         “Operating
Equipment”  shall have the meaning
given to the term “Property and Equipment” under the Uniform System of
Accounts.

 

1.95         “Operating
Profit”  shall mean: with respect to
any Hotel, for any period, the excess, if any, of Gross Revenues for such Hotel
for such period over Operating Costs for such Hotel for such period; and with
respect to all of the Hotels (or a group of Hotels), for any period, the
excess, if any, of Gross Revenues for all of the Hotels (or such group of
Hotels) for such period over Operating Costs for all of the Hotels (or such group
of Hotels) for such period.

 

1.96         “Operating
Standards”  shall have the meaning
given such term in Section 2.1.

 

1.97         “Operating
Supplies”  shall have the meaning
given to the term “Inventories” under the Uniform System of Accounts.

 

1.98         “Original
Management Agreement”  shall have the
meaning given such term in the first recital to this Agreement.

 

1.99         “Other
Documents”  shall mean, collectively,
the Purchase Agreement, the PR Stock Agreement, the Baltimore Purchase
Agreement and any other agreement, instrument, indemnity or undertaking
executed and delivered by IHG or any of its Affiliates in connection with the
Closing or the closing under the PR Stock Agreement or any other Transaction
Document.

 

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

 

1.101               “Owner’s
First Priority”  shall mean an annual
amount equal to the sum of (a) the Base Priority Amount plus, (b) effective
on the date of each disbursement by Purchaser or Owner pursuant to Sections
5.2(c)(iv) or 15.2 (in excess of net 

 

18

 

insurance proceeds or the
Award), an amount equal to the amount so disbursed multiplied by the Owner’s
First Priority Adjustment Rate (determined as of the dates on which such sums
are advanced).  Owner’s First Priority
shall be subject to further adjustment as provided in Sections 2.7, 15.1(c) and
24.17(b).

 

1.102               “Owner’s
First Priority Adjustment Rate” 
shall mean a per annum rate equal to the greater of (x) eight and
five-tenths (8.5%) percent and (y) the sum of the rate for fifteen (15) year
U.S. Treasury Obligations, as published in the Wall Street Journal, plus
three hundred thirty (330) basis points.

 

1.103               “Owner’s Fixed Priority”  shall mean Owner’s First Priority and Owner’s
Second Priority, collectively.

 

1.104               “Owner’s Percentage Priority”  shall mean, for each Fiscal Year after the
2006 Fiscal Year for each Hotel other than the Baltimore Hotel, and for each
Fiscal Year after the 2007 Fiscal Year for the Baltimore Hotel, an amount equal
to seven and one-half percent (7.5%) of the excess, if any, of Gross Revenues
of such Hotel for such Fiscal Year over the Gross Revenues for such Hotel for
its Base Year.

 

1.105               “Owner’s
Second Priority”  shall mean an
annual amount equal to the sum of (a) Three Million Thirty Seven Thousand
Five Hundred Dollars ($3,037,500) for the period through January 5, 2006
and Three Million Four Hundred Fifty-Eight Thousand Twenty-Five Dollars
($3,458,025) thereafter (prorated, if necessary, based on the applicable
Effective Dates as contemplated by Section 10.5) plus (b) effective
on the date of each disbursement by Purchaser or Owner pursuant to Sections
5.2(c)(ii) hereof, an amount equal to the amount so disbursed
multiplied by the applicable Disbursement Rate (determined as of the dates on
which such sums are advanced).  Owner’s
Second Priority shall be subject to further adjustment as provided in Sections
2.7, 15.1(c) and 24.17(b).

 

1.106               “Parent”  shall mean with respect to any Person, any
Person who owns directly, or indirectly through one or more Subsidiaries or
Affiliates, greater than fifty percent (50%) of the voting or beneficial
interest in, or otherwise has the right or power (whether by contract, through
ownership of securities or otherwise) to control, such Person.

 

1.107               “Person”  shall mean any individual or entity, and the
heirs, executors, administrators, legal representatives, 

 

19

 

successors and assigns of
such individual or entity where the context so admits.

 

1.108               “Pledged
Hotels”  shall mean, with respect to
any loan or other debt secured by an Authorized Mortgage, collectively, the
Hotels which secure such loan or other debt.

 

1.109               “Pooled
FF&E Hotels”  shall mean the
Hotels and, after the closing under the PR Stock Agreement and subject to the
limitations on transfer set forth in the PR Lease, so long as the PR Property
is owned by an Affiliate of Purchaser, the PR Property.

 

1.110               “PR
Guaranty”  shall have the meaning
given to such term in the Guaranty.

 

1.111               “PR
Indemnity”  shall mean that certain
Indemnity Agreement to be executed and delivered by the Guarantor pursuant to
the PR Stock Agreement at the closing thereunder.

 

1.112               “PR
Lease”  shall mean that certain lease
to be entered into pursuant to the PR Stock Agreement between the owner of the
PR Property, on the one hand, and Manager’s Affiliate, on the other hand, with
respect to the InterContinental Hotel in San Juan, Puerto Rico, as the same may
be amended from time to time.

 

1.113               “PR
Property”  shall have the meaning
ascribed to the term “Property” in the PR Lease.

 

1.114               “PR
Stock Agreement”  shall mean that
certain Amended and Restated Stock Purchase Agreement pursuant to which an
Affiliate of Manager sold or will sell the stock of the owner of the PR
Property to an Affiliate of Owner, as the same may be amended from time to
time.

 

1.115               “PR
Tenant”  shall mean the tenant under
the PR Lease.

 

1.116               “Principal
Documents”  shall mean, collectively,
this Agreement, the PR Lease, the Guaranty, the PR Guaranty, the PR Indemnity,
the Collateral Agency Agreement and the Deposit Agreement.

 

1.117               “Priority
Coverage Ratio”  shall mean for any
period, for any Hotel or group of Hotels, the quotient of (a) the excess
of Operating Profit for such Hotel or group of Hotels over an implied reserve
for capital replacements equal to five 

 

20

 

percent (5%) of Gross
Revenues for such Hotel or group of Hotels (as applicable) divided by (b) the
sum of the Owner’s First Priority allocated pursuant to Section 10.9
to such Hotel or group of Hotels (as applicable) for such period.  To the extent that any amount (or portion
thereof) used to calculate the Priority Coverage Ratio is denominated in any
currency other than United States Dollars, the same shall be converted to
United States Dollars using a reasonable method consistent with the Accounting
Principles used by Manager and its Affiliates to account for foreign
currencies.

 

1.118               “Purchase
Agreement”  shall mean, collectively,
one or more purchase agreements between Owner or its Affiliate(s) and Manager
or its Affiliate(s) pursuant to which Purchaser has on the Effective Date
acquired the Hotels (other than the Baltimore Hotel) from Manager or its
Affiliate(s), as the same may be amended from time to time.

 

1.119               “Purchaser”  shall mean, collectively, the landlords under
the Lease.

 

1.120               “Renewal
Terms”  shall mean any extension of
the Term of this Agreement, commencing upon the expiration of the Initial Term
or any extensions thereto, as provided in Article 3.

 

1.121               “Repairs”  shall have the meaning given such term in Section 7.6.

 

1.122               “Replacement
Property”  shall mean a hotel
mutually acceptable to the parties acquired by Purchaser in substitution for a
Hotel with respect to which this Agreement was terminated pursuant to Section 16.1.

 

1.123               “Reservation
System”  shall mean a computerized
network of high speed terrestrial and satellite-linked hardware and data lines
connecting hotels, central reservation centers, data processing centers and
travel agencies which provides reservation services to the Staybridge Suites,
InterContinental, Crowne Plaza or Holiday Inn, as applicable, hotels in North America.

 

1.124               “Reserve
Account”  shall mean an
interest-bearing United States dollar account established for funds to be held
in reserve for Capital Replacements in Purchaser’s name at a bank selected by
Purchaser.

 

21

 

1.125               “Reserve
Effective Date”  shall mean February 25,
2007 for all Hotels except the Baltimore Hotel, for which the “Reserve
Effective Date” shall mean February 25, 2006.

 

1.126               “Reserve
Percentage”  shall mean, with respect
to all of the Hotels other than the Baltimore Hotel, the following percentages
for the corresponding periods:

 

	
  Year

  	
   

  	
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
  0

  	
  %

  
	
  2006

  	
   

  	
  0

  	
  %

  
	
  2007

  	
   

  	
  3.0

  	
  %

  
	
  2008

  	
   

  	
  3.5

  	
  %

  
	
  2009

  	
   

  	
  4.0

  	
  %

  
	
  2010

  	
   

  	
  4.5

  	
  %

  
	
  Thereafter

  	
   

  	
  5.0

  	
  %

  

 

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

 

	
  Year

  	
   

  	
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2006

  	
   

  	
  3.0

  	
  %

  
	
  2007

  	
   

  	
  4.0

  	
  %

  
	
  Thereafter

  	
   

  	
  5.0

  	
  %

  

 

1.127               “Residual
Distribution”  shall mean amounts to
be distributed to Owner pursuant to Section 10.2.

 

1.128               “Restricted
Area”  shall mean, for any Hotel, the
area around such Hotel depicted on Exhibit D.

 

1.129               “Restricted
Period”  shall mean: for each
Staybridge Hotel and Holiday Inn Hotel, the period ending on the third (3rd) anniversary of the
Effective Date; and for each InterContinental Hotel and Crowne Plaza Hotel, the
period ending on the fifth (5th)
anniversary of the Effective Date.

 

1.130               “Rooms
Revenue”  shall mean all revenue
derived from the rental of guest rooms in a Hotel in whatever currency collected
determined in accordance with the Accounting Principles.

 

1.131               “RST”  shall mean retail sales taxes imposed
pursuant to the Retail
Sales Tax Act (Ontario).

 

22

 

1.132               “Sales Tax”  shall mean all federal (U.S. and Canada),
state, provincial, municipal or local sales, use, excise, GST, value added,
retail sales, gross receipts and occupancy taxes, duties, levies, charges or
similar governmental charges, whether imposed now or in the future.

 

1.133               “Secured
Obligations”  shall have the meaning
given such term in the Deposit Guaranty.

 

1.134               “Severance
Date”  shall have the meaning given
to such term in the Guaranty.

 

1.135               “Sites”  shall mean the parcels of real estate more
particularly described on Exhibits A-1 through A-13 attached hereto.

 

1.136               “Specially
Designated or Blocked Person”  shall
mean (i) a Person designated by the U.S. Department of Treasury’s Office
of Foreign Assets Control from time to time as a “specially designated national
or blocked person” or similar status, (ii) a Person described in Section 1
of the U.S. Executive Order 13224, issued September 23, 2001, or (iii) a
person or entity otherwise identified by Government Agencies as a person or
entity with which either Party is prohibited from transacting business.  As of the date of this Agreement, a list of
such designations and the text of the Executive Order are published at:  www.ustreas.gov/offices/enforcement/ofac.

 

1.137               “Staybridge
Hotels”  shall mean the Hotels that
are operated as of the date hereof as Staybridge Suites hotels.

 

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

 

1.139               “Substitute
Tenant”  shall have the meaning given
the term in Section 4.2.

 

1.140               “Successor
Purchaser”  shall have the meaning
given to such term in Section 4.3(a)(iv)  (C).

 

1.141               “System
Fees”  shall mean the fees specified
in Section 9.2, excluding the e-mail service fee and the accounting
fee described therein.

 

23

 

1.142               “System
Marks”  shall mean all service marks,
trademarks, copyrights, trade names, logo types, commercial symbols, patents or
other similar rights or registrations now or hereafter held, applied for or
licensed by Manager or any Affiliate of Manager in connection with the
Staybridge Suites, InterContinental, Crowne Plaza or Holiday Inn, as
applicable, brand of hotels.

 

1.143               “Term”  shall mean the term of this Agreement as it
may be extended or terminated pursuant to the terms of this Agreement.

 

1.144               “Transaction
Documents”  shall mean, collectively,
the Principal Documents and the Other Documents.

 

1.145               “Transferred
Hotel”  shall mean a Canadian Hotel
which is sold or otherwise transferred by Purchaser and Owner (other than to an
Affiliate) pursuant to Section 24.17.

 

1.146               “Uniform
System of Accounts”  shall mean the
Uniform System of Accounts for the Lodging Industry, Ninth Revised Edition,
1996, as published by the Educational Institute of the American Hotel and Motel
Association, as it may be amended from time to time.

 

1.147               “Ultimate
Parent”  shall mean, with respect to
any Person, each Parent of such Person who in turn has no Parent.

 

1.148               “Unsuitable
for Its Permitted Use”  shall mean
with respect to a Hotel, a state or condition of such Hotel such that (a) following
any damage or destruction involving such Hotel, such Hotel cannot be operated
in the good faith judgment of Manager or Owner on a commercially practicable
basis and it cannot reasonably be expected to be restored to substantially the
same condition as existed immediately before such damage or destruction and
otherwise as required under Article 15 hereof, using only the net
proceeds of insurance obtained in connection therewith and other funds that
Owner or Manager elect to provide pursuant to the terms of Article 15
hereof within twelve (12) months following such damage or destruction or such
shorter period of time as to which business interruption insurance is available
to cover amounts payable to Owner hereunder and other costs related to the
Hotel following such damage or destruction, (b) as the result of a partial
taking by Condemnation, such Hotel cannot be operated in the good faith
judgment of Owner on a commercially practicable basis in light of then existing
circumstances, or (c) as the result of a partial taking by 

 

24

 

Condemnation (other than an Anaheim Condemnation) such Hotel cannot be
operated in the good faith judgment of Manager on a commercially practicable
basis in light of then existing circumstances. 
Notwithstanding the foregoing, the term “Unsuitable for Its Permitted
Use” shall apply to the Baltimore Hotel to the extent that any such damage,
destruction or Condemnation is to the infrastructure and/or equipment which
is/are located within the Baltimore Parking Garage.  However, the term “Unsuitable for Its Permitted
Use” shall not apply to the Baltimore Hotel to the extent that any such damage,
destruction or Condemnation is to infrastructure and/or equipment which is/are
not located within or otherwise a part of the Baltimore Hotel or the Baltimore
Parking Garage (including, without limitation, the “Condo Parking”, the “Condo
Project”, or the “Office Building” as such terms are defined in the Baltimore
Declaration).

 

1.149       “Working Capital”  shall mean funds, in whatever currency, that
are used (or held for use) in the day-to-day operation of the business of the
Hotels, including, without limitation, change and petty cash funds, amounts
deposited in operating bank accounts, receivables, deposits with utility
providers, amounts deposited in payroll accounts, prepaid expenses, amounts to
pay GST on the Owner’s “taxable supplies” (including, without limitation,
Operating Supplies, Operating Equipment, rent under the Lease, and Management
Fees), and funds required to maintain Operating Supplies, less accounts payable
and accrued current liabilities, exclusive of any funds in the Reserve Account.

 

1.150       “Yearly Budget”  shall mean, with respect to each Hotel, the
annual operating budget of such Hotel, covering a Fiscal Year, as prepared by
Manager in accordance with the Accounting Principles and approved by
Owner.  Such budget shall include an
operating budget, a business plan and a Capital Replacements Budget.  Without limiting the generality of the
foregoing, the Yearly Budget shall include a projection of
the estimated financial results of the operation of each Hotel for the Fiscal
Year.  Such projection shall project the
estimated Gross Revenues, departmental profits, Operating Costs and Operating
Profit for the Fiscal Year for each Hotel.

 

ARTICLE 2

 

SCOPE OF AGREEMENT

 

2.1           Engagement of Manager.  Subject to the terms of this Agreement, Owner
hereby grants to Manager the sole and exclusive

 

25

 

right to supervise and
direct the management and operation of the Hotels for the Term as Owner’s agent
coupled with an interest.  Manager hereby
accepts said grant and agrees that it will control, supervise and direct the
management and operation of the Hotels, all subject to the terms, requirements
and conditions of this Agreement, with commercially reasonable efforts in doing
so, and in an efficient and economical manner consistent with standards
prevailing in well managed hotels similar to the Hotels, including all
activities in connection therewith which are customary and usual to such an
operation (the foregoing standards constituting the “Operating Standards”).  Without limiting the generality of the
foregoing, and in addition to the other functions to be performed by Manager
pursuant to this Agreement, Manager shall perform (or shall cause its
Affiliates to perform), in connection with the Hotels in its capacity as “Manager”
hereunder and in accordance with the applicable Brand Standards, the Operating
Standards and the terms of this Agreement, each of the following functions, provided,
however, except as otherwise set forth in this Agreement, the costs and
expenses of performing the following functions shall be Operating Costs:

 

(a)           Establish
and revise, as necessary, administrative policies and procedures, including
policies and procedures for the control of revenue and expenditures, for the
purchasing of supplies and services, for the control of credit, and for the
scheduling of maintenance, and verify that the foregoing procedures are
operating in a sound manner.

 

(b)           Manage
expenditures to replenish Operating Supplies and Operating Equipment, make
payments on accounts payable and collect accounts receivable.

 

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

 

(d)           Procure
all Operating Supplies and replacement Operating Equipment.

 

(e)           Provide,
or cause to be provided, risk management services relating to the types of
insurance required to be obtained or provided by Manager under this Agreement.

 

(f)            Reasonably
cooperate (provided that except as herein expressly provided Manager shall not
be obligated to enter into any amendments of this Agreement or, unless Owner
agrees to reimburse Manager therefor, to incur any material expense including
any internal expenses) in any attempt(s) to: (i)

 

26

 

effectuate a sale or
other transfer of a Hotel subject to the terms of Sections 4.4 and 4.5
of this Agreement; or (ii) obtain any Authorized Mortgage.

 

(g)           Negotiate,
enter into and administer service contracts and licenses for the operation of
the Hotels, including, without limitation, and to the extent appropriate,
contracts and licenses for health and safety systems maintenance, electricity,
gas, telephone, cleaning, elevator and boiler maintenance, air conditioning
maintenance, laundry and dry cleaning, master television service, use of
copyrighted materials (such as music and videos), entertainment and other
services as Manager deems advisable.

 

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

 

(i)            Take
reasonable action to collect and institute in its own name or in the name of
Owner or a Hotel, in each instance as Manager in its reasonable discretion
deems appropriate, legal actions or proceedings to collect charges, rent or
other income derived from the operation of the Hotels or to oust or dispossess
guests, tenants, members or other Persons in possession therefrom, or to cancel
or terminate any lease, license or concession agreement for the breach thereof
or default thereunder by the tenant, licensee or concessionaire.

 

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

 

(k)           Collect
and account for and remit to Government Agencies all applicable excise, sales,
value added, occupancy and use taxes or similar governmental charges collected
by or at the Hotels directly from guests, members, other patrons, tenants,
licensees, concessionaires or other occupants, or as part of the sales price of
any goods, services, rentals or displays, such as gross receipts, admission or
similar or equivalent taxes, duties, levies or charges, and prepare, sign and
submit to the applicable Government Agencies the applicable returns and reports
therefor on behalf of Owner, in Owner’s name and using Owner’s registration.

 

(l)            Keep
Owner advised of events which might reasonably be expected to have a material
effect on the financial performance or value of any Hotel.

 

27

 

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

 

(n)           Use
its reasonable efforts to keep all ground, underlying and parking leases in
full force and effect and arrange appropriate substitutes for any such lease
which ceases to be or is reasonably anticipated to cease to be in full force
and in effect.

 

(o)           Except
for the obligations of Owner or Owner’s Affiliate arising pursuant to that
certain Sixth Supplement to the Baltimore Declaration, comply with all of the
obligations of Owner and Owner’s Affiliate under the Baltimore Declaration in
their capacities as owners and/or operators of the Baltimore Hotel (including,
without limitation, the Baltimore Health Club and the Baltimore Central
Plant).  Notwithstanding the foregoing,
Manager additionally agrees to comply with all of the obligations of Owner and
Owner’s Affiliate under Section 4.4 of the Baltimore Declaration.

 

(p)           Perform
such other tasks with respect to the Hotels as are generally performed by managers
of similar hotels consistent with the Operating Standards and the Brand
Standards.

 

2.2           Additional
Services.  Any fees for services not
included in the Management Fees for the Hotels shall be consistent with fees
established for similar types of hotels managed by Manager or its
Affiliates.  Any disputes under this Section 2.2
shall be resolved by Arbitration.

 

2.3           Use
of Hotels.  Manager shall not use,
and shall exercise commercially reasonable efforts to prevent the use of, the
Hotels and Owner’s and Manager’s personal property (whether owned or leased)
used in connection with the Hotels, if any, for any unlawful purpose.  Manager shall not commit, and shall use
commercially reasonable efforts to prevent the commission of, any waste at the
Hotels.  Manager shall not use, and shall
use commercially reasonable efforts to prevent the use of, the Hotels in such a
manner as will constitute an unlawful nuisance thereon or therein.  Manager shall use commercially reasonable
efforts to prevent the use of the Hotels in such a manner as might reasonably
be expected to impair Owner’s or Purchaser’s title thereto or any portion
thereof or might reasonably be expected to give rise to a claim or claims for
adverse use or adverse possession by the public, as such, or of implied
dedication of the Hotels or any portion thereof.

 

28

 

2.4           Right
to Inspect.  Manager shall permit
Owner and its authorized representatives to inspect or show the Hotels during
usual business hours upon not less than twenty four (24) hours’ notice,
provided that any inspection by Owner or its representatives shall not
unreasonably interfere with the use and operation of the Hotels and further
provided that in the event of an emergency as determined by Owner in its
reasonable discretion, prior notice shall not be required.

 

2.5           No
Right of Offset.  Manager shall not
offset against any amounts owed to Owner; provided, however,
Manager may offset amounts which Owner has failed to fund in violation of Section 5.2(c) (or,
so long as PR Property is a Pooled FF&E Hotel, the landlord under the PR
Lease has failed to fund in violation of Section 5.1.3(b) of the PR
Lease) against the amounts owed to Owner hereunder provided that after giving
effect to all such offsets there shall still be paid to Owner an amount
sufficient to pay regularly scheduled payments of interest and principal under
any loan or other debt secured by an Authorized Mortgage and attributable to
the Pledged Hotels.

 

2.6           Condition
of the Hotels.

 

(a)           Manager
acknowledges receipt and delivery of possession of each Hotel, and Manager
accepts each Hotel in its “as is” condition as of the Effective Date, subject
to the rights of parties in possession, the existing title, including all
covenants, conditions, restrictions, reservations, mineral leases, easements
and other matters of record or that are visible or apparent on the Hotels, all
applicable Legal Requirements, and such other matters which would be disclosed
by an inspection of the Hotels and the record title thereto or by an accurate
survey thereof.  MANAGER REPRESENTS
THAT:  IT HAS INSPECTED THE HOTELS
INCLUDING THE FF&E AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION
THEREOF SATISFACTORY; EXCEPT FOR THE BALTIMORE HOTEL, AS OF THE EFFECTIVE DATE,
THE HOTELS ARE IN COMPLIANCE WITH THE APPLICABLE BRAND STANDARDS IN ALL
MATERIAL RESPECTS; EXCEPT FOR CAPITAL REPLACEMENTS TO BE MADE FROM TIME TO TIME
USING THE BALTIMORE REBRANDING AMOUNTS, FUNDS TO BE DEPOSITED IN THE RESERVE
ACCOUNT PURSUANT TO SECTION 5.2(a) AND AMOUNTS TO BE EXPENDED
BY THE MANAGER’S AFFILIATES AS REQUIRED BY THE PURCHASE AGREEMENT, MANAGER
CURRENTLY DOES NOT ANTICIPATE THE NEED TO MAKE CAPITAL REPLACEMENTS DURING THE
FIRST FIVE YEARS OF THE TERM (PROVIDED, HOWEVER, SUCH REPRESENTATION
IS NOT A GUARANTY OR WARRANTY THAT NO SUCH CAPITAL REPLACEMENTS WILL BE
REQUIRED); AND IT IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF OWNER,
PURCHASER OR ANY OF THEIR AGENTS OR EMPLOYEES WITH RESPECT TO ANY OF THE MATTERS
SET FORTH IN THIS SECTION.

 

29

 

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

 

(b)           Manager’s
representations set forth in Section 2.6(a) are qualified as
to the Baltimore Hotel in certain respects because, prior to its Effective
Date, the Baltimore Hotel was operated as an unbranded hotel that was owned by
an unrelated third party and, in order to bring the Baltimore Hotel into
compliance with applicable Brand Standards, Manager will need to spend the
Baltimore Rebranding Amounts on various items as contemplated by Section 5.2(h).  Manager reasonably believes that the Baltimore
Rebranding Amounts shall be sufficient for purposes of bringing the Baltimore
Hotel into compliance with applicable Brand Standard.  Except for those Capital Replacements that
are to be made at the Baltimore Hotel using the Baltimore Rebranding Amounts,
Manager currently does not anticipate the need to make any other Capital
Replacements during the first five (5) years of the Term with respect to
the Baltimore Hotel (provided, however, such representation is not a guaranty
or a warranty that no such Capital Replacements will be required).  Manager covenants to complete the rebranding
of the Baltimore Hotel on or prior to January 1, 2007.

 

2.7           Non-Economic
Hotels.

 

(a)           Manager
shall be entitled to designate as a Non-Economic Hotel any Hotel for which, in
each of any three (3) consecutive full Fiscal Years during the Term, the
Operating Profit is less than the sum of (i) amounts to be funded to the
Reserve Account pursuant to Section 5.2(a) on account of such
Hotel, plus (ii) Owner’s Fixed Priority attributable to such Hotel
pursuant to Exhibit C hereto; provided, however, that
the number of Hotels designated as Non-Economic Hotels under this Agreement
(other than those with respect to which such designation has been withdrawn or
deemed withdrawn, but including those which have been sold pursuant to this Section 2.7)
shall not exceed three (3).  If
subsequent to a Hotel being designated as a Non-Economic Hotel but prior to its
sale pursuant to this Section 2.7, the Operating Profit of such
Hotel for any Fiscal Year shall exceed the sum of amounts to be funded to the
Reserve Account pursuant to Section 5.2(a) on account of such
Hotel, plus the portion of the Owner’s Fixed Priority for

 

30

 

such Fiscal Year so
attributable to such Hotel, such designation shall be deemed withdrawn;
provided, however, if Manager is then negotiating a sale of such Hotel to a
third party, such designation shall not be deemed withdrawn for a period of
three (3) months.

 

(b)           So
long as there is no Manager Default or Manager Event of Default, Manager may
market each Hotel that is a Non-Economic Hotel for sale.  In addition, if Manager reasonably
anticipates based on projections prepared in the ordinary course that a Hotel
will become a Non-Economic Hotel within the next twelve (12) months, Manager
may market such Hotel for sale; provided, however, no Hotel shall be sold
pursuant to this Section 2.7 other than Non-Economic Hotels.  If
Manager receives an Offer, Manager shall give Owner and Purchaser notice
thereof, which notice shall include a copy of the executed Offer.  In the event that Owner and Purchaser shall
fail to accept or reject such Offer within five (5) Business Days after
receipt of such notice, such Offer shall be deemed to be rejected by them.  Provided there is no Manager Default or
Manager Event of Default, if Owner and Purchaser shall either sell such
Non-Economic Hotel pursuant to such Offer or reject or be deemed to have
rejected such Offer, then effective as of the date of such sale or, if the
Offer was rejected or deemed rejected, the proposed date of sale contained in
such Offer, as the case may be, the following shall apply: (i) the Term
shall terminate with respect to such Non-Economic Hotel; (ii) no further
Owner’s Percentage Priority shall accrue with respect to such Non-Economic
Hotel’s Gross Revenues which accrue after such termination; (iii) the
Owner’s First Priority shall be reduced by an amount equal to eight percent
(8%) of the net (after taking into account any costs paid by Manager) proceeds
of sale received by Owner or Purchaser (or, in the case of such a rejection,
eight percent (8%) of the projected net (after taking into account any costs to
be paid by Manager) proceeds of sale which would have been received by Owner or
Purchaser determined by reference to such Offer); and (iv) the Owner’s
Second Priority shall be reduced by one half of one percent (0.5%) of such net
proceeds (or, in the case of a rejection, one half of one percent (0.5%) of
such projected net proceeds).

 

2.8           No
Early Termination of Manager; Nature of Relationship etc.

 

(a)           So
long as this Agreement is in full force and effect and Owner is not entitled
pursuant to the terms hereof to terminate this Agreement in its entirety, Owner
covenants and agrees not to hire, engage, appoint or employ any other manager
to

 

31

 

manage any Hotel prior to
the expiration or earlier termination of the Term with respect to such
Hotel.  Any otherwise applicable
principles of law notwithstanding, it is Owner’s intent and agreement that
Manager shall manage each Hotel pursuant to this Agreement through the Term so
long as this Agreement is in full force and effect with respect to such Hotel.

 

(b)           Owner
shall provide appropriate asset management services with respect to the Hotels
at no cost or expense to Manager (and shall use reasonable efforts to cooperate
with Manager in order to keep all ground, underlying and parking leases in full
force and effect).  The costs and
expenses incurred by Owner in connection with providing such asset management
services shall not be Operating Costs. 
Owner shall, from time to time, upon the request of Manager provide
Manager with the name, telephone number, fax number and email address of the
individual responsible for providing such asset management services.  Manager will cooperate with and assist the
Owner in every reasonable and proper way to permit Owner to carry out its
duties and exercise its rights hereunder with respect to the Hotels.

 

(c)           Without
limiting the scope or intent of the provisions of Section 19.1 of
this Agreement, each of the parties acknowledges and agrees that (i) the
execution and delivery by the other of this Agreement is substantial and
essential consideration for their respective Affiliates’ purchase and sale of
the Hotels (other than the Baltimore Hotel) pursuant to the Purchase Agreement,
(ii) but for the execution and delivery of this Agreement, Manager’s
Affiliates would not have sold the Hotels (other than the Baltimore Hotel) to
Purchaser pursuant to the Purchase Agreement, (iii) but for the execution
and delivery of this Agreement, Owner’s Affiliates would not have purchased the
Hotels (other than the Baltimore Hotel) from Manager’s Affiliates or the
Baltimore Hotel from the Baltimore Seller, (iv) the terms and provisions
of the Purchase Agreement and the Baltimore Purchase Agreement, including the
purchase prices set forth therein, the PR Stock Agreement and the PR Lease were
negotiated and agreed upon on the basis and upon the condition that this
Agreement be executed and delivered at the time of the closing of the sale of
the Hotels to Purchaser, (v) this Agreement fairly, accurately and fully
sets forth the agreement between Owner and Manager regarding Manager’s
management of the Hotels through the Term, (vi) there are no duties or
obligations between the parties not expressly set forth herein and (vii) each
of the parties hereto has a duty of commercial good faith and fair dealing.

 

32

 

(d)           Any
common law or other rule or restriction that would otherwise apply
notwithstanding, but subject to the terms of Section 24.1, Manager,
Owner and their respective Affiliates are free to manage, engage in or license
other business activities, including activities involving transient lodging and
related activities.  Except as provided
in Section 24.1, nothing herein or otherwise shall prevent Manager,
Owner or their respective Affiliates from owning, managing or licensing other
facilities, and Manager, Owner and their respective Affiliates may manage,
engage in or license any business activity at any other location whether or not
competing with the Hotels, without the consent or approval of, or liability to,
the other and without offering the other any opportunity to participate
therein.  Subject to the terms of Section 24.1,
each party hereby waives any claim or cause of action, of whatever nature and
however derived, relating to or arising in any way out of the other’s
ownership, licensing or management of any other hotel or commercial property
wherever located.

 

ARTICLE 3

 

TERM AND RENEWALS

 

3.1           Term.  The term of this Agreement shall be for a
period beginning on the Effective Date and continuing for the Initial Term and
any extension of the term hereof in accordance with the provisions of this
Agreement, unless sooner terminated as herein provided.  Manager acknowledges that if the ground lease
for the InterContinental Hotel in Toronto, Ontario is terminated, the lessor
thereunder may terminate this Agreement upon giving not less than one hundred
eighty (180) days’ notice, which notice shall be given within ninety (90) days
after such ground lease is terminated.

 

3.2           Renewal
Term.  Provided the term of the PR
Lease is simultaneously extended in accordance with the terms of the PR Lease,
the Term may be extended, at Manager’s option, for up to two (2) consecutive
periods (each, a “Renewal Term”) of fifteen (15) years each on not less
than two (2) years’ prior notice to Owner. 
If Manager fails to give notice of its election not to exercise either
of its options to extend the Term on or before the date which is the day prior
to the date that is two (2) years prior to the then Expiration Date or if
PR Tenant fails to give notice of its election not to exercise either of its
options to extend the term of the PR Lease on or before the date which is the
day prior to the date that is two (2) years prior to the then expiration
date of the PR Lease, Manager shall be deemed to have exercised the applicable
extension option.  The

 

33

 

terms and provisions of
this Agreement will remain in effect as stated herein during any Renewal Term
except that Manager shall have no right to extend the Term beyond the Renewal
Terms herein provided.

 

3.3           Owner’s
Termination Right at End of Term.  If
Manager gives notice of its election not to extend the Term, or the PR Tenant
gives notice of its election not to extend the term of the PR Lease, or Manager
shall have no further right to extend the Term, then at any time during the
last two years of the Term, Owner may terminate this Agreement on not less than
thirty (30) days’ prior written notice.

 

ARTICLE 4

 

TITLE TO HOTEL

 

4.1           Covenants
of Title.  During the Term, provided
no Manager Default exists, Manager shall have the right peaceably and quietly
to operate the Hotels in accordance with the terms of this Agreement, free from
interference, disturbance and eviction by Owner or Purchaser or by any other
Person or Persons claiming by, through or under Owner or Purchaser, subject
only to termination of this Agreement as herein provided.  Except as may otherwise be provided herein,
Owner, at Owner’s own expense (and not as an Operating Cost), shall prosecute
all appropriate actions, judicial or otherwise, required to assure such quiet
and peaceable operation by Manager and shall pay and discharge any rental
obligations under the Lease.  Without
Manager’s written consent, which consent shall not be unreasonably withheld,
Owner shall not during the Term enter into an agreement, covenant or
encumbrance affecting title to the Hotels except in connection with Authorized
Mortgages and sales or transfers of the Hotels not prohibited hereby.  Further, during the Term, Owner shall not
convert any Hotel to a condominium form of ownership.

 

4.2           Non-Disturbance.  Purchaser and Manager agree that in the event
the Lease terminates prior to expiration or earlier termination of the Term, so
long as (i) there exists no uncured Manager Event of Default and (ii) Owner
is not otherwise entitled to terminate this Agreement: (a) Manager shall
not be disturbed in its rights under this Agreement by Purchaser; (b) Purchaser
shall assume the obligations of Owner under this Agreement; and (c) Manager
shall attorn to Purchaser and recognize Purchaser as the “Owner” under this
Agreement.  Purchaser shall have the
right to assign all of its right, title and interest in, to and under this
Agreement to a new tenant (a

 

34

 

“Substitute Tenant”)
to which Purchaser shall lease the Hotels (pursuant to a lease which imposes no
greater risks, obligations, duties or liability on Manager than the Lease
(assuming the same had not been terminated) and for a term equal to the
unexpired term of this Agreement) which Substitute Tenant shall expressly
assume all of the Owner’s obligations under this Agreement.  Upon such assignment to, and assumption by, a
Substitute Tenant, Purchaser shall be relieved of all future obligations
arising under this Agreement (other than any expressly imposed on Purchaser
pursuant to Sections 4.2 through and including 4.7), Manager
shall attorn to the Substitute Tenant and recognize the Substitute Tenant as
the “Owner” under this Agreement, and the term “Lease” as used in this
Agreement shall be deemed to refer to such lease between Purchaser and the
Substitute Tenant.

 

4.3           Financing.

 

(a)           Purchaser
shall be entitled to encumber the Hotels or any of them with one or more
Authorized Mortgages which are expressly subordinate to this Agreement or in
connection with which the following terms and conditions are satisfied:

 

(i)      the loan or other debt
secured by such Authorized Mortgage shall not be cross-collateralized with
other property or hotels which are not managed or franchised by Manager, IHG or
their respective Affiliates;

 

(ii)     the principal amount
secured by such Authorized Mortgage shall not exceed the sum of seventy-five
percent (75%) (or, if less than four (4) Pooled FF&E Hotels secure
such principal amount, sixty-five percent (65%)) of the sum of the fair market
value as of the date of the granting of such Authorized Mortgage of the Pledged
Hotels and the other properties securing such principal amount;

 

(iii)       as of the date of the
granting of such Authorized Mortgage, the Debt Service Coverage Ratio
associated with such loan or debt secured thereby shall not be less than (i) 1.4
if fewer than four (4) Pooled FF&E Hotels secure such loan or other
debt or (ii) 1.3 if four (4) or more Pooled FF&E Hotels secure
such loan or other debt; and

 

(iv)    the holder of such
Authorized Mortgage shall execute and deliver to Manager (Manager agreeing to
likewise execute and deliver to such holder) a so-called

 

35

 

subordination, non-disturbance and attornment
agreement which shall provide that:

 

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

 

(B)           so long as this Agreement is in full
force and effect and there exists no Manager Default which has not been cured
within any applicable notice or grace period, Manager’s rights under this
Agreement shall not be disturbed by reason of such subordination or by reason
of foreclosure of such Authorized Mortgage or receipt of deed in lieu of
foreclosure;

 

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

 

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

 

36

 

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

 

(F)           Such other terms as are customary for
similar agreements.

 

(b)           In
the event less than all of the Hotels are to secure the loan or other debt
secured by an Authorized Mortgage, Owner shall have the right to cause the Pledged
Hotels to be managed pursuant to a separate management agreement which
agreement shall be for a term equal to the unexpired portion of the Term and
otherwise on substantially the same terms of this Agreement except as otherwise
provided herein, provided that the Pledged Hotels in the aggregate and the
remaining Hotels in the aggregate shall have Priority Coverage Ratios for the 12-month
period ending on the last day of the month next prior to the date on which such
Authorized Mortgage is granted equal to each other or equal to, or greater
than, 1.3.  In connection with entering
into such separate management agreement, the parties shall make appropriate
allocations of Owner’s Fixed Priority, amounts in the Reserve Account, the
Working Capital, and any outstanding advances made by Owner, Manager or their
respective Affiliates so that the obligations allocable to the Hotels subject
to such Authorized Mortgage shall not be due from the other Hotels and vice
versa.  The allocation of Owner’s
Fixed Priority for each Hotel shall be proportional to the NOI of such Hotel
for the then most recently ended twelve (12) months relative to the NOI of all
the other Hotels for such period. 
Without the consent of Manager, the holder of any Authorized Mortgage
shall have the right to elect to be subject and subordinate to this Agreement,
such subordination to be effective upon such terms and conditions as such
holder may direct which are not inconsistent with the provisions hereof.

 

(c)           Manager
shall be entitled to pay any overdue regularly scheduled payments of interest
and principal on any Authorized Mortgage from the Operating Profits of all of
the Hotels subject to such Authorized Mortgage and to credit any such payments
against disbursement obligations for Owner’s Fixed Priority.

 

4.4           Sale
of a Hotel to an Affiliate.  In the
event of a sale or transfer of Purchaser’s interest in any Hotel to an
Affiliate of the Purchaser with such Affiliate assuming Purchaser’s obligations
under the Lease, this Agreement shall

 

37

 

remain in full force and
effect without regard to such sale or transfer.

 

4.5           Sale
of All the Hotels.  If Purchaser
sells or otherwise transfers all of the Hotels to a single transferee in a
single transaction, (a) the transferee shall assume Purchaser’s
obligations hereunder and (b) Purchaser shall be released and relieved
from any and all obligations hereunder. 
In connection with such transfer, Owner may assign this Agreement to the
transferee or its Affiliate, and provided the assignee assumes all of Owner’s
obligations hereunder thereafter accruing, Owner shall be released and relieved
from all such obligations.  Except as
provided in Sections 2.7 or 24.17 or in connection with the
foreclosure of an Authorized Mortgage or deed-in-lieu of such foreclosure,
Purchaser and its Affiliates and their successors and assigns shall not sell
less than all the Pooled FF&E Hotels to any Person except to an Affiliate
as provided in Section 4.4 or in Section 15.6 of the PR Lease.

 

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

 

4.7           Restricted
Sale.  Except as provided in Section 2.7
or in connection with a foreclosure of an Authorized Mortgage, neither
Purchaser nor Owner shall transfer its interest in any Hotel, directly or
indirectly, (a) to any Person which: (i) is in control of or
controlled by Persons who have been convicted of felonies; (ii) is a
Competitor or an Affiliate of a Competitor; (iii) lacks the financial
capabilities to perform Owner’s obligations hereunder; or (iv) is a Specially
Designated or Blocked Person or (b) if such transfer would materially
adversely affect the ability of Manager or its Affiliates to obtain or retain
any license or permit for the Hotels or comply with any applicable ground or
parking leases for the Hotels.

 

ARTICLE 5

 

REQUIRED FUNDS

 

5.1           Working
Capital.

 

(a)           With
respect to all of the Hotels other than the Baltimore Hotel, Manager shall
contribute to the Working Capital for the Hotels an amount (the “Initial
Working Capital”) reasonably sufficient to pay Operating Costs for the
Hotels and

 

38

 

GST required to be paid
by Owner (including, without limitation, any GST on or in respect of Operating
Supplies, Operating Equipment and any other items acquired by Owner in
connection with the closing under the Purchase Agreement) for the first thirty
(30) days of operating the Hotels following the Effective Date after taking
into account Gross Revenues and GST collected from patrons, guests and others
of, or at, the Hotels.  Promptly after
the month in which the applicable Effective Date occurs, the parties shall
agree on the amount of the Initial Working Capital which Manager so
contributed.  With respect to the
Baltimore Hotel only, the Initial Working Capital is $0.00.

 

(b)           After
the first thirty (30) days following the applicable Effective Date for each of
the Hotels, upon written notice from Manager, Owner may, but shall not be
obligated to, advance any additional funds, over and above the Initial Working
Capital, necessary to pay Operating Costs and/or GST required to be paid by
Owner (but not Owner’s First Priority or Owner’s Second Priority) as they come
due.  Any such request by Manager shall
be accompanied by a reasonably detailed explanation of the reasons for the
request.  All funds so advanced for
Working Capital shall be utilized by Manager to pay Operating Costs and/or such
GST as they come due.  If Owner does not
advance such additional Working Capital within two (2) Business Days after
notice, Manager, as its exclusive remedy, shall have the right either to (i) advance
such additional Working Capital or (ii) terminate this Agreement on ten (10) days’
advance written notice to Owner; provided, however, such notice
of termination shall be void ab  initio if Owner advances the
requested funds necessary to pay Operating Costs and such GST prior to the end
of the tenth (10th) day after the receipt of such termination
notice.  If Manager fails to either make
such advance or give notice of termination within ten (10) days, then
after the expiration of such two (2) Business Days, Owner may elect by
written notice to Manager to terminate this Agreement, which termination shall
be effective ten (10) days after the date such notice is given.  Upon the expiration or earlier termination of
the Term, the Working Capital of the Hotels shall be applied to pay all
Operating Costs, such GST and all amounts owed to Owner to the extent Gross
Revenues are insufficient.  Thereafter,
Manager shall be entitled to retain the Initial Working Capital, and the
balance of the Working Capital shall belong to Owner.  All refunds and (the cash equivalents of) any
input credits in respect to GST paid from Working Capital shall remain part of
the Working Capital.

 

39

 

5.2           Reserve
Account.

 

(a)           Manager
shall transfer from the Bank Accounts to the Reserve Account in cash on or
before the 25th day of each Fiscal Month, beginning on the Reserve
Effective Date and continuing for each and every month during the Term, an
aggregate amount equal to each Hotel’s Reserve Percentage applicable to the
calendar year in which the prior Fiscal Month occurred times the Gross Revenues
at such Hotel for the prior Fiscal Month. 
The amount to be contributed to the Reserve Account on account of the
Gross Revenues of the Canadian Hotels shall be calculated using Canadian
dollars but shall be contributed to the Reserve Account in United States
dollars in accordance with Section 24.24.  Subject to the terms of Section 5.2(g) and
5.2(h), amounts in the Reserve Account are to pay for Capital
Replacements undertaken after the Effective Date required to maintain any and
all of the Hotels in accordance with the Operating Standards and the Brand
Standards; provided, however, notwithstanding anything in
this Agreement to the contrary, no additional cost or expense shall be incurred
or paid in connection with any Capital Replacements made during the last two (2) years
of the Term to the extent attributable solely to complying with the Brand
Standards.  The amounts so paid
into the Reserve Account shall be recorded on the Hotels’ books of account as “Reserve
for FF&E Replacements.”  Except as
expressly provided herein, any expenditures for Capital Replacements during any
Fiscal Year which have been approved in the yearly Capital Replacements Budget
may be made without Owner’s further approval and, to the extent available, may
be made by Manager from the Reserve Account. 
Any amounts remaining in the Reserve Account at the close of each Fiscal
Year will be carried forward and retained in the Reserve Account.  Any and all portions of the Hotels which are
scrapped or removed in connection with the making of any major or non-major
repairs, renovations, additions, alterations, improvements, removals or
replacements at the Hotels shall be disposed of by Manager and any net proceeds
thereof shall be deposited in the Reserve Account and not included in Gross
Revenues.  In addition, any proceeds from
the sale of FF&E no longer necessary to the operation of the Hotels and any
refunds or (the cash equivalents of) input credits attributable to GST paid
with funds from the Reserve Account shall be added to the Reserve Account.  Subject to Section 5.2(h),
Manager shall be entitled to use funds in the Reserve Account to make Capital
Replacements at any and all of the Hotels regardless of the Hotel from which
such funds originate.  To the extent that
the cost of any such Capital Replacements are to be paid for in a currency
other than United States dollars, Manager shall exchange an appropriate portion
of the funds in the Reserve Account into such other currency at the

 

40

 

best rates and terms
commercially available to Manager at the time of such exchange for such purpose
on or about the date such funds are withdrawn from the Reserve Account and
applied to pay such costs in accordance with Manager’s general practice for
Capital Replacements.  All costs of such
exchange shall be Operating Costs.

 

(b)           Subject
to the terms of Section 5.6, Manager shall be the only party
entitled to withdraw funds from the Reserve Account until a Manager Default
shall occur.

 

(c)           Subject
to the terms of Sections 5.2(f), 5.2(g) and 5.2(h),
additional amounts shall be funded into the Reserve Account to pay for Capital
Replacements as follows:

 

(i)  Either
Owner or Manager may propose that additional funds be funded into the Reserve
Account.

 

(ii)  If both
parties give their approval to a proposed funding within twenty (20) Business
Days after a request for such approval is given from one party to the other,
Owner shall (or shall cause Purchaser to) fund the approved amount into the
Reserve Account within twenty (20) Business Days after both parties approve in
writing of such funding provided that there is then no uncured Manager
Default.  Neither party shall
unreasonably withhold its approval of such a proposed funding; provided,
however, no purchaser at foreclosure of an Authorized Mortgage or
grantee of a deed in lieu of such foreclosure nor any Person claiming by,
through or under such purchaser or grantee shall have an obligation to so not
withhold its consent; provided  further, however, Owner
will consider the likelihood of its receiving the increase in Owner’s Second
Priority which would result from its making such advance as well as the effect
on the value of the Hotels resulting from the delay or failure in making the
proposed Capital Replacements.  Upon such
funding, Owner’s Second Priority will be adjusted as provided in the definition
of such term.

 

(iii)  If
Owner proposes in writing such funding for the purpose of making particular
Capital Replacements but Manager does not approve of the same in writing within
twenty (20) Business Days after Owner gives such proposal to Manager, Owner
shall have the right, but not the obligation, to make such funding, and Manager
shall cause such Capital Replacements to be made with the amounts so

 

41

 

funded unless such Capital Replacements conflict with
the applicable Brand Standards.

 

(iv)  If
Manager proposes in writing such funding for the purpose of one or more
particular Capital Replacements and Owner does not approve of the same in
writing within twenty (20) Business Days after such proposal is given to Owner,
Manager shall have the right, but not the obligation, to either provide the
proposed funding itself or, if such Capital Replacements are set forth in the
Capital Replacements Budget or are required to comply with the Operating Standards,
applicable Brand Standards, Insurance Requirements or Legal Requirements and at
the time of the giving of such proposal to Owner, the funds in the Reserve
Account shall be insufficient for such Capital Replacements, require Owner to
provide (or cause Purchaser to provide) the proposed funding.  If Owner or Purchaser provides such funding,
the Owner’s First Priority will be adjusted as provided in the definition of
that term.

 

(v)  Notwithstanding
anything contained in this Section 5.2(c) to the contrary,
neither Owner nor Manager shall request the other party to fund any amounts
with respect to the Baltimore Central Plant except to the extent that such
amounts relate to the portion of the Baltimore Central Plant that is allocated
to the Baltimore Hotel in accordance with the terms and conditions of the
Baltimore Declaration and the Baltimore Maintenance Memorandum.

 

(d)           If
Owner shall fail to disburse (or cause Purchaser to disburse) funds to Manager
for deposit into the Reserve Account in violation of Section 5.2(c),
which failure continues for five (5) days after the giving of notice from
Manager to Owner, then, in addition to Manager’s other remedies hereunder or
under the HPT Guaranty (as defined in the Purchase Agreement), Manager shall be
entitled, but not obligated, to deposit in the Reserve Account the amount of
funds which Owner so failed to disburse.

 

(e)           Upon
the expiration or earlier termination of the Term, Manager shall disburse to
Purchaser, or as Purchaser shall direct, all amounts remaining in the Reserve
Account after payments of all expenses on account of Capital Replacements
appropriately incurred by Manager during the Term.

 

(f)            Unless
and until the Affiliates of the Manager which sold the Hotels to Purchaser and
the stock of the owner of the PR Property to an Affiliate of Owner have
expended $25,000,000 (net of any applicable GST that is refundable) of their
own

 

42

 

funds to make Capital
Replacements at the Pooled FF&E Hotels (other than the Baltimore Hotel),
Owner shall have no obligation to make or to cause Purchaser to make any
advances to the Reserve Account.

 

(g)           Notwithstanding
anything contained herein to the contrary, if Owner advises Manager that in
Owner’s opinion, the fair market value of all personal property of Purchaser
at, about or which forms a part of a Hotel is equal to or exceeds thirteen and
one-half percent (13.5%) of the fair market value of all property of Purchaser
pertaining to such Hotel (including all such personal property, the Building
and the underlying land or ground lease), Manager and its Affiliates shall not
use funds from the Reserve Accounts or which are required to be expended
pursuant to the Purchase Agreement to purchase additional personal property for
use at, about or as part of such Hotel without Owner’s prior written consent,
which consent may be granted or withheld in Owner’s sole and absolute judgment.

 

(h)           Notwithstanding
anything contained in this Section 5.2 to the contrary, Owner will
deposit (or will cause Purchaser to deposit) $1,000,000 into the Reserve
Account as of January 1, 2007 and an additional $1,300,000 into the
Reserve Account as of January 1, 2008; provided, however,
that, subject to Section 5.2(g), Manager shall apply all such amounts
to the costs associated with rebranding the Baltimore Hotel as an
Intercontinental hotel (including, without limitation, any Capital Replacements
associated with such rebranding) or to reimburse Manager for any such
rebranding costs to the extent previously incurred directly by Manager.

 

(i)            In
addition, Owner shall deposit (or cause Purchaser to deposit) $1,420,000 into
the Reserve Account, and Manager shall deposit $400,000 into the Reserve
Account, in each case on or before the date which is six (6) months
following the Effective Date with respect to the Baltimore Hotel.  Manager shall apply all amounts so deposited
by Owner or Purchaser to the costs of replacing the roof membrane as
contemplated by Section 4.4 of the Baltimore Declaration.  Manager shall apply all amounts so deposited
by Manager to the costs of making certain upgrades to the building systems at
the Baltimore Hotel.  Both Owner and
Manager acknowledge and agree that (i) neither of them shall be entitled
to any manner of reimbursement or refund for any such amounts so deposited
(including, without limitation, any adjustment to the Base Priority Amount or
any return or reimbursement for such amounts under Section 10.1); (ii) neither
of them shall be required to deposit any additional amount into the Reserve
Account under this Section 5.2(i) even

 

43

 

if the amounts so
deposited are not sufficient to cover all of the costs of the repairs or
upgrades to which they apply; and (iii) if the cost of replacing the roof
membrane as contemplated by Section 4.4 of the Baltimore Declaration
exceeds $1,420,000, then any and all excess costs for completing such roof
repairs shall be funded using the other amounts from the Reserve Account.

 

5.3           Additional
Requirements for Reserve.  All
expenditures from the Reserve Account shall be (as to both the amount of each
such expenditure and the timing thereof) both reasonable and necessary given
the objective that the Hotels will be maintained and operated to a standard
comparable to competitive properties and in accordance with the Operating
Standards and the applicable Brand Standards.

 

5.4           Ownership
of Replacements.  All Capital
Replacements made pursuant to this Agreement and all amounts in the Reserve
Account shall be the property of Owner or Purchaser, as applicable, as provided
under the Lease.

 

5.5           No
Additional Contributions.  Except as
otherwise expressly provided in this Agreement, neither Owner nor Purchaser
shall, under any circumstances, be required to, or provide funds to, build or
rebuild any improvement at the Hotel, or make any repairs, replacements,
alterations, restorations or renewals of any nature or description to the
Hotel, whether ordinary or extraordinary, structural or nonstructural, foreseen
or unforeseen.

 

5.6           Pooled
Reserves.  It is understood and
agreed that, subject to Section 5.2(h), so long as the PR Property
is a Pooled FF&E Hotel, funds deposited in the Reserve Account pursuant to
this Agreement and the FF&E Reserve under PR Lease shall be maintained and
used on a consolidated basis such that all amounts to be deposited in the
Reserve Account and the FF&E Reserve shall be deposited in a single account
and Manager and PR Tenant may apply any funds therein to any of the Pooled FF&E
Hotels in accordance with the terms of this Agreement and PR Lease.

 

ARTICLE 6

 

BRAND STANDARDS AND
MANAGER’S CONTROL

 

6.1           Brand
Standards.  Manager shall operate
each Hotel as a Staybridge Suites, InterContinental, Crowne Plaza or Holiday
Inn, as applicable, hotel in accordance with the terms of this

 

44

 

Agreement, the applicable
Brand Standards and the Operating Standards. 
Manager and its Affiliates which own the applicable System Marks and
Brand Standards reserve the right to revise and amend such System Marks or
Brand Standards from time to time on a non-discriminatory basis.  Owner also agrees that the Hotels will be
required to participate in applicable Brand-wide or area programs that are
implemented after the date hereof from time to time by Manager or its
Affiliates with respect to the applicable Brand.  The allocable cost of participation in such
programs (to the extent not duplicative of the services for which the
Management Fee is being paid) shall be Operating Costs of the Hotel to the
extent the same are consistent in all material respects with the amounts for
the same included in the applicable Yearly Budget.

 

6.2           Manager’s
Control.  Subject to the terms of
this Agreement, Manager shall have uninterrupted control over the operation of
the Hotels.  Owner acknowledges that
under this Agreement, Owner delegates all authorities and responsibilities for
operation of the Hotels to Manager provided, however, Manager
shall not be entitled to make any agreement or commitment binding on Owner
except as herein expressly provided. 
Manager shall be solely responsible for determining room rates, food and
beverage menu prices, charges to guests for other Hotel services and the terms
of guest occupancy and admittance to the Hotels, use of rooms for commercial
purposes, policies relating to entertainment, labor policies, publicity and
promotion activities and technology services and equipment to be used in the
Hotel.  Manager shall review with Owner
from time to time, and during the annual review of the Yearly Budget, material
changes in policies, practices and procedures and their effect on the financial
performance of the Hotels.

 

6.3           Arbitration.  Any dispute under this Article 6
shall be resolved by Arbitration.

 

ARTICLE 7

 

OPERATION OF THE HOTEL

 

7.1           Permits.  Manager, as an Operating Cost, shall obtain
and maintain in its name (or Owner’s or Purchaser’s name to the extent the same
is required by applicable Legal Requirements) in full force and effect all
necessary operating licenses and permits, including liquor, bar, restaurant,
sign and hotel licenses, as may be required for the operation of the Hotels in
accordance with this Agreement, the applicable Brand Standards and the
Operating Standards.  Without limiting
the foregoing,

 

45

 

Manager shall comply with
all of the obligations of Purchaser under Section 8.5 of the Baltimore
Purchase Agreement.  Owner and/or
Purchaser shall reasonably cooperate with Manager in obtaining any such
operating licenses or permits.  Except as
otherwise provided in the Purchase Agreement, any costs or expenses (including,
without limitation, reasonable attorneys’ fees) incurred by Owner and/or
Purchaser in connection therewith shall constitute Operating Costs.  Manager will use reasonable efforts to comply
with all Legal Requirements imposed in connection with any such licenses and
permits and at all times use commercially reasonable efforts to manage the
Hotels in accordance with, and cause the Hotels to comply with, such Legal
Requirements, any other Legal Requirements and Insurance Requirements
applicable to any Hotel.

 

7.2           Equipment
and Supplies.  Manager shall procure
pursuant to the Yearly Budgets all such Operating Supplies and Operating
Equipment as Manager deems necessary for the normal and ordinary course of
operation of the Hotels in accordance with the applicable Brand Standards and
Operating Standards.  Notwithstanding the
foregoing, Manager shall have no obligation to procure Operating Supplies and
Operating Equipment for infrastructure and/or equipment which is/are not
located within the Baltimore Hotel and which is/are not the responsibility of
the Owner of the Baltimore Hotel (including, without limitation, the Baltimore Health
Club and the Baltimore Central Plant) to maintain, repair or replace.

 

7.3           Personnel.

 

(a)           All
personnel employed at the Hotels will be employees of Manager or its
Affiliates.  Manager will hire,
supervise, direct, discharge and determine the compensation, other benefits and
terms of employment of all personnel working in the Hotels; provided, however,
(i) Manager shall make no final decision with respect to hiring the
general manager for any Hotel without first consulting with Owner and (ii) Manager
shall comply with all of the obligations of Owner’s Affiliate and/or Manager
under Section 8.6 of the Baltimore Purchase Agreement (except with respect
to any employees who work in the Baltimore Parking Garage).  Subject to the foregoing proviso, Manager, in
the exercise of reasonable discretion and business judgment, will be the sole
judge of the fitness and qualifications of such personnel and is vested with
absolute discretion in the hiring, supervising, directing, discharging and
determining the compensation, other benefits and terms of employment of such
personnel.  In such discretion, Manager
may elect to staff certain functions at offsite or regional locations, or to

 

46

 

provide employee benefits
on an applicable Brand-wide or other multi-location basis and shall equitably
allocate the employee costs among the hotels participating in such staffing or
benefits.  Subject to Manager’s rights to
apply Gross Revenues to Operating Costs, the Manager shall be responsible for (A) the
payment of all compensation owing to its employees, (B) the provision of
any benefits, statutory or otherwise, earned, incurred or accrued by any of its
employees, and (C) the payment or the deduction from the compensation
and/or benefits of its employees, as the case may be, and the remittance to the
appropriate Government Agencies of such sums as may be required to be paid by
an employer or withheld from the employees’ compensation and/or benefits under
the provision of any Legal Requirements. 
Owner shall not interfere with the performance of employment duties of,
or give orders or instructions to, any personnel employed at the Hotel.  Except as otherwise provided herein,
Operating Costs will include all expenses, costs or charges which are allocable
to the Term and are related to or incidental to any on-site personnel employed
in the operation of the Hotels (including, without limitation, salaries, wages,
other compensation, benefit contributions and premiums, net of amounts paid by Hotel
employees; stop-loss insurance premiums; group health plan benefit payments in
excess of contribution and premium amounts paid by Hotel employees; pay for
vacation, holidays, sick leave and other leaves of absence; workers’
compensation premiums; workers’ compensation benefit payments paid by Manager;
reasonable and customary administrative fees and taxes; and severance benefits
applicable under Manager’s then current human resources policies).

 

(b)           Manager
shall comply with all Legal Requirements pertaining to labor relations, the
personnel employed by it pursuant to this Agreement and their employment.  Manager shall not enter into any written
employment agreements with any person which purport to bind the Owner without
obtaining Owner’s consent, which consent may be withheld in Owner’s sole and
absolute discretion.  If either Manager
or Owner shall be required, pursuant to any such Legal Requirement, to
recognize a labor union or to enter into collective bargaining with a labor
union, the party so required shall promptly notify the other.  The terms of this Section 7.3(b) shall
survive the expiration or earlier termination of this Agreement.  Manager shall be the “successor employer”
under any collective bargaining agreements applicable to the Hotels as of the
Closing and under applicable Legal Requirements.

 

47

 

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

 

(d)           To
the extent consistent with the applicable Yearly Budget, Operating Costs may
include up to the following amounts per Fiscal Year, for travel related
expenses of Manager’s senior operational personnel in connection with their
visits to such Hotel: 

 

	
  Hotel Type

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Staybridge
  Hotels

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Intercontinental
  Hotels

  	
   

  	
  $

  	
  10,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Crowne Plaza

  	
   

  	
  $

  	
  10,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Holiday Inn
  Hotels

  	
   

  	
  $

  	
  5,000

  	
   

  

 

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

 

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

 

7.4           Sales,
Marketing and Advertising.  Manager
shall and/or shall cause one or more of its Affiliates to:

 

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

 

48

 

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

 

(c)           include
the Hotels in Manager’s and its Affiliates’ local, regional and worldwide
promotional and advertising programs, in each case, related to the applicable
Brand;

 

(d)           represent
the Hotels through Manager’s and its Affiliates’ worldwide sales offices;

 

(e)           include
the Hotels in the applicable loyalty programs, including, without limitation,
inclusion of the Hotels in promotional materials distributed to participants of
such program;

 

(f)            coordinate
the Hotels’ participation in travel programs marketed by airlines, travel
agents and government tourist departments when Manager determines such
participation to be advisable; and

 

(g)           cause
the Hotels to participate in sales and promotional campaigns and activities
involving complimentary rooms, food and beverages to bona fide travel agents,
tourist officials and airline representatives where Manager has determined that
such participation is in furtherance of the Hotels’ business and is customary
in the travel industry or in the practices and policies of Manager.

 

7.5           Reservation
and Communication Services.  The
Hotels shall be included as participating hotels on the Reservation System
operated by Manager, its Affiliates or agent(s) for the benefit of Staybridge
Suites, InterContinental, Crowne Plaza or Holiday Inn, as applicable, hotels
from and after the Effective Date. 
Manager will provide (or will cause its Affiliates to provide) the
following services to the Hotels through the Reservation System:

 

(a)           acceptance
of reservations for the Hotels through the applicable Reservation System from
individual customers and groups who contact Manager (or its Affiliates or
agents) directly or through a regional reservation or sale office of Manager or
its Affiliates or agents;

 

(b)           acceptance
of reservations for the Hotels through other hotels in the applicable Brand;

 

(c)           acceptance
of reservations for the Hotels through the reservation systems of other providers
in the travel industry,

 

49

 

including, without limitation, global distribution systems and general
sales agencies with which Manager (or its Affiliates) may have agreements from
time to time, whereby the reservation systems of such parties are available for
communication of reservations to hotels in the applicable Brand;

 

(d)                                 acceptance
of reservations for the Hotels received through alternative communications
channels such as the internet; and

 

(e)                                  access
to the Hotels of the communications network used by Manager (or its Affiliates)
for communication between it and hotels in the applicable Brand.

 

7.6                                 Maintenance
and Repairs.  Subject to the terms
hereof, Manager shall promptly make or cause to be made all repairs,
replacements, corrections, maintenance, alterations, improvements, renovations,
installations, renewals and additions (collectively, “Repairs”) of every
kind and nature, whether interior or exterior, structural or nonstructural,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to the commencement of the Term (concealed or
otherwise) necessary or appropriate to maintain the Hotels (including all
private roadways, sidewalks and curbs located thereon) for which Owner,
Purchaser or a Hotel has responsibility in good order and repair, reasonable
wear and tear excepted (whether or not the need for such Repairs occurs as a
result of Owner’s or Manager’s use, any prior use, Insurance Requirements, the
elements or the age of the Hotels, or any portion thereof), and in conformity
with Legal Requirements (including, without limitation, retaining all
construction lien holdbacks under the Construction
Lien Act (Ontario) and releasing such holdbacks only when all liens
have expired or been discharged or vacated, all notices have been withdrawn,
and the time period for filing any liens has expired), applicable Brand
Standards and the Operating Standards. 
All Repairs shall be made in a good, workmanlike manner, consistent with
Manager’s and industry standards for like hotels in like locales, in accordance
with all applicable Legal Requirements and Insurance Requirements.  To the extent such Repairs cannot be
performed by Manager’s on-site staff, Manager shall be entitled to cause such
repairs to be performed by third parties or, subject to Owner’s prior approval,
Affiliates of Manager acting under separate technical services agreements
pursuant to Section 11.1.

 

50

 

7.7                                 Material
Repairs.

 

(a)                                  Except
as set forth in Section 7.7(b), prior to making any Material
Repair, Manager shall submit, to Owner in writing, a proposal setting forth, in
reasonable detail, the proposed Material Repair and shall provide to Owner such
plans and specifications, and such permits, licenses, contracts and such other
information concerning the same as Owner may reasonably request.  Owner shall have twenty (20) Business Days to
approve or disapprove all materials submitted to Owner, in connection with any
such proposal; provided, however, (i) Owner may not withhold
its approval of a Material Repair with respect to such items as are (A) required
in order for the Hotels to comply with applicable Brand Standards (except
during the last two (2) years of the Term as set forth in Section 5.2(a))
or Operating Standards; or (B) required by reason of or under any
Insurance Requirement or Legal Requirement, or otherwise required for the
continued safe and orderly operation of each Hotel and (ii) Owner’s
approval shall not be required with respect to the cost of any proposed Material
Repair if the same is set forth as a separate line item in the then applicable
approved Capital Replacements Budget.  If
Owner fails to disapprove of such Material Repair within such twenty (20)
Business Days, Owner shall be deemed to have approved same.

 

(b)                                 In
the event that a condition should exist in or about a Hotel of an emergency
nature or in violation of applicable Legal Requirements or Insurance
Requirements, including structural conditions, which requires immediate repair
necessary to prevent imminent danger or damage to persons or property, Manager
is hereby authorized to take all steps and to make all expenditures necessary
to repair and correct any such condition, regardless of whether provisions have
been made in the applicable Yearly Budget for any such expenditures or if
sufficient funds exist in the Reserve Accounts. 
Upon the occurrence of such an event or condition, Manager will
communicate to Owner all available information regarding such event or
condition as soon as reasonably possible and will take reasonable steps to
obtain Owner’s approval before incurring such expenses.  Expenditures under this Section 7.7(b) shall
be paid from the Reserve Account to the extent such expenditure is properly
considered a Capital Replacement.

 

(c)                                  No
Capital Replacements shall be made which would tie-in or connect a Hotel with
any other improvements on property adjacent to such Hotel (and not part of its
Site) including, without limitation, tie-ins of buildings or other structures
or utilities (other than connections to public or private utilities) without
the prior written approval of Owner, which 

 

51

 

approval may be granted or withheld in Owner’ sole and absolute
discretion; provided, however, Owner shall be reasonable in approving any such
Capital Replacements that would tie in or connect the Baltimore Hotel to any
other elements in the development in which the Baltimore Hotel is located.

 

7.8                                 Liens;
Credit.  Manager shall use
commercially reasonable efforts to prevent any liens from being filed against
any Hotel which arise from any Repairs in or to such Hotels.  Manager shall use commercially reasonable
efforts to cause the release of any such liens from the Hotels.  If any such lien arises as a result of or in
connection with a Manager Default, then Manager shall bear the cost of
obtaining the lien release (exclusive of the cost of the Repair to which it
pertains, unless Manager is otherwise responsible therefor) and the same shall
not constitute an Operating Cost.  In no
event shall any party borrow money in the name of, or pledge the credit of, any
other party.  Manager shall not allow any
lien to exist with respect to its interest in this Agreement.  Manager shall not finance the cost of any
Repair by the granting of a lien on, or security interest in, any Hotel or
Manager’s interest therein or hereunder.

 

7.9                                 Real
Estate and Personal Property Taxes. 
Manager shall pay as Operating Costs on behalf of Owner, prior to
delinquency, all taxes and assessments which may become a lien on, or are
assessed against, any Hotel or any component thereof and which may be due and
payable for the Term, unless payment thereof is being contested by Manager, as
hereinafter provided, enforcement is stayed and the amount so contested is
escrowed or guaranteed in a form satisfactory to Owner.  Owner shall, promptly after receipt thereof
by Owner, give Manager copies of all notices as to all such taxes and
assessments.

 

7.10                           GST
and RST.  The parties acknowledge
that the Owner is the supplier of hotel services and that the Manager acts as
the Owner’s agent in making supplies to the public of hotel services.  The Owner authorizes Manager to prepare and
file GST and RST returns on behalf of the Owner, in the Owner’s name, and using
the Owner’s GST or RST registration number or vendor permit number as the case
may be.  Manager shall apply Working
Capital to the payment of GST payable by Owner with respect to items which
Manager pays on Owner’s behalf and shall cooperate with Owner to make the
Working Capital available to Owner to pay GST payable by Owner with respect to
items which Manager does not pay on Owner’s behalf, including without
limitation rent paid under the Lease. 
Owner shall provide Manager with details of any GST or RST collected or
paid by it directly which detail 

 

52

 

is not otherwise available to Manager. 
Manager acknowledges that pursuant to the Lease, all amounts in the
Reserve Account and all goods or services purchased with such funds belong to
Purchaser.  Accordingly, GST paid from
the funds in the Reserve Account shall not be reflected on Owner’s GST returns.

 

7.11                           Contest.  Manager shall have the right in Manager’s or
Owner’s name to contest or protest any tax or assessment or proposed assessment
which may become a lien on, or be assessed against, any Hotel or any component
thereof due and for the Term or any Legal Requirement payable by appropriate
legal proceedings, conducted in good faith and with due diligence, provided
that (a) such contest shall not cause Purchaser or Owner to be in default
under any Authorized Mortgage, (b) no part of a Hotel nor any Gross
Revenues therefrom shall be in any immediate danger of sale, forfeiture,
attachment or loss, and (c) Owner and Purchaser are not exposed to any
risk for criminal or civil liability. 
The reasonable cost and expenses of such contest or protest shall be
Operating Costs.

 

7.12                           Privacy.  Manager shall conduct the business of the
Hotels in compliance in all material respects with all applicable Legal
Requirements governing privacy and the protection of personal information
(including, inter alia, the personal information of patrons and employees of
the Hotels), including the Personal Information Protection and Electronic
Documents Act (Canada).  The Manager
shall implement a written privacy policy which governs the collection, use and
disclosure of personal information and shall comply in all material respects
with such policy.

 

ARTICLE 8

 

FISCAL MATTERS

 

8.1                                 Accounting
Matters.

 

(a)                                  Manager
shall maintain books and records reflecting the results of Hotel operations on
an accrual basis in accordance with the Uniform System of Accounts and the
Accounting Principles.  Owner and Manager
and their respective independent accounting firms and representatives will have
the right to examine such books and records of the Hotels at any reasonable
time and to make and retain copies thereof. 
Manager shall retain, for at least three (3) years after the
expiration of each Fiscal Year, reasonably adequate records showing Gross
Revenues and applications thereof for the Hotels for such Fiscal

 

53

 

Year (which obligation shall survive the expiration or earlier
termination of the Term).

 

(b)                                 On
or before the twenty-fifth (25th) day after the end of each Fiscal Month,
Manager shall furnish (or shall cause its Affiliates to furnish) Owner with a
detailed operating statement setting forth the results of operations at the
Hotels with respect to such month and year-to-date showing for each Hotel and
for all of the FF&E Pooled Hotels, Gross Revenues, Rooms Revenues, revenue
per available room, occupancy percentage and average daily rate, Operating
Costs, Operating Profit, the applications and distributions thereof and any
Owner’s Percentage Priority together with an Officer’s Certificate.  Such statements may be provided
electronically to Owner.

 

(c)                                  Not
less than ten (10) days prior to the date on which Owner or any of its
Affiliates are required to file audited financial statements with the United
States Securities and Exchange Commission (but in all events on or before February 15
of each year), Manager shall deliver to Owner and Purchaser an Officer’s
Certificate (the “8.1(c) Statement”) setting forth for the prior
year the totals for each Hotel and for all of the FF&E Pooled Hotels of
Gross Revenues and Operating Costs, the calculation of Owner’s Percentage
Priority and the Residual Distribution, Additional Rent under the PR Lease (if
applicable) and deposits to, and expenditures from, the Reserve Account
together with an Agreed Upon Procedure Letter with respect thereto.  The cost of obtaining such letter shall be an
Operating Cost.

 

(d)                                 If
any amounts due to Owner as shown in an Officer’s Certificate or audit provided
pursuant to Sections 8.1(f) or 17.4 exceed the amounts
previously paid with respect thereto to Owner, Manager shall pay such excess to
Owner at such time as the Officer’s Certificate or audit is delivered, together
with interest at the Interest Rate from the date due.  (Any such interest which accrues after the
day that is ten (10) Business Days after the date on which the 8.1(c) Statement
is delivered or is due and any such interest which results from Manager’s
willful understatement of amounts due to Owner shall not be Operating Costs,
but shall be paid by Manager.)  If Owner’s
Percentage Priority due as shown in an Officer’s Certificate or audit is less
than the amount previously paid with respect thereto to Owner, Owner shall be
entitled to retain the same but shall credit such overpayment against the next
installment of Owner’s Percentage Priority. 
If any Management Fee due to Manager as shown on an Officer’s
Certificate or audit is less than the amount previously paid to Manager on
account thereof,

 

54

 

Manager shall, within ten (10) Business Days after the date on
which such Officer’s Certificate or audit is delivered, deposit the overpayment
in the Bank Accounts.  If the Residual
Distribution due as shown on the Officer’s Certificate or audit is less than
the amount previously paid to Owner with respect thereto, Owner shall promptly
deposit (or deliver to Manager who will in turn deposit) the overpayment in the
Bank Accounts.  In no event shall (i) any
amount previously deposited in the Reserve Account be withdrawn therefrom
pursuant to this Article 8 or (ii) distributions of Owner’s
First Priority be subject to adjustment.

 

(e)                                  In
addition, Manager shall provide Owner with information relating to the Hotels,
Manager and its Affiliates that (i) may be required in order for Owner,
Purchaser or their Affiliates to prepare financial statements in accordance
with Accounting Principles or to comply with any Legal Requirement including,
without limitation, any applicable tax and securities laws and regulations and
the United States Securities and Exchange Commission’s interpretation thereof, (ii) may
be required for Owner, Purchaser or any of their Affiliates to prepare federal
(United States and Canada), state, provincial or local tax returns, including,
without limitation, GST or (iii) is of the type that Manager customarily
prepares for other hotel owners or itself.

 

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

 

(g)                                 Manager
shall maintain separate books and records regarding the operation of the
Baltimore Central Plant which books and records shall be reasonably
satisfactory to Owner and

 

55

 

Owner’s Affiliate that owns the Baltimore Hotel, all in satisfaction of
the requirements of the Baltimore Maintenance Memorandum.

 

(h)                                 The
terms of Sections 8.1(a), 8.1(d) and 8.1(f) and
any provisions regarding dispute resolution set forth in this Section 8.1
shall survive the expiration or earlier termination of the Term.

 

8.2                                 Yearly
Budgets.

 

(a)                                  Not
less than sixty (60) days prior to the first day of each Fiscal Year after the
2005 Fiscal Year for all Hotels except the Baltimore Hotel, and not less than
sixty (60) days prior to the first day of each Fiscal Year after the 2006
Fiscal Year for the Baltimore Hotel, Manager shall submit to Owner for Owner’s
approval a proposed Yearly Budget for each Hotel including a proposed Capital
Replacements Budget for each Hotel for the ensuing full or partial Fiscal Year,
as the case may be.  If Owner fails to
disapprove of a proposed Yearly Budget within thirty (30) days after the
submission thereof to Owner for its approval, the same shall be deemed
approved.  Together with each such
Capital Replacements Budget, Manager shall provide to Owner a proposed
three-year capital forecast for such Hotel for Owner’s review and
approval.  Manager will, from time to
time not less often than quarterly, issue periodic forecasts of operating
performance to Owner reflecting any significant unanticipated changes,
variables or events or describing significant additional unanticipated items of
income or expense.  Manager will provide
Owner with the material data and information utilized in preparing the Yearly
Budgets and the Capital Replacements Budgets or any revisions thereof.  Manager will not be deemed to have made any
guaranty, warranty or representation whatsoever in connection with the Yearly
Budgets and the Capital Replacements Budgets, except that the proposed Yearly
Budgets, including the Capital Replacements Budgets, reflect Manager’s best
professional estimates of the matters they describe.  Manager shall use its reasonable efforts,
subject to the Operating Standards, to operate and manage the Hotels in accordance
with their respective Yearly Budgets. 
The Yearly Budgets for the Hotels (other than the Baltimore Hotel) for
the 2005 Fiscal Year shall be those most recently delivered by Manager to Owner
on or before the Effective Date.  The
Yearly Budget for the Baltimore Hotel for the 2006 Fiscal Year shall be
delivered by Manager to Owner on or before February 28, 2006 and, in the
interim period between the Effective Date and February 28, 2006, the
applicable budget shall be based on the actual amounts incurred by the prior
owner while operating the

 

56

 

Baltimore Hotel for the corresponding period in calendar year 2005.

 

(b)                                 In
the event Owner disapproves or raises any objections to the proposed Yearly
Budget, or any portion thereof, or any revisions thereto, Owner and Manager
shall cooperate with each other in good faith to resolve the disputed or
objectionable items.  If Owner
disapproves of a proposed Yearly Budget, Owner will disapprove on a specific
line-by-line basis to the extent reasonably practical.  Any dispute with respect to a proposed Yearly
Budget which is not resolved by the parties within thirty (30) days after the
submission thereof to Owner shall be resolved by Arbitration.

 

(c)                                  In
the event Owner and Manager are not able to resolve the disputed or
objectionable matters raised by Owner in regard to a Yearly Budget prior to the
commencement of the applicable Fiscal Year, either voluntarily or by means of
Arbitration, Manager is authorized to operate the Hotel in accordance with the
proposed Yearly Budget; provided, however, that as for disputed
budget items, Manager may not expend more than the previous year’s budgeted
amount for such item (if any), increased by a percentage equal to the increase
in (i) the Consumer Price Index during the last year, with respect to the
non-Canadian Hotels and (ii) the Canadian Consumer Price Index during the
last year, with respect to the Canadian Hotels, unless such expenditure is of
the type contemplated under Section 7.7(b) or is for an
expense (such as real estate taxes, insurance premiums or utilities) which is
beyond the Manager’s reasonable control; provided  further, however,
Manager shall not expend on account of Capital Replacements in any period for
any Hotel an amount in excess of five percent (5%) of such Hotel’s Gross
Revenues for such period other than pursuant to an approved Capital
Replacements Budget or in connection with amounts deposited in the Reserve
pursuant to Section 5.2(h) or with the prior written consent
of Owner or in connection with the up to $25,000,000 required to be expended by
Manager’s Affiliates pursuant to Section 5.2.1 of the Purchase
Agreement.  For purposes of this section,
“increase in the Consumer Price Index during the last year” shall mean the
percentage increase in the Consumer Price Index for the twelve (12) month
period ending immediately prior to the date of submission of the disputed
proposed Yearly Budget, and “increase in the Canadian Consumer Price Index
during the last year” shall mean the percentage increase in the Canadian
Consumer Price Index for the twelve (12) month period ending immediately prior
to the date of submission of the disputed proposed Yearly Budget.

 

57

 

8.3                                 Bank
Accounts.

 

(a)                                  The
revenues of the Hotels shall be deposited into one or more Bank Accounts.  The Bank Accounts will be separate and
distinct from any other accounts, reserves or deposits required by this
Agreement, and Manager’s designees who are included in the coverage of any
required fidelity or similar insurance will be the only parties authorized to
draw upon any Bank Account; provided, however, such designees
shall only be authorized to draw upon a Bank Account for purposes authorized by
the terms of this Agreement.

 

(b)                                 So
long as this Agreement is in full force and effect and there is no uncured
Manager Default, Manager shall have exclusive control of the Bank
Accounts.  Nothing contained herein is to
be construed as preventing Manager from maintaining separate payroll accounts
or petty cash funds and making payments therefrom as the same may be customary
in the hotel business or the applicable Brand Standards.

 

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

 

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

 

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

 

58

 

ARTICLE 9

 

FEES TO MANAGER

 

9.1                                 Management
Fees.

 

(a)                                  As
consideration for the management and operation of the Hotels by Manager,
Manager shall earn the following fees, which fees shall be payable as provided
in Section 10.1.

 

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

 

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

 

(b)                                 So
long as the PR Property shall be a Pooled FF&E Hotel, Owner shall be
entitled to offset against the Management Fees any amounts then due and owing
to Owner or any of its Affiliates under the PR Lease or the PR Indemnity, and
Manager shall not pay itself any amount which Owner is so entitled to offset.

 

(c)                                  The parties acknowledge that services performed
by the Manager hereunder in connection with a Canadian Hotel constitute one or
more “taxable supplies” for GST purposes. 
As a result, GST is applicable and must be charged and collected from
Owner by Manager in addition to and calculated on the Base Management Fee, the
Incentive Management Fee, and that part of the Operating Costs incurred by the
Manager and reimbursed in connection with this Agreement.

 

9.2                                 System
Fees.  Manager shall pay, as
Operating Costs on behalf of Owner, usual and customary system fees and
assessments on an area-wide basis for the systems of hotels comprising the
applicable Brand which currently include:

 

(a)                                  with
respect to the Staybridge Brand, (i) a reservation and marketing fee of
three percent (3.0%) of Rooms Revenue, (ii) a Priority Club Fee of four
and three-quarters percent (4.75%) of all qualifying folio revenue at a Hotel
to

 

59

 

Priority Club (i.e., the loyalty program of the Brands) members, (iii) a
Technology Fee equal to $10.80 per guest room per month, (iv) an e-mail
service fee equal to $15.00 per e-mail user per month and (v) an
accounting fee of $15.00 per month per guest room;

 

(b)                                 with
respect to the InterContinental Brand, (i) a reservation and marketing fee
of three percent (3.0%) of Rooms Revenue, (ii) a Priority Club Fee of four
and three-quarters percent (4.75%) of all qualifying folio revenue at a Hotel
to Priority Club members, (iii) a Technology Fee equal to $10.80 per guest
room per month, (iv) an e-mail service fee equal to $15.00 per e-mail user
per month and (v) an accounting fee of $15.00 per guest room per month;

 

(c)                                  with
respect to the Crowne Plaza Brand, (i) a reservation and marketing fee of
three percent (3.0%) of Rooms Revenue, (ii) a Priority Club Fee of four
and three-quarters percent (4.75%) of all qualifying folio revenue at a Hotel
to Priority Club members, (iii) a Technology Fee equal to $10.80 per guest
room per month, (iv) an e-mail service fee equal to $15.00 per e-mail user
per month and (v) an accounting fee of $15.00 per guest room per month;
and

 

(d)                                 with
respect to the Holiday Inn Brand, (i) a reservation and marketing fee of
three percent (3.0%) of Rooms Revenue, (ii) a Priority Club Fee of four
and three-quarters percent (4.75%) of all qualifying folio revenue at a Hotel
to Priority Club members, (iii) a Technology Fee equal to $10.80 per guest
room per month, (iv) an e-mail service fee equal to $15.00 per e-mail user
per month and (v) an accounting fee of $15.00 per guest room per month.

 

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

 

60

 

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

 

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

 

ARTICLE 10

 

DISBURSEMENTS

 

10.1                           Disbursement
of Funds.  As and when received by
Manager or the Hotels, all Gross Revenues from all of the Hotels shall be
deposited into the Bank Accounts and, subject to the terms of Sections 8.1
and 10.7, applied in the following order of priority to the extent
available:

 

61

 

(a)                                  First,
to pay all Operating Costs;

 

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

 

(c)                                  Third,
to Owner, all accrued but unpaid Owner’s First Priority for the Fiscal Year to
which such Gross Revenues pertain (net of amounts theretofore paid from Gross
Revenues by Manager on behalf of Owner on account of debt service due under an
Authorized Mortgage as provided in Section 4.3(c));

 

(d)                                 Fourth,
(i) to reimburse Manager for any amounts advanced by Manager pursuant to Section 5.2(d) together
with interest on the outstanding amounts thereof at the Interest Rate
(determined as of the date of the applicable advance) and (ii) to pay for
Capital Replacements which Owner failed to timely fund in violation of Section 5.2(d);

 

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

 

(f)                                    Sixth,
to Manager, interest at the Interest Rate (determined as of the date of the
applicable advance) on any outstanding amounts advanced by Manager pursuant to Section 15.2(d);

 

(g)                                 Seventh,
to Manager, any accrued but unpaid Base Management Fee for the Fiscal Year to
which such Gross Revenues pertain but not for any other period;

 

(h)                                 Eighth,
to Owner, all accrued but unpaid Owner’s Second Priority for the Fiscal Year to
which such Gross Revenues pertain but not for any other period (and, without
duplication for amounts netted under Section 10.1(c), net of
amounts theretofore paid from Gross Revenues by Manager on behalf of Owner on
account of debt service due under an Authorized Mortgage as provided in Section 4.3(c));

 

(i)                                     Ninth,
(commencing in 2007 for all Hotels other than the Baltimore Hotel and
commencing in 2008 for the Baltimore Hotel) to Owner, all accrued but unpaid
Owner’s Percentage Priority for all of the Hotels;

 

(j)                                     Tenth, to reimburse Owner for any advances made
by Owner to Working Capital;

 

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(k)                                  Eleventh, to reimburse Manager for any advances made by Manager to Working Capital in
excess of the Initial Working Capital;

 

(l)                                     Twelfth, to replenish any portion of the Deposit
which has been drawn upon, regardless of whether such draw was made in
connection with the Secured Obligations or otherwise;

 

(m)                               Thirteenth, prior to the Severance Date, provided
the Guarantor is not in default of any of its obligations under the Guaranty,
to reimburse the Guarantor for any unreimbursed payments made by it on account
of the Guaranteed Obligations under the Guaranty; provided, however,
if the Guarantor shall have Provided Collateral (as defined in the Guaranty)
under the Guaranty, then the amount to be reimbursed to the Guarantor under
this Section 10.1(m) shall be disbursed to Owner, to be held by
Owner as collateral for the Guarantor’s obligations under the Guaranty until
the Outstanding Balance under the Guaranty is equal to zero dollars ($0); provided
further, however, that any amounts which would otherwise be
reimbursed to the Guarantor shall first be applied to any amount due under the
PR Guaranty;

 

(n)                                 Fourteenth,
to reimburse Owner for any advances made by Owner or
Purchaser to the Reserve Account pursuant to Section 5.2(c)(iii);

 

(o)                                 Fifteenth, to reimburse Manager for (i) outstanding
advances made by Manager pursuant to Section 15.2(d) to the
extent then due and payable and (ii) other contributions made by it to the
Reserve Account other than pursuant to Section 5.2(d) or Section 5.2(f);

 

(p)                                 Sixteenth,
to Owner, all accrued and unpaid Owner’s First Priority for prior periods;

 

(q)                                 Seventeenth, to pay Manager accrued but unpaid
Base Management Fees for prior periods;

 

(r)                                    Eighteenth, to Owner, all accrued and
unpaid Owner’s Second Priority for prior periods; and

 

(s)                                  Nineteenth, to Manager, the Incentive Management
Fee.

 

10.2                           Residual
Distribution.  Simultaneously with
the making of each payment of the Incentive Management Fee, the then remaining
Gross Revenues will be disbursed to Owner. 
Except as herein provided, Manager shall have no responsibility to incur

 

63

 

Operating Costs or undertake any Capital Replacement except to the
extent Manager is reasonably assured that funds to pay such Operating Costs and
for such Capital Replacements will be timely available.

 

10.3                           Owner’s First Priority.  Owner’s
First Priority shall be due and payable in advance in equal monthly
installments on the first day of each Fiscal Month, pro-rated for any partial
month, regardless of any inadequacy of Gross Revenues or Operating Profits.  If any
installment of Owner’s First Priority is not paid when due, the same shall
accrue interest at the Interest Rate. 
(Such interest shall be payable on demand, shall not be an Operating
Cost, and shall be paid by Manager.) 
Appropriate adjustments shall be made to reflect any change in Owner’s
First Priority on account of advances made pursuant to Sections 5.2(c) or
15.2 by Owner or Purchaser when such advances are made, provided any
additional amounts of Owner’s First Priority due by reason of any such advance
for the month in which such advance is made shall not be due and payable until
the first Business Day of the month next after the date as of which such change
occurs.  As installments of Owner’s First
Priority are to be paid in advance, Manager may advance amounts due on account
of a monthly installment of Owner’s First Priority for a Fiscal Month and
reimburse itself from Operating Profits for such Fiscal Month the amounts so
advanced; provided, however, if Operating Profits of all of the
Hotels for such Fiscal Month in excess of the amount to be contributed to the
Reserve Account pursuant to Section 5.2 are insufficient to make
such reimbursements, the amount of such insufficiency shall be deemed an
advance under the PR Guaranty to the extent any amount is owed thereunder and
then an advance to Working Capital, and Manager shall be entitled to the
reimbursement thereof only pursuant to Section 10.1(k); provided,
however, unless such advance is deemed an advance under the PR Guaranty,
by notice given to Owner within thirty (30) days after the end of such Fiscal
Month, Manager may elect to deem the amount of such insufficiency an advance
under the Guaranty (and not an advance to Working Capital).  If Manager shall so make such election, the
amount of such insufficiency shall be reimbursed to the Guarantor as provided
in Section 10.1(m).  If Owner
fails to receive any installment of Owner’s First Priority as and when due,
Owner may terminate this Agreement on not less than thirty (30) days’ notice; provided,
however, such notice shall be void ab  initio if such
installment together with any interest accrued thereon is paid to Owner prior
to the thirtieth (30th) day after such notice is given.

 

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10.4                           Owner’s
Percentage Priority.  Owner’s
Percentage Priority shall be calculated on a Hotel-by-Hotel basis, and shall
accrue and be payable in monthly installments to the extent that Gross Revenues
year-to-date at any Hotel exceed Gross Revenues for such Hotel for the
corresponding period in its Base Year. 
The installment of Owner’s Percentage Priority for all of the Hotels for
each Fiscal Month shall be due and payable on the twenty-fifth (25th)
day of the following month.  Owner’s
Percentage Priority with respect to any Hotel located in Canada shall be
calculated in Canadian dollars but shall be paid to Owner in United States
dollars in accordance with Section 24.24.

 

10.5                           Owner’s
Second Priority.  Owner’s Second
Priority shall accrue in equal monthly installments on the first day of each Fiscal Month, pro-rated for any
partial month, and shall be paid as provided in Section 10.1;
provided, however, all accrued and unpaid Owner’s Second Priority
shall be due and payable upon the expiration or earlier termination of the
Term.  Appropriate adjustments shall be made to reflect any change in Owner’s
Second Priority on account of advances made by Owner or Purchaser pursuant to Sections
5.2(c)(ii) when such advances are made, provided any additional
amounts of Owner’s Second Priority due by reason of any such advance for the
month in which such advance is made shall not be due and payable until the
first Business Day of the month next after the date as of which such change
occurs.

 

10.6                           No
Interest.  Except as expressly
provided herein, no interest shall accrue or be payable to either party
hereunder on account of any amount owed to such party hereunder.

 

10.7                           Calculation
of Interim Disbursements.  Other than
as described in Sections 5.2 or 10.3, the priority order for
disbursement of Gross Revenues set forth in Section 10.1 shall be
determined on an annual basis in accordance with Section 8.1; provided,
however, there shall be interim monthly disbursements to which the
following shall apply:

 

(a)                                  Each
month during a Fiscal Year, the disbursements of Gross Revenues will be made on
a cumulative, year-to-date basis based on Manager’s monthly statements
delivered pursuant to Section 8.1(b) as if that year-to-date
period represented a full Fiscal Year.

 

(b)                                 If
a statement delivered pursuant to Section 8.1(b) reflects any
overpayment (other than with respect to Owner’s First Priority or amounts to be
contributed to the Reserve

 

65

 

Account), the party which received such overpayment shall deposit the
same in the Bank Accounts (or remit the same to Manager for such deposit) and
the same shall then be dispersed in the order specified in Section 10.1.

 

10.8                           Amounts Outstanding at End of Term.  Unless
this Agreement is wrongfully terminated by Owner, then upon the expiration or
earlier termination of this Agreement, Manager shall have no claim against
Owner, Purchaser or the Hotels for amounts owed to it under this Agreement
which have not been paid by reason of the inadequacy of Gross Revenues or
Operating Profits.

 

10.9                           Allocation of Owner’s Fixed Priority.  Owner’s Fixed Priority shall initially be
allocated among the Hotels as set forth in Exhibit C.  Upon any increase to Owner’s Fixed Priority
by reason of any advance made pursuant to Section 5.2(c) or Section 15.2,
such increase shall be allocated to each Hotel to the extent such advance was
made for such Hotel.  In the event of an
adjustment to Owner’s First Priority or Owner’s Second Priority pursuant to Sections 2.7
or 24.17, such adjustment shall be allocated among the remaining Hotels
in proportion to their allocated share of Owner’s First Priority immediately
prior to such adjustment.

 

10.10                     Survival.  The terms of this Article 10
shall survive the expiration or earlier termination of the Term.

 

ARTICLE 11

 

CERTAIN OTHER
SERVICES

 

11.1                           Optional
Services.  Owner acknowledges that
Manager and its Affiliates sometimes provide separate, optional services which
may relate to the Hotels in addition to those which are encompassed by this
Agreement.  Owner agrees to consider in
good faith any proposals presented to it by Manager or any of Manager’s
Affiliates for such additional services relative to the Hotels; it being
understood, however, that this Section 11.1 shall in no event be
construed to require Owner to accept any such proposals.

 

11.2                           Purchasing.  In making purchasing decisions with respect
to products and services used in the operation of the Hotels, Manager will
exercise reasonable business judgment in accordance with the Operating
Standards.  Manager shall be entitled to
contract with its Affiliates, others in whom Manager or its Affiliates have an
ownership interest and others with

 

66

 

whom Manager or its Affiliates have contractual relationships to
provide goods and/or services to the Hotels, provided that the prices and/or
terms for such goods and/or services are competitive and no worse than the
prices and/or terms that such provider charges unrelated third parties.  In determining whether such prices and/or
terms are so competitive, they will be compared to the prices and/or terms
which are available from comparably qualified providers for goods and/or
services of similar quality grouped in reasonable categories, rather than being
compared item by item.  Subject to the
foregoing proviso, the prices charged for such goods or services may include
overhead and the allowance of a reasonable return to the provider.  Subject to the foregoing proviso, Owner
acknowledges and agrees that the providers of such goods and/or services may
retain for their own benefit any credits, rebates or commissions received with
respect to such purchases. 
Notwithstanding anything contained herein to the contrary, Manager will
act in a manner that enables Owner and the Hotels to gain not less than the
same benefits with respect to purchasing as are made available to other hotels
of the same category as the Hotels which other hotels are owned or operated by
Manager or its Affiliates.  Disputes
under this Section 11.2 shall be resolved by Arbitration.

 

ARTICLE 12

 

SIGNS AND SERVICE
MARKS

 

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

 

12.2                           System
Marks.  It is understood and agreed
by Owner that the names Staybridge Suites, InterContinental, Crowne Plaza and
Holiday Inn and all System Marks are the exclusive property of Manager or its
Affiliates.  Owner agrees and
acknowledges the exclusive right of ownership of Manager and its Affiliates to
the System Marks and the Reservation Systems. 
Except for any rights expressly granted to Owner in this Agreement,
Owner hereby disclaims any right or interest therein, regardless of the legal
protection afforded thereto.  Except for
any rights expressly granted to Owner in this Agreement, in the event of
termination or cancellation of this Agreement, whether as a result of a default
by Manager or otherwise, Owner shall not hold itself out as, or operate the
Hotels as, Staybridge Suites, InterContinental, Crowne Plaza and Holiday Inn, as
applicable, hotels, and will immediately cease using such names and all

 

67

 

other System Marks in connection with the name or operation of each
Hotel as of the Expiration Date. 
Promptly after the Expiration Date (or such later date on which Manager
shall cease to operate the Hotels) and the expiration of any right granted to
Owner to use the System Marks, subject to the terms of Section 17.4,
Owner shall remove all signs, furnishings, printed material, emblems, slogans
or other distinguishing characteristics which are now or hereafter may be
connected or identified with an applicable Brand or Reservation System.  Owner shall not use any System Marks or any
part, combination or variation thereof in the name of any partnership,
corporation or other business entity, nor allow the use thereof by others.

 

12.3                           System
Mark Litigation.

 

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

 

(b)                                 In
the event a Hotel, Owner or Manager is the subject of any litigation or action
brought by any party seeking to claim rights in or to restrain the use of any
System Mark used by Manager in connection with the Hotel, then, provided Owner
is a party to such litigation or action and further provided that Manager shall
have provided to Owner either a guaranty in form and substance reasonably
satisfactory to Owner with respect to Manager’s obligations under Section 12.3(a) or
collateral to secure Manager’s obligations under Section 12.3(a) reasonably
satisfactory to Owner, the conduct of any suit whether brought by Manager or
instituted against Owner and/or Manager shall be under the absolute control of
counsel nominated and retained by Manager notwithstanding that Manager may not
be a party to such suit.

 

(c)                                  The
Owner shall not bring suit against any user of any System Mark alleging or
asserting any claim based on Owner’s right, title or interest as of the
Effective Date in any System Mark.

 

(d)                                 The
terms of this Section 12.3 shall survive the expiration or earlier
termination of this Agreement.

 

68

 

12.4                           Other
Intellectual Property Provisions.

 

(a)                                  Owner
acknowledges that Manager or Manager’s Affiliates are or may become the owner
or licensee of certain intellectual property including: (a) software for
use at one or more facilities managed by Manager or Manager’s Affiliates and
all source and object code versions thereof and all related documentation, flow
charts, user manuals, listing and service/operator manuals and any
enhancements, modifications or substitutions thereof; and (b) operating
methods, procedures and policies and (c) upgrades and improvements to the
foregoing (as the same may be upgraded or improved, collectively, “Intellectual
Property”).  Manager shall utilize
the Intellectual Property to the extent necessary or appropriate in connection
with the operation of the Hotels for the purpose of carrying out its
obligations hereunder.  Subject to the
terms of Sections 6.1 and 24.1, such use shall be strictly on a
non-exclusive basis and neither such use nor anything contained in this
Agreement shall confer any proprietary or other rights in the Intellectual
Property on Owner or any third parties.

 

(b)                                 To
the extent that Owner has leased (or any Affiliate of Owner has acquired)
certain intellectual property rights to use (i) trade names associated
with the Baltimore Hotel and its related restaurants and lounges, or (ii) software
and other Intellectual Property associated with the Baltimore Hotel, Owner
agrees to allow (and cause any Affiliates of Owner to allow) Manager to use the
same in its management of the Baltimore Hotel without charge.

 

ARTICLE 13

 

INSURANCE

 

13.1                           Insurance
Coverage.  Unless Owner elects to
procure and maintain the insurance required hereunder, as an Operating Cost,
which election may be made from time to time and withdrawn from time to time on
not less than thirty (30) days’ notice, then, to the extent commercially
available (regardless of whether it is available on reasonable terms), Manager
shall procure and maintain as an Operating Cost, at all times during the Term
or while it is in possession of any of the Hotels, reasonable and adequate
amounts of casualty, liability and other usual and customary types of insurance
for the Hotels and their operations. 
Without limiting the generality of the foregoing, Manager shall obtain
and maintain, with insurance companies of recognized responsibility, a minimum
of the following insurance to the extent commercially available (regardless of
whether it is available on reasonable terms):

 

69

 

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

 

(b)                                 Business
interruption and blanket earnings plus extra expense under a rental value
insurance policy or endorsement covering risk of loss during the lesser of the
first twelve (12) months of reconstruction or the actual reconstruction period
necessitated by the occurrence of any of the hazards described in subparagraph (a) above,
in such amounts as may be customary for comparable properties managed or leased
by Manager or its Affiliates in the surrounding area and in an amount
sufficient to prevent Owner or Purchaser from becoming a co-insurer;

 

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

 

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

 

(e)                                  Worker’s
compensation insurance coverage for all persons employed by Manager at the
Hotels with statutory limits and otherwise with limits of and provisions in
accordance with Legal Requirements and employer’s liability insurance as is
customarily carried by similar employers which coverage shall be

 

70

 

written by an insurance company of recognized responsibility, as a
qualified self-insurer subject to applicable state requirements and approvals,
or specific to the State of Texas, as a nonsubscriber;

 

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

 

(g)                                 Such
additional insurance as may be required, from time to time by (i) the
Baltimore Declaration (with respect to the Baltimore Hotel only), (ii) any
Legal Requirement, (iii) any holder of an Authorized Mortgage or (iv) which
is otherwise reasonably required upon advance notice given to Manager in
accordance with the terms hereof.

 

13.2                           Insurance
Policies.

 

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

 

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

 

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

 

(d)                                 In
the event Owner or Manager believes that the then full replacement cost of a
Hotel has increased or decreased at any time during the Term, such party, at
its own cost, shall have the right to have such full replacement cost
redetermined by an independent accredited appraiser approved by the other,
which approval shall not be unreasonably withheld or delayed.  The party desiring to have the full
replacement cost so redetermined shall forthwith, on receipt of such
determination by such appraiser, give written notice thereof to the other
parties.  The determination of such
appraiser shall be final and

 

71

 

binding on the parties hereto until any subsequent determination under
this Section 13.2(d), and the party obligated to maintain insurance
hereunder shall forthwith conform the amount of the insurance carried to the
amount so determined by the appraiser. 
Such replacement value determination will not be necessary so long as a
Hotel is insured through a blanket replacement value policy.

 

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

 

(f)                                    All
such policies shall provide Owner, Manager and any holder of an Authorized
Mortgage if required by the same, thirty (30) days’ prior written notice of any
material change or cancellation of such policy and the property insurance
policies shall provide for a waiver of subrogation, to the extent available.

 

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

 

13.4                           Insurance
Proceeds.  All proceeds payable by
reason of any loss or damage to a Hotel, or any portion thereof (other than the
proceeds of any business interruption insurance), shall be paid directly to
Purchaser as its interest may appear and all loss adjustments with respect to
losses payable to Manager shall require the prior written consent of Purchaser.

 

72

 

13.5                           Manager’s
Insurance Program.

 

(a)                                  Manager
will obtain quotations for insurance on an annual basis and provide, when
available, such quotations to Owner for its approval or rejection.  If Owner rejects such quotations, it may
obtain such insurance and thereafter Owner shall maintain, as an Operating
Cost, the insurance, the quotation for which Owner rejected.

 

(b)                                 Owner
acknowledges that in the event the insurance required hereunder is provided
through Manager’s insurance program, to the extent available, the costs and
charges therefor will be paid as an Operating Cost without regard to whether
such payment is to an Affiliate of Manager and whether that Affiliate receives
a profit as a result thereof.

 

ARTICLE 14

 

INDEMNIFICATION
AND WAIVER OF SUBROGATION

 

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

 

14.2                           Waiver
of Subrogation.  To the fullest
extent permitted by law, each of Owner and Manager hereby waives any and all
rights of subrogation and right of recovery or cause of action, and agrees to
release the other and Purchaser from liability for loss or damage to property
to the extent such loss or damage is covered by valid and collectible insurance
in effect at the time of such loss or damage or which would have been covered
if the insurance required by this Agreement were being carried (unless the same
is not carried due to the fault of Owner); provided, however,
that such waiver shall be of no force or effect if the party benefiting
therefrom fails to obtain and maintain the insurance required to be obtained
and maintained by it.  Such waivers are
in addition to, and not in limitation or derogation of, any other waiver or
release contained in this Agreement. 
Written notice of the terms of the above waivers shall be given to the
insurance carriers of Owner and Manager, and the insurance policies shall be
properly endorsed, if necessary, to prevent the invalidation of said policies
by reason of such waivers.

 

73

 

14.3                           Survival.  The terms of this Article 14
shall survive the expiration or earlier termination of this Agreement.

 

ARTICLE 15

 

DAMAGE TO AND
DESTRUCTION OF THE HOTEL

 

15.1                           Termination.

 

(a)                                  If
during the Term any Hotel shall be totally or partially destroyed and the Hotel
is thereby rendered Unsuitable for Its Permitted Use, (i) Manager may
terminate this Agreement with respect to such Hotel on sixty (60) days’ written
notice to Owner, or (ii) Owner may terminate this Agreement with respect
to such Hotel on not less than sixty (60) days’ written notice to Manager,
whereupon, this Agreement, with respect to such Hotel, shall terminate and
Owner or Purchaser shall be entitled to retain the insurance proceeds payable
on account of such damage.

 

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

 

(c)                                  Upon
any termination under this Article 15 or Article 16,
Owner’s First Priority and Owner’s Second Priority shall be reduced as follows:

 

(i)  Such
reduction to Owner’s First Priority shall be in an amount such that after
giving effect to such reduction the ratio of Owner’s First Priority to the NOI
of the Hotels (other than the Hotel with respect to which this Agreement has
been so terminated) for the most recently ended full twelve (12) calendar
months prior to the date of the casualty or Condemnation shall equal the ratio
of Owner’s First Priority before such reduction to the NOI of all the Hotels
(including, the Hotel with respect to which this Agreement has been terminated)
for such 12-month period; and

 

(ii)  Such
reduction to Owner’s Second Priority shall be in an amount such that after
giving effect to such

 

74

 

 

reduction the
ratio of Owner’s Second Priority to the NOI of the Hotels (other than the Hotel
with respect to which this Agreement has been so terminated) for the most
recently ended full twelve (12) calendar months prior to the date of the
casualty or Condemnation shall equal the ratio of Owner’s Second Priority
before such reduction to the NOI of all the Hotels (including, the Hotel with
respect to which this Agreement has been terminated) for such 12-month period.

 

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

 

15.2                           Restoration.

 

(a)                                  If
during the Term any Hotel is damaged or destroyed by fire, casualty or other
cause but is not rendered Unsuitable for Its Permitted Use or if neither Owner
nor Manager terminates this Agreement pursuant to Section 15.1,
Owner shall make the net proceeds of insurance received in connection with such
casualty (excluding the proceeds of business interruption or similar insurance
which are a portion of Gross Revenues) and any other amount Owner elects to
contribute toward restoration available to Manager for restoration of such
Hotel subject to customary terms applicable to advances and construction loans
(to the extent applicable) and the terms of the Lease and any Authorized
Mortgage, and Owner shall make, or shall cause there to be made, all Repairs
necessary to restore such Hotel to substantially the same condition as existed
prior to such casualty.  If Owner elects
to retain Manager’s services in connection with such Repairs, the terms of Section 11.1
shall apply.

 

(b)                                 If
during the Term with respect to the Baltimore Hotel, the Baltimore Parking
Garage is owned by an Affiliate of Owner and is damaged or destroyed by fire,
casualty or other cause but the Baltimore Hotel is not rendered Unsuitable for
Its Permitted Use or if neither Owner nor Manager terminates this Agreement
pursuant to Section 15.1, Owner shall cause such Affiliate to apply
the net proceeds of received in connection with such casualty (excluding the
proceeds of business interruption or similar insurance) toward restoration of
the Baltimore Parking Garage.

 

(c)                                  Any
casualty which does not result in a termination of this Agreement with respect
to the applicable Hotel shall not

 

75

 

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

 

(d)                                 If
the net proceeds of the insurance received in connection with a casualty or an
Award received in connection with a Condemnation are insufficient to complete
the required Repairs, Owner shall have the right (but not the obligation) to
contribute (or cause Purchaser to contribute) the amount of such
insufficiency.  If Owner elects not to
contribute such insufficiency by notice given to Manager within ten (10) Business
Days after a notice given by Manager to Owner reasonably detailing the
existence of such insufficiency, Manager shall have the right to contribute
such insufficiency.  If Manager fails to
contribute such insufficiency to an account of Owner to be used in completing
such Repairs within ten (10) Business Days after Owner’s election, the
Hotel subject to such casualty or Condemnation shall be deemed Unsuitable for
Its Permitted Use and the terms of Section 15.1 or 16.1, as
applicable, shall apply.  Subject to the
terms of Section 10.1, Manager shall be entitled to the return of
amounts funded by it under this Section 15.2(d) in equal
monthly installments based upon the number of months remaining in the Term after
the month in which such advance is made (after giving effect to any then
exercised or deemed exercised options to extend).

 

ARTICLE 16

 

CONDEMNATION

 

16.1                           Total
Condemnation.

 

(a)                                  If
either (x) the whole of a Hotel shall be taken by Condemnation, or (y) a
Condemnation of less than the whole of a Hotel renders such Hotel Unsuitable
for Its Permitted Use, this Agreement shall terminate with respect to such
Hotel and Owner and Purchaser shall seek the Award for their interests in such
Hotel as provided in the Lease, which Award shall belong solely to them.  In addition, Manager shall have the right to
initiate or participate in such proceedings as it deems advisable to recover
any damages to which Manager may be entitled; provided, however,
that Manager shall be entitled to retain the award or compensation it may
obtain through such proceedings which are conducted separately from those of
Owner and Purchaser only if such award or compensation does not reduce the
award or compensation otherwise available to Owner and Purchaser.  If this Agreement is so terminated with
respect to a Hotel, Owner and Purchaser shall make reasonable efforts to use
the Award to

 

76

 

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

 

(b)                                 Purchaser
and Owner shall not be obligated to expend in the aggregate more than the Award
in connection with (i) investigating and negotiating to purchase all
properties proposed by Manager to be the Replacement Property (including,
without limitation, attorneys’ and consultants’ fees and title search and
survey costs) and (ii) acquiring a Replacement Property (including,
without limitation, the purchase price therefor, title insurance premiums,
broker’s commissions and transfer taxes);

 

(c)                                  Purchaser
and Owner shall have no obligation to acquire any proposed Replacement Property
unless the projected NOI thereof and each of every other aspect of the proposed
Replacement Property which Purchaser reasonably considers relevant is
comparable in Purchaser’s sole judgment in all respects to the Hotel which is
being replaced;

 

(d)                                 Purchaser
and Owner shall not be obligated to investigate more than three (3) proposed
properties;

 

(e)                                  Owner’s
Fixed Priority will be increased by an amount equal to the reduction therein
resulting from the termination of this Agreement with respect to the Hotel
which is being replaced; and

 

(f)                                    Purchaser
shall not be obligated to acquire any proposed Replacement Property, if Manager
and Owner do not reasonably agree upon an appropriate amendment hereto pursuant
to which this Agreement will be extended to such property.

 

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

 

16.2                           Partial
Condemnation.  In the event of a
Condemnation of less than the whole of a Hotel such that such Hotel is not
rendered Unsuitable for Its Permitted Use, Owner shall, to the extent of the
Award and any additional amounts disbursed by Owner or Purchaser, commence
promptly and continue diligently to restore the untaken portion of such Hotel
so that such Hotel shall constitute a complete architectural unit of the same
general character and condition (as nearly as may be possible under the
circumstances) as existed immediately prior to such Condemnation, in full
compliance with all Legal Requirements,

 

77

 

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

 

16.3                           Temporary
Condemnation.  In the event of any
temporary Condemnation of a Hotel or Owner’s interest therein, this Agreement
shall continue in full force and effect. 
The entire amount of any Award made for such temporary Condemnation
allocable to the Term, whether paid by way of damages, rent or otherwise, shall
constitute Gross Revenues.  For purposes
of this Agreement, a Condemnation shall be deemed to be temporary if the period
of such Condemnation is not expected to, and does not, exceed twelve (12)
months.

 

16.4                           Anaheim
Taking.  Notwithstanding anything
contained herein to the contrary, the terms of Sections 15.2(d) and
16.3 shall not apply to any Anaheim Condemnation.  Rather, if an Anaheim Condemnation occurs and
this Agreement is not terminated with respect to the affected Hotel(s), subject
to the requirements of Section 7.7, Manager, in conformity with
Legal Requirements, the Operating Standards and Insurance Requirements,
promptly shall commence and continue diligently to restore the untaken portion
of such Hotel(s) so that any such Hotel shall constitute a complete
architectural unit of the same general character and condition (as nearly as
may be possible under the circumstances) as existed immediately prior to such
Condemnation (including adequate parking facilities) in all material respects
pursuant to a plan for such eventuality approved in advance and in writing by
Owner, which approval shall not be unreasonably withheld.  Owner shall make the Award for such Anaheim
Condemnation available to Manager to pay the cost of such restoration subject
to customary terms applicable to advances of construction loans (to the extent
applicable).  In the event that the Award
is insufficient to cover the full cost of the restoration, Manager shall be
entitled to apply funds from the Reserve Account to pay such costs.

 

16.5                           Baltimore
Taking.  For so long as the Baltimore
Parking Garage is owned by an Affiliate of Owner, in the event of a
Condemnation of all or any portion of the Baltimore Parking Garage such that
the Baltimore Hotel is not rendered Unsuitable for Its Permitted Use, Owner
shall cause such Affiliate of Owner, to the extent of the Award, to commence
promptly and continue diligently to restore the untaken portion of the
Baltimore Parking Garage so that the Baltimore Parking Garage shall constitute
a complete architectural unit of the same

 

78

 

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

 

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

 

ARTICLE 17

 

DEFAULT AND
TERMINATION

 

17.1                           Manager
Events of Default.  Each of the
following shall constitute a “Manager Event of Default”:

 

(a)                                  The
filing by Manager, the Canadian Manager, PR Tenant or the Guarantor of a
voluntary petition in bankruptcy or insolvency or a petition for reorganization
under any bankruptcy law, or the admission by Manager, the Canadian Manager, PR
Tenant or the Guarantor that it is unable to pay its debts as they become due,
or the institution of any proceeding by

 

79

 

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

 

(b)                                 The
consent by Manager, the Canadian Manager, PR Tenant or the Guarantor to an
involuntary petition in bankruptcy or the failure to vacate, within
ninety (90) days from the date of entry thereof, any order approving an
involuntary petition with respect to Manager, the Canadian Manager, PR Tenant
or the Guarantor.

 

(c)                                  The
entering of an order, judgment or decree by any court of competent
jurisdiction, on the application of a creditor, adjudicating Manager, the
Canadian Manager, PR Tenant or the Guarantor as bankrupt or insolvent or approving
a petition seeking reorganization or appointing a receiver, trustee, or
liquidator of all or a substantial part of Manager’s, the Canadian Manager’s,
PR Tenant’s or the Guarantor’s assets, and such order, judgment or decree’s
continuing unstayed and in effect for an aggregate of sixty (60) days
(whether or not consecutive).

 

(d)                                 The
failure of Manager, the Guarantor, PR Tenant, the guarantor under the PR
Guaranty or any Affiliate of any of them to make any payment required to be
made in accordance with the terms of this Agreement or any other Transaction
Document which failure continues beyond any applicable notice and grace period.

 

(e)                                  The
failure of Manager, its Ultimate Parent, the Collateral Agent, the Guarantor,
PR Tenant, the guarantor under the PR Guaranty or any Affiliate of any of them
to perform, keep or fulfill any of the other covenants, undertakings,
obligations or conditions set forth in this Agreement or any other Principal
Document on or before the date required for the same, which failure continues
for a period of thirty (30) days after receipt of written notice demanding such
cure; provided, however, if such failure is susceptible of cure,
but such cure cannot be accomplished within said thirty (30) day period, said
thirty (30) days shall be extended for so long as is reasonably necessary to
effect such cure provided that such cure is commenced within thirty (30) days
after such notice is given and is thereafter diligently pursued to completion.

 

(f)                                    The
material failure of Manager, the sellers under the Purchase Agreement or the PR
Stock Agreement, IHG or any Affiliate of any of them to perform, keep or
fulfill any of the other covenants, undertakings, obligations or conditions set
forth in any of the Other Documents on or before the date required for the
same, which failure continues for a period of

 

80

 

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

 

(g)                                 The
failure of Manager to maintain insurance coverages required to be maintained by
Manager under this Agreement.

 

(h)                                 The
failure by Manager, PR Tenant, their Ultimate Parent(s) or the Guarantor to deliver
to Owner any financial statement as and when required by the Principal
Documents, which failure continues for a period of ten (10) Business Days
after written notice from Owner.

 

(i)                                     Any
representation or warranty made by Manager or any of its Affiliates in this
Agreement or any Transaction Document proves to have been false in any material
respect on the date when made or deemed made; provided, however,
if Manager did not know of such falseness at the time such representation or
warranty was made, and the facts or circumstances giving rise to such falseness
are susceptible of cure, Manager shall have up to thirty (30) days after notice
from Owner to effectuate such cure.

 

(j)                                     The
failure of (i) any Ultimate Parent of Manager or (ii) the Guarantor
to timely and fully keep and observe any obligations under the Transaction
Documents or any other document or instrument executed and delivered in
connection herewith to maintain any net worth or unencumbered assets or to
deliver any collateral, in all cases as required under the Transaction
Documents, which is not cured within ten (10) days after notice from Owner
to Manager.

 

(k)                                  The
occurrence of an Event of Default under the PR Lease.

 

(l)                                     The
failure of the Canadian Manager to be an Affiliate of Manager.

 

17.2                           Remedies
for Manager Defaults.  So long as a
Manager Event of Default shall be outstanding, Owner shall have (in addition to
its other rights and remedies at law, in equity or otherwise) the right to
terminate this Agreement.  Upon such
termination, or if this Agreement is terminated pursuant to Sections 5.1
or 10.3, Owner shall be entitled to liquidated

 

81

 

damages.  Owner’s right to
receive liquidated damages has been agreed to due to the uncertainty,
difficulty and/or impossibility of ascertaining the actual damages suffered by
Owner.  Further, if not for Owner’s right
to receive such liquidated damages, Purchaser would not have entered into the
Purchase Agreement, Purchaser would not have acquired the Hotels and Owner
would not have entered into the Lease. 
MANAGER HEREBY ACKNOWLEDGES AND AGREES THAT SUCH LIQUIDATED DAMAGES ARE
NOT A PENALTY, BUT ARE TO COMPENSATE OWNER AND ITS AFFILIATES FOR THE EXPENSE
AND LOST EARNINGS WHICH MAY RESULT FROM ARRANGING SUBSTITUTE MANAGEMENT
FOR THE HOTELS AS WELL AS TO COMPENSATE FOR THE RENT OWNER MUST PAY UNDER THE
LEASE AND THE PRICE PAID FOR THE HOTELS BY OWNER’S AFFILIATE.  Such liquidated damages shall be equal to all
accrued but unpaid amounts due to Owner hereunder up until the date of
termination, plus the Outstanding Balance, as defined in the Guaranty, plus the
outstanding balance of the Deposit. 
Owner shall be entitled to interest, at the Interest Rate, on such liquidated
damages from the date of such termination until the date of payment of such
damages and interest.  Except with
respect to Owner’s rights and remedies for any breach or violations by Manager
of the terms of Section 17.4, Owner shall look solely to any
collateral hereafter pledged securing Manager’s obligations hereunder for
satisfaction of any claim of Owner against Manager hereunder; provided, however,
nothing contained herein is intended to, nor shall it, limit or reduce the
obligations of the Guarantor under the Guaranty or the guarantor under the PR
Guaranty or limit Owner’s rights with respect to either of them.

 

17.3                           Owner
Events of Default and Remedies for Owner Defaults.  In the event any representation or warranty
made by Owner in this Agreement proves to be untrue when made in any material
respect or Owner fails to perform any of its obligations hereunder, then
Manager shall have the right to institute forthwith any and all proceedings
permitted by law or equity (provided they are not specifically barred under the
terms of this Agreement), including, without limitation, actions for specific
performance and/or damages; provided, however, except as may be
expressly provided in this Agreement, Manager shall have no right to terminate
this Agreement by reason of such a failure by Owner or otherwise.  Manager shall be entitled to terminate this
Agreement in the event of a violation of the terms of Section 4.7
by Purchaser or Owner.  Except as
otherwise specifically provided in this Agreement, Manager hereby waives all
rights arising from any occurrence whatsoever, which may now or hereafter be
conferred upon it by law, (a) to modify without the agreement of Owner,
surrender or terminate this Agreement or

 

82

 

quit or surrender any Hotel or any portion thereof, or (b) to
obtain (i) any abatement, reduction, suspension or deferment of the sums
allocable or otherwise payable to Owner or other obligations to be performed by
Manager hereunder or (ii) any increase in any amounts payable to Manager
hereunder.  In the event Owner wrongfully
terminates this Agreement or Manager terminates this Agreement pursuant to a
right to do so as a result of Owner’s breach, then, subject to Manager’s
mitigation obligations and any other limitation on remedies set forth herein,
Manager shall be entitled to recover as part of its damages for such wrongful
termination an amount equal to the damages suffered by Manager on account of
terminating the employment of on-site employees of the Hotels as a result of
such wrongful termination.

 

17.4                           Post
Termination Obligations.  Upon
expiration or earlier termination of this Agreement for any reason, Owner and
Manager shall proceed as follows:

 

(a)                                  Within
sixty (60) days following the effective date of such expiration or earlier termination,
Manager will submit to Owner an audited final accounting of the results of the
Pooled FF&E Hotels’ operations and all accounts between Owner and Manager
through the effective date of such expiration or earlier termination, the cost
of which audit shall be shared equally by Manager and Owner and shall not be an
Operating Cost and shall be performed by Ernst & Young or another
accounting firm selected by Manager and approved by Owner.  Said final accounting shall be accompanied by
an Officer’s Certificate and shall promptly be submitted by Manager to Owner
for its approval.  Owner shall not
unreasonably withhold or delay its approval of the final accounting and any
such disapproval shall contain reasonably detailed explanation for
disapproval.  Within thirty (30) days
after delivery of such final accounting, the parties will make appropriate
adjustments to any amounts previously paid or due under this Agreement.

 

(b)                                 On
the effective date of such expiration or earlier termination, Manager will deliver
to Owner all books and records of the Hotels, provided that Manager may retain
copies of any of the same for Manager’s records.  Notwithstanding the foregoing, Manager will
not be required to deliver to Owner any information or materials (including, without
limitation, software, database, manuals and technical information) which are
proprietary property of Manager.

 

(c)                                  On
the effective date of such expiration or earlier termination, Manager will
deliver possession of the Hotels,

 

83

 

together with any and all keys or other access devices, to Owner.

 

(d)                                 On
the effective date of such expiration or earlier termination, Manager will
assign to Owner or its designee, and Owner or such designee will assume, all booking,
reservation, service and operating contracts relating exclusively to the
occupancy or operation of the Hotels and entered into in the ordinary course of
business by Manager in accordance with this Agreement.  Owner agrees to indemnify and hold Manager
harmless from liability or other obligations under any such agreements relating
to acts or occurrences, including Owner’s or such designee’s failure to
perform, on or after the effective date of such assignment.

 

(e)                                  Manager
will assign to Owner or its designee any assignable licenses and permits
pertaining to the Hotels and will otherwise reasonably cooperate with Owner as
may be necessary for the transfer of any and all Hotel licenses and permits to
Owner or Owner’s designee.

 

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

 

(g)                                 Manager shall have the option, to be exercised
within thirty (30) days after termination or expiration, to purchase, at their
then book value, any FF&E, Operating Equipment or other personal property
as may be marked with any System Mark at the Hotels.  In the event Manager does not exercise such
option, Owner agrees that it will use any such items not so purchased
exclusively in connection with the Hotels until they are consumed; provided,
however, Manager shall not be entitled to purchase FF&E, Operating
Equipment or other personal property located at a Hotel which is to be operated
under the Brand name or by Manager, until such Hotel shall no longer be so
operated.

 

(h)                                 Owner shall have the right to operate the
improvements on the applicable Sites
without modifying the structural design of same and without making any Material
Repair, notwithstanding the fact that such design or certain features thereof
may be proprietary to Manager or its Affiliates and/or protected by trademarks
or service marks held by Manager or an Affiliate, provided that such use shall
be confined to the applicable Sites. 
Further, provided that the applicable Hotels then satisfy the applicable
Brand Standards (unless the Hotels fail to satisfy such Brand Standards due to
a breach hereof by Manager), Owner shall be entitled (but not obligated) to
operate

 

84

 

such of the Hotels as Owner designates under the
applicable Brand name for a period of one (1) year following such
expiration or earlier termination in consideration for which Owner shall pay
the then standard franchise and system fees for such Brand and comply with the
other applicable terms and conditions of the form of franchise agreement then
being entered into with respect to such Brand.

 

(i)                                     Manager shall transfer to Owner the telephone
numbers used in connection with the operation of the Hotels (but not any Brand
generally).

 

(j)                                     Manager
shall cooperate with Owner’s or its designees’ efforts to engage employees of
the Hotels.

 

(k)                                  If
requested by Owner prior to such expiration or earlier termination of this
Agreement in whole or in part, Manager shall continue to manage under the
applicable Brand any affected Hotels designated by Owner after such expiration
or earlier termination for up to one (1) year, on such reasonable terms
(which shall include an agreement to reimburse Manager for its reasonable out-of-pocket
costs and expenses, and reasonable administrative costs and a management fee of
seven and one-half percent (7.5%) of Gross Revenues with respect to the
Staybridge Hotels and the Holiday Inn Hotels and a management fee of three
percent (3%) of Gross Revenues with respect to the InterContinental Hotels and
the Crowne Plaza Hotels) as Owner and Manager shall reasonably agree.

 

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

 

ARTICLE 18

 

NOTICES

 

18.1                           Procedure.

 

(a)                                  Any
and all notices, demands, consents, approvals, offers, elections and other
communications required or permitted under this Agreement shall be deemed
adequately given if in writing and the same shall be delivered either by hand,
by telecopier with written acknowledgment of receipt (provided if notice is
given by telecopier, a copy shall also be sent on the following Business Day by
Federal Express or similar
expedited commercial carrier), or by Federal
Express or similar expedited commercial carrier, addressed to the recipient of
the notice,

 

85

 

with all freight charges prepaid (if by Federal Express or similar carrier).

 

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

 

(c)                                  All
such notices shall be addressed as follows:

 

	
  If to Owner:

  	
   

  	
  HPT TRS IHG-2, INC.

  
	
   

  	
   

  	
  c/o Hospitality Properties
  Trust

  
	
   

  	
   

  	
  400 Centre Street

  
	
   

  	
   

  	
  Newton, Massachusetts 02458

  
	
   

  	
   

  	
  Attn: President

  
	
   

  	
   

  	
  Facsimile: 617-969-5730

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Sullivan & Worcester
  LLP

  
	
   

  	
   

  	
  One Post Office Square

  
	
   

  	
   

  	
  Boston, Massachusetts 02109

  
	
   

  	
   

  	
  Attn: Warren M. Heilbronner, Esq.

  
	
   

  	
   

  	
  Facsimile: 617-338-2880

  
	
   

  	
   

  	
   

  
	
  If to Manager:

  	
   

  	
  IHG Management (Maryland) LLC

  
	
   

  	
   

  	
  c/o Intercontinental Hotels Group

  
	
   

  	
   

  	
   

  	
  Resources, Inc.

  
	
   

  	
   

  	
  8844 Columbia 100 Parkway

  
	
   

  	
   

  	
  Columbia, Maryland 21045

  
	
   

  	
   

  	
  Attn: Vice President of Operations

  
	
   

  	
   

  	
  Facsimile: 410-964-9249

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  InterContinental Hotels Group

  
	
   

  	
   

  	
  Resources, Inc.

  
	
   

  	
   

  	
  c/o Six Continents
  Hotels, Inc.

  
	
   

  	
   

  	
  Three Ravinia Drive, Suite 100

  
	
   

  	
   

  	
  Atlanta, Georgia 30346

  
	
   

  	
   

  	
  Attn: Operations
  Attorney

  
	
   

  	
   

  	
  Facsimile: 770-604-2378

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
  Alston &
  Bird LLP

  
	
   

  	
   

  	
  One
  Atlantic Center

  
	
   

  	
   

  	
  1201
  West Peachtree Street

  
	
   

  	
   

  	
  Atlanta,
  Georgia 30309

  

 

86

 

	
   

  	
   

  	
  Attn:
  Timothy Pakenham, Esq.

  
	
   

  	
   

  	
  Facsimile:
  404-253-8885

  

 

(d)                                 By
notice given as herein provided, the parties hereto and their respective
successors and assigns shall have the right from time to time and at any time
during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.

 

ARTICLE 19

 

RELATIONSHIP,
AUTHORITY AND FURTHER ACTIONS

 

19.1                           Relationship.  Manager shall be the agent of Owner with a
limited agency, coupled with an interest, solely for the purpose of operating
the Hotels and carrying out ordinary and customary transactions for that
purpose.  Owner and Manager shall not be
construed as joint venturers or partners of each other, and neither shall have
the power to bind or obligate the other except as set forth in this
Agreement.  Manager shall not constitute
a tenant or subtenant of Owner and this Agreement shall not constitute Owner a
franchisee of Manager or of any of Manager’s Affiliates.  Manager shall not exercise any right of Owner
or Owner’s Affiliate under the Baltimore Declaration without the prior written
consent of Owner, which consent shall not be unreasonably withheld or delayed.  This Agreement shall not create a franchise
or a franchisor/franchisee relationship within the meaning of the Federal Trade Commission Act or any
other Legal Requirement.

 

19.2                           Further
Actions.  Each of the parties agrees
to execute all contracts, agreements and documents and take all actions
necessary to comply with the provisions of this Agreement and the intent
hereof.

 

ARTICLE 20

 

APPLICABLE LAW

 

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

 

87

 

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

 

ARTICLE 21

 

SUCCESSORS AND
ASSIGNS

 

21.1                           Assignment.

 

(a)                                  Except as expressly provided below, Manager shall
not assign, mortgage, pledge, hypothecate or otherwise transfer its interest in
all or any portion of this Agreement
or any rights arising under this Agreement or suffer or permit such interests
or rights to be assigned, transferred, mortgaged, pledged, hypothecated or
encumbered, in whole or in part, whether voluntarily, involuntarily or by
operation of law, or permit the management of the Hotels by anyone other than
Manager or Owner.  For purposes of this Section 21.1,
an assignment of this Agreement shall be deemed to include any transaction
which results in Manager no longer being an Affiliate of Guarantor or pursuant
to which all or substantially all of Manager’s assets are transferred to any
Person who is not an Affiliate of Guarantor.

 

(b)                                 Manager shall have the right, without Owner’s
consent, but subject to the applicable assignee or Affiliate satisfying the
requirements of Section 24.15, to (i) assign Manager’s
interest in this Agreement (A) to IHG or any Affiliate of IHG, (B) in
connection with a merger, corporate restructuring or consolidation of IHG or a
sale of all or substantially all of the assets of IHG and (C) in
connection with a sale of all or substantially all of the assets (including
associated management agreements) owned by IHG and its Affiliates relating to
the Brands and (ii) engage its Affiliates as sub-managers with respect to
the separate Brands of Hotels.  At Owner’s
election, Manager shall assign this Agreement to any Person who is not an
Affiliate of IHG that acquires all or substantially all of the assets of IHG
relating to the Brands and shall cause such Person to assume all of Manager’s
obligations thereafter accruing hereunder. 
Notwithstanding anything herein to the contrary, Manager shall neither,
directly or indirectly, assign this

 

88

 

Agreement to any Person, nor engage any
sub-manager, who is or is an Affiliate of a Specially Designated or
Blocked Person.

 

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

 

(i)  the
Canadian Manager shall provide the Canadian Services to the Owner in accordance
with this Agreement;

 

(ii)  there
shall be payable to the Canadian Manager as consideration for the Canadian
Services, a portion of the amounts otherwise payable or reimbursable to Manager
under this Agreement, as follows:

 

(A)                              the
portion of the Operating Costs incurred by the Canadian Manager in providing
the Canadian Services;

 

(B)                                the
portion of the Base Management Fee for each period equal to the fraction that
the Gross Revenues of the Canadian Hotels for such period is of the Gross
Revenues of the Hotels for such period, which fee shall be payable to the
Canadian Manager concurrently with the remaining portion of the Base Management
Fee payable to the Manager;

 

(C)                                the
portion of the Incentive Management Fee for each period equal to the fraction
that the NOI of the Canadian Hotels for such period is of the NOI of the Hotels
for such period, which fee shall be paid to the Canadian Manager concurrently
with the remaining portion of the Incentive Management Fee payable to the
Manager;

 

89

 

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

 

(iii)  no
portion of the System Fees or other fees referred to in Section 9.2
shall be payable in respect of Canadian Services; and

 

(iv)  Manager
shall not be released from any of its obligations under this Agreement and
shall at all times remain liable for the performance of the Canadian Services
and all other obligations of Manager hereunder.

 

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

 

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

 

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

 

(c)                                  Owner shall not assign, mortgage, pledge,
hypothecate or otherwise transfer its interest in all or any portion of this
Agreement or any rights arising under this Agreement without the prior written consent of Manager except (i) in
connection with a sale of a Hotel in accordance with the terms of Sections
4.4 or 4.5, (ii) to Purchaser or an Affiliate of Purchaser, (iii) to

 

90

 

Manager or an Affiliate of Manager, (iv) to
an Affiliate of Owner in a merger, corporate restructuring or consolidation of
Purchaser or any of its Affiliates,(v) in connection with the granting of
an Authorized Mortgage or (vi) to a Substitute Tenant as provided in Section 4.2;
provided, however, in each instance (other than in connection
with a collateral assignment) that the assignee hereof assumes all of Owner’s
obligation hereunder and under the other Transaction Documents thereafter
accruing.

 

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

 

(e)                                  In
the event fifty percent (50%) or more of the hotels comprising a Brand cease to
be Staybridge Suites, InterContinental, Crowne Plaza or Holiday Inn, as
applicable, hotels and are converted to another brand in a single transaction
or a series of related transactions, Owner may elect to require Manager to
promptly convert at its own cost and expense (and not as an Operating Cost and
without reimbursement from the Reserve Account) the applicable Hotels to the
brand of hotels to which such other hotels are converted.  In such event, all references herein to “Staybridge
Suites”, “InterContinental”, “Crowne Plaza” or “Holiday Inn”, as applicable,
shall be deemed to refer to the trade name of the system of hotels to which the
Hotels are to be so converted.

 

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

 

91

 

ARTICLE 22

 

RECORDING

 

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

 

ARTICLE 23

 

FORCE MAJEURE

 

23.1                           Operation
of Hotel.  If at any time during the
Term it becomes necessary in Manager’s reasonable opinion to cease or alter
operations at any Hotel in order to protect the health, safety and welfare of
the guests and/or employees of such Hotel, or such Hotel itself, for reasons of
force majeure beyond the control of Manager such as, but not limited to, acts
of war, insurrection, civil strife and commotion, labor unrest or acts of God,
then in such event Manager may close and cease or alter operation of all or
part of such Hotel, reopening and commencing or resuming operation when Manager
deems that such may be done without jeopardy to such Hotel, its guests and
employees.

 

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

 

ARTICLE 24

 

GENERAL PROVISIONS

 

24.1                           Trade
Area Restriction.

 

92

 

(a)                                  Notwithstanding
anything to the contrary in this Agreement, neither Manager nor any Affiliate
shall acquire, own, manage, operate or open any hotel as a “Staybridge Suites”
or “Holiday Inn” hotel nor shall Manager or any Affiliate authorize a third
party to operate or open any hotel as a “Staybridge Suites” or “Holiday Inn”
hotel that is within the Restricted Area of any Hotel operated under the same
name during its Restricted Period, unless such hotel (i) is owned or
leased by Owner or its Affiliate; (ii) is owned, operated, managed,
franchised or under development on the Effective Date and has been specifically
identified in writing at or prior to the time of the execution of the Purchase
Agreement or replaces any such hotel, provided such replacement hotel does not have
more than ten percent (10%) more guest rooms than the original hotel which it
replaces; or (iii) is part of an acquisition by IHG or its Affiliates of an interest (including an interest as a
franchisor) in a chain or group of not less than ten (10) comparable
hotels (such acquisition to occur in a single transaction or a series of
related transactions).  The terms of this
Section 24.1(a) shall apply only to “Staybridge Suites” and “Holiday
Inn” hotels and shall not in any way restrict the ownership, management,
franchising or operation of other brands or flags of any hotels owned or
operated by Manager or its Affiliates within the Restricted Area.  For the avoidance of doubt, the restriction
set forth in this Section 24.1(a) only applies to two or more
hotels of the same brand, i.e., two or more Staybridge Suites hotels or two or
more Holiday Inn hotels.  A Holiday Inn
hotel and a Staybridge Suites hotel within a Restricted Area shall not be
deemed a violation of this Section.

 

(b)                                 Notwithstanding
anything to the contrary in this Agreement, neither Manager nor any Affiliate
shall acquire, own, manage, operate or open any hotel as an “InterContinental”
or “Crowne Plaza” hotel nor shall Manager or any Affiliate authorize a third
party to operate or open any hotel as an “InterContinental” or “Crowne Plaza”
hotel that is within the Restricted Area of any Hotel operated under the same
name during its Restricted Period, unless such hotel (i) is owned or
leased by Owner or its Affiliate; (ii) is owned, operated, managed,
franchised or under development on the Effective Date and has been specifically
approved by Owner in writing at or prior to the time of the execution of the
Purchase Agreement or replaces any such hotel, provided such replacement hotel
is not first opened after such time and does not have more than ten percent
(10%) more guest rooms than the original hotel which it replaces; or (iii) is
part of an acquisition by IHG or its
Affiliates of an interest (including an interest as a

 

93

 

franchisor) in a chain or group of not less than five (5) comparable
full service hotels (such acquisition to occur in a single transaction or a
series of related transactions).  The
terms of this Section 24.1(b) shall apply only to “InterContinental”
and “Crowne Plaza” hotels and shall not in any way restrict the ownership,
management, franchising or operation of other brands or flags of any hotels
owned or operated by Manager or its Affiliates within the Restricted Area.  For the avoidance of doubt, the restriction
set forth in this Section 24.1(b) only applies to two or more
hotels of the same brand, i.e., two or more Crowne Plaza hotels or two or more
InterContinental hotels.  A Crowne Plaza
hotel and an InterContinental hotel within a Restricted Area shall not be
deemed a violation of this Section.

 

24.2                           Environmental
Matters.

 

(a)                                  Manager
shall not store, release, discharge, spill upon, dispose of or transfer to or
from any Hotel any Hazardous Substance, except for those which are customarily
used at other hotels like the Hotels and are in compliance with all Legal
Requirements.  Manager shall maintain the
Hotels at all times free of any Hazardous Substance (except for those which are
customarily used at other hotels like the Hotels and are in compliance with all
Legal Requirements).  Manager (i) upon
receipt of notice or knowledge thereof shall promptly notify Purchaser and
Owner in writing of any material change in the nature or extent of Hazardous
Substances at any Hotel, (ii) shall file and transmit to Purchaser and
Owner a copy of any Community Right to Know or similar report which is required
to be filed with respect to any Hotel pursuant to the Emergency Planning and
Community Right to Know Act, 42 U.S.C. Section 11001 et seq.
or any other Legal Requirements, (iii) shall transmit to Purchaser and
Owner copies of any citations, orders, notices or other governmental
communications received by Manager with respect to Hazardous Substances or
alleged violations of Legal Requirements relating to the protection of the
environment or human health or safety (collectively, “Environmental Notice”),
which Environmental Notice requires a written response or any action to be
taken and/or if such Environmental Notice gives notice of and/or presents a
material risk of any material violation of any Legal Requirement and/or
presents a material risk of any material cost, expense, loss or damage, (iv) shall
observe and comply with all Legal Requirements relating to the use, storage,
maintenance and disposal of Hazardous Substances and all orders or directives
from any official, court or agency of competent jurisdiction

 

94

 

relating to the use, storage or maintenance or requiring the removal,
treatment, containment or other disposition of Hazardous Substances, and (v) shall
pay or otherwise dispose of any fine, charge or imposition related to any of
the foregoing.

 

(b)                                 In
the event of the discovery of Hazardous Substances other than those maintained
in accordance with this Agreement on any portion of any Site or in any Hotel
during the Term, Manager shall use reasonable efforts to promptly (i) clean
up and remove from and about such Hotel all Hazardous Substances thereon, if
appropriate, (ii) contain and prevent any further release or threat of
release of Hazardous Substances on or about such Hotel, and (iii) use good
faith efforts to eliminate any further release or threat of release of
Hazardous Substances on or about such Hotel, and (iv) otherwise effect a
remediation of the problem in accordance with (A) the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq., as amended; (B) the regulations promulgated
thereunder, from time to time; and (C) all Legal Requirements (now or
hereafter in effect) dealing with the use, generation, treatment, release,
discharge, storage, disposal, clean up, remediation or abatement of Hazardous
Substances.

 

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

 

(d)                                 Notwithstanding
anything contained in this Section 24.2 to the contrary, with
respect to the Baltimore Hotel only, if either party first discovers any
Hazardous Substances on or about the Baltimore Site or the Baltimore Hotel from
and after the Effective Date, other than those maintained in accordance with
this Agreement, and it is further reasonably determined that such Hazardous
Substances were present on or about the Baltimore Site or the Baltimore Hotel
prior to the Effective Date with respect to the Baltimore Hotel, then Owner
and/or Owner’s Affiliate who owns the Baltimore Hotel shall be responsible for
any costs reasonably incurred by Manager in connection with any remediation or
other action required under this Agreement on account of such Hazardous
Substances.  Manager acknowledges that it
had a full opportunity to perform environmental due diligence on the Baltimore
Hotel and the Baltimore Site prior to the Effective Date for the Baltimore

 

95

 

Hotel, including, without limitation, a review of environmental
reports.  Manager acknowledges that it is
satisfied with the results of such diligence and it has no reason to believe
that there are currently any Hazardous Substances on or about the Baltimore
Site or the Baltimore Hotel in violation of this Agreement which require any
further action.

 

24.3                           Authorization.  Owner represents that it has full power and
authority to execute this Agreement and to be bound by and perform the terms
hereof.  Manager represents it has full
power and authority to execute this Agreement and to be bound by and perform
the terms hereof.  On request, each such
party will furnish to the other evidence of such authority.

 

24.4                           Severability.  If any provision of this Agreement shall be
held or deemed to be, or shall in fact be, invalid, inoperative or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the conflict
of any provision with any constitution or statute or rule of public policy
or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative or
unenforceable in any other jurisdiction or in any other case or circumstance or
of rendering any other provision or provisions herein contained invalid,
inoperative or unenforceable to the extent that such other provisions are not
themselves actually in conflict with such constitution, statute or rule of
public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative or unenforceable provision
had never been contained herein and such provision reformed so that it would be
valid, operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case.

 

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

 

24.6                           Formalities.  Any amendment or modification of this
Agreement must be in writing signed by all parties hereto.  This Agreement may be executed in one or more
counterparts, each of which will be deemed an original.

 

96

 

24.7                           Consent
to Jurisdiction; No Jury Trial.

 

(a)                                  Except
as provided in Section 24.20, all actions and proceedings arising
out of or in any way relating to this Agreement shall be brought, heard, and
determined exclusively in an otherwise appropriate federal or state court
located within the State of Maryland. 
Except as provided in Section 24.20, the parties hereby (a) submit
to the exclusive jurisdiction of any Maryland federal or state court of
otherwise competent jurisdiction for the purpose of any action or proceeding
arising out of or relating to this Agreement and (b) voluntarily and
irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise in any such action or proceeding, any claim or defense that they are
not personally subject to the jurisdiction of such a court, that such a court
lacks personal jurisdiction over any party or the matter, that the action or
proceeding has been brought in an inconvenient or improper forum, that the
venue of the action or proceeding is improper, or that this Agreement may not
be enforced in or by such a court.  To
the maximum extent permitted by applicable law, each party consents to service
of process by registered mail, return receipt requested, or by any other manner
provided by law.

 

(b)                                 To
the maximum extent permitted by applicable law, each of the parties hereto
waives its rights to trial by jury with respect to this Agreement or matter
arising in connection herewith.

 

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

 

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

 

24.10                     Section and
Other Headings.  The headings
contained in this Agreement are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.

 

24.11                     Documents.  Throughout the Term, Owner agrees to furnish
Manager copies of all notices relating to real and

 

97

 

personal property taxes and insurance statements, all financing
documents (including notes and mortgages) relating to the Hotels and such other
documents pertaining to the Hotels as Manager may request.

 

24.12                     No Consequential Damages.  Except as may be expressly provided herein,
in no event shall either party be liable for any consequential, exemplary or
punitive damages suffered by the other as the result of a breach of this
Agreement.  Time is of the essence with
respect to this Agreement.

 

24.13                     No Political Contributions.  Notwithstanding anything contained in this
Agreement to the contrary, no money or property of the Hotels shall be paid or
used or offered, nor shall Owner or Manager directly or indirectly use or
offer, consent or agree to use or offer, any money or property of the Hotels (i) in
aid of any political party, committee or organization, (ii) in aid of any
corporation, joint stock or other association organized or maintained for
political purposes, (iii) in aid of any candidate for political office or
nomination for such office, (iv) in connection with any election, (v) for
any political purpose whatever, or (vi) for the reimbursement or
indemnification of any person for any money or property so used.

 

24.14                     REIT Qualification.

 

(a)                                  Manager
shall take all commercially reasonable actions reasonably requested by Owner or
Purchaser for the purpose of qualifying Purchaser’s rental income from Owner
under the Lease as “rents from real property” pursuant to Sections 856(d)(2),
856(d)(8)(B) and 856(d)(9) of the Code.  Manager shall not be liable if such
reasonably requested actions, once implemented, fail to have the desired result
of qualifying Purchaser’s rental income from Owner under the Lease as “rents
from real property” pursuant to Sections 856(d)(2), 856(d)(8)(B) and
856(d)(9) of the Code.  This Section 24.14
shall not apply in situations where an Adverse Regulatory Event has occurred;
instead, Section 24.16 shall apply in such an instance.

 

(b)                                 In
the event Owner or Purchaser wish to invoke the terms of Section 24.14(a),
Owner or Purchaser (as appropriate) shall contact Manager and the parties shall
meet with each other to discuss the relevant issues and to develop a plan for
implementing such reasonably requested actions.

 

98

 

(c)                                  Any
additional out-of-pocket costs or expenses incurred by Manager in complying
with such a request shall be borne by Owner (and shall not be an Operating
Cost).  Owner shall reimburse Manager for
such expense or cost promptly, but not later than five (5) Business Days
after such expense or cost is incurred.

 

24.15                     Further Compliance with Section 856(d) of
the Code.  Commencing with the
Effective Date and continuing throughout the Term, the Manager shall qualify as
an “eligible independent contractor” as defined in Section 856(d)(9)(A) of
the Code.  To that end:

 

(a)                                  Manager
shall not permit wagering activities to be conducted at or in connection with
any Hotel by any person who is engaged in the business of accepting wagers and
who is legally authorized to engage in such business at or in connection with
such Hotel;

 

(b)                                 Manager
shall use reasonable efforts to cause each Hotel to qualify as a “qualified
lodging facility” under Section 856(d)(9)(D) of the Code;

 

(c)                                  Manager
shall not own, directly or indirectly or constructively (within the meaning of Section 856(d)(5) of
the Code), more than thirty-five percent (35%) of the shares of HPT (whether by
vote, value or number of shares), and Manager shall otherwise comply with any
regulations or other administrative or judicial guidance now or hereafter
existing under said Section 856(d)(5) of the Code with respect to
such ownership limits; and

 

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

 

99

 

 

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

 

(e)                                  Manager,
without the prior consent of Owner, which consent shall not be unreasonably
withheld, shall not permit or suffer:

 

(i)  the
Manager to fail to be a limited liability company under state law taxable under
the Code as a disregarded entity of InterContinental Hotels Group Resources, Inc.;

 

(ii) 
InterContinental Hotels Group Resources, Inc. to fail to be a corporation
under state law and taxable under the Code as an association; or

 

(iii)  a
direct or indirect subsidiary of InterContinental Hotels Group Resources, Inc.
to become a lessee of property owned by Purchaser or any of its Affiliates.

 

(f)                                    Without
the prior consent of Owner, which consent shall not be unreasonably withheld,
the Canadian Manager and Manager shall not permit:

 

(i)  the Canadian
Manager to fail to be a corporation under Canadian provincial law taxable under
the Code as an association;

 

(ii)  a
direct or indirect subsidiary of the Canadian Manager to become a lessee of
property owned by Purchaser or any of its Affiliates; or

 

(iii)  The
Canadian Manager or Manager, for so long as Purchaser or Owner or any Affiliate
as to Purchaser or Owner shall seek to qualify as a “real estate investment
trust” under the Code, to be reorganized, restructured,

 

100

 

combined, merged or
amalgamated with any Affiliate (as to Manager or the Canadian Manager) in such
manner that any such Affiliate would, or in Purchaser’s or Owner’s reasonable
judgment could, be expected to adversely affect (including, e.g., by
application of any Person’s actual “disregarded entity” status under the Code)
the status that both Manager and the Canadian Manager have as a Code Section 856(d)(9)(A) ”eligible
independent contractor” at a Code Section 856(d)(9)(D) ”qualified
lodging facility” owned or leased by Purchaser or Owner.

 

24.16                     Adverse Regulatory Event.

 

(a)                                  In
the event of an Adverse Regulatory Event arising from or in connection with
this Agreement, Owner and Manager shall work together in good faith to amend
this Agreement to eliminate the impact of such Adverse Regulatory Event; provided,
however, Manager shall have no obligation to materially reduce its
rights or materially increase its obligation under this Agreement, all taken as
a whole, or to bear any out-of-pocket costs or expenses under this Section 24.16.  Manager shall not be liable if any such
amendment, once operative, fails to have the desired result of eliminating the
impact of an Adverse Regulatory Event.

 

(b)                                 For
purposes of this Agreement, the term “Adverse Regulatory Event” means any time
that a new law, statute, ordinance, code, rule or regulation (but not an
administrative or judicial ruling) imposes, or could impose in Owner’s or
Purchaser’s reasonable opinion, any material threat to HPT’s status as a “real
estate investment trust” under the Code or to the treatment of amounts paid to
Purchaser under the Lease as “rents from real property” under Section 856(d) of
the Code.

 

(c)                                  Owner
or Purchaser shall promptly inform Manager of any Adverse Regulatory Event of
which it is aware and which it believes likely to impair compliance of any of
the Hotels with respect to the aforementioned sections of the Code.

 

24.17                     Adverse Canadian Event.  If, as a result of the adoption of, making of
or change to any tax law, tax regulation, tax treaty or official directive or
the interpretation or application thereof by any court or by any Government
Agency charged with the administration thereof or the compliance with any
guideline or request of any Government Agency (whether or not having the force
of law) Owner and Purchaser determine in good faith that it is no longer
consistent with their business goals to continue to own the Canadian Hotels,
then, subject to

 

101

 

the terms and conditions of Section 4.7, Owner and
Purchaser may sell all of their interest in the Canadian Hotels (either on a
pooled basis or individually).  The
following shall apply each time Owner and Purchaser desire to sell a Canadian
Hotel under this Section 24.17:

 

(a)                                  Owner
and Purchaser shall first offer to sell such Canadian Hotel(s) to Manager,
without representation or warranty, for such purchase price as Owner and
Purchaser shall specify in a written notice given to Manager.  In the event that Manager shall fail to
accept or reject such offer within ten (10) Business Days after receipt of
such notice, such offer shall be deemed to be rejected by Manager.

 

(b)                                 If
Manager accepts an offer made with respect to any Canadian Hotel pursuant to this
Section 24.17, then effective as of the date of such sale, the
following shall apply: (i) Purchaser shall deliver to Manager with respect
to such Transferred Hotel(s) a deed with covenants against grantor’s acts; (ii) Manager
shall deliver to Purchaser the purchase price specified in the offer; (iii) the
Term shall terminate with respect to such Transferred Hotel(s); (iv) no
further Owner’s Percentage Priority shall accrue with respect to the Gross
Revenues of such Transferred Hotel(s) which accrue after such termination; (v) the
Owner’s First Priority shall be reduced by an amount equal to eight and
one-half percent (8.5%) of the net (after taking into account any costs paid by
Manager) proceeds of sale received by Owner or Purchaser; and (vi) the
Owner’s Second Priority shall be reduced by one percent (1.0%) of such net
proceeds.

 

(c)                                  If
Manager rejects or is deemed to have rejected any offer made with respect to
any Canadian Hotel(s) pursuant to this Section 24.17, then Owner
and Purchaser shall have the right, for a period of one (1) year from the
date on which such offer is rejected or deemed rejected, to sell such Canadian
Hotel(s) to any third party purchaser on such terms and conditions as Owner and
Purchaser shall determine in their sole discretion; provided, however,
in no event shall the purchase price with respect to such Canadian Hotel(s) be
less than ninety-five percent (95%) of the purchase price offered to Manager
under this Section 24.17.  If
Owner and Purchaser fail to consummate the sale of such Canadian Hotel(s)
within one (1) year from the date on which their offer is rejected or
deemed rejected, then Owner and Purchaser shall be obligated again to first
offer such Canadian Hotel(s) to Manager in accordance with this Section 24.17
prior to selling it to any third party. 
If Owner and Purchaser sell such Canadian Hotel(s) to any third 

 

102

 

party in accordance with this Section 24.17, then the
following shall apply:

 

(i)  Subject
to the execution or delivery of a New Management Agreement as provided below,
this Agreement with respect to such Transferred Hotel(s) shall be terminated
effective as of the date title is transferred to such Transferred Hotel.

 

(ii) 
Simultaneously with such termination, Manager and the transferee of such
Transferred Hotel(s) or any tenant under a new lease with respect to such
Transferred Hotel(s) (which new lease shall have a term equal to the then
unexpired term of the Lease and shall impose no greater liability,
responsibility, or obligation on Manager than the Lease) shall enter into a new
management agreement (a “New Management Agreement”) with Manager on
substantially the same terms as this Agreement except as otherwise provided
herein for a term equal to the unexpired portion of the Term of this Agreement.

 

(iii) 
Manager, Owner, Purchaser and the transferee (or its tenant), acting
reasonably, shall allocate amounts in the Reserve Account and the Working
Capital between such Transferred Hotel(s) and the other Hotels.  The parties shall also make reasonable
allocations with respect to Owner’s Fixed Priority, and any outstanding
advances made by Owner, Manager or their respective Affiliates.  Only for purposes of allocating Owner’s Fixed
Priority between the Transferred Hotel(s) and the other Hotels, the allocation
of Owner’s First Priority and Owner’s Second Priority for each Hotel shall be
proportional to the NOI of such Hotel(s) for the then most recently ended
thirty-six (36) months relative to the NOI of all the other Hotels for such
period.  Amounts which are allocated to
the Transferred Hotel(s) shall be transferred to the transferee thereof to be
held by Manager or such transferee (or its tenant) pursuant to the New Management
Agreement.

 

(iv) 
Following such sale or transfer, Owner, its Affiliates and the Hotels which are
not Transferred Hotel(s) shall have no responsibilities with respect to amounts
that are so transferred and the transferee, its tenant and their Affiliates and
the Transferred Hotel(s) shall have no responsibility with respect to amounts
which are not so transferred.

 

103

 

(v)  From and
after the consummation of such sale or other transfer and compliance with the
terms hereof, the term “Hotels” as used herein shall not include the
Transferred Hotel(s).

 

(vi)  Owner
shall be responsible to cause its Affiliates, any new tenant and the transferee
to execute and deliver the documents contemplated by this Section 24.17
to be executed and delivered by them.

 

24.18                     Commercial Leases.  Manager shall not enter into any sublease
with respect to any Hotel (or any part thereof) unless the same has been
approved by Purchaser in its sole and absolute discretion; provided, however,
Manager may sublease or grant concessions or licenses to shops or any other
space at a Hotel subject to the following terms and conditions: (a) subleases
and concessions are for newsstand, gift shop, parking garage, heath club,
restaurant, bar or commissary purposes or similar concessions; (b) such
subleases and concessions do not have a term in excess of the lesser of five (5) years
or the remaining Term under this Agreement; (c) such subleases and
concessions do not demise, (i) in the aggregate, in excess of Five
Thousand (5,000) square feet of any Hotel, or (ii) for any single
sublease, in excess of One Thousand (1,000) square feet of any Hotel; (d) any
such sublease, license or concession to an Affiliate of a Manager shall be on
terms consistent with those that would be reached through arms-length
negotiation; (e) for so long as Purchaser or any Affiliate of Purchaser
shall seek to qualify as a real estate investment trust under the Code,
anything contained in this Agreement to the contrary notwithstanding, Manager
shall not sublet or otherwise enter into any agreement with respect to a Hotel
on any basis such that in the opinion of the Owner the rental or other fees to
be paid by any sublessee thereunder would be based, in whole or in part, on
either (i) the income or profits derived by the business activities of
such sublessee, or (ii) any other formula such that any portion of such
sublease rental would fail to qualify as “rents from real property” within the
meaning of Section 865(d) of the Code or any similar or successor
provision thereto; (f) such lease or concession will not violate or affect
any Legal Requirement or Insurance Requirement; (g) Manager shall obtain
or cause the subtenant to obtain such additional insurance coverage applicable
to the activities to be conducted in such subleased space as Owner and any
mortgagee under an Authorized Mortgage may reasonably require; and (h) not
less than twenty (20) days prior to the date on which Manager

 

104

 

proposes to enter into any sublease or concession, Manager shall
provide a copy thereof to Owner.

 

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

 

24.20                     Arbitration.

 

(a)                                  Whenever
in this Agreement it is provided that a dispute is to be resolved by an
Arbitration, such dispute shall be finally resolved pursuant to an arbitration
before a panel of three (3) arbitrators who will conduct the arbitration
proceeding in accordance with the provisions of this Agreement and the rules of
the American Arbitration Association. 
Unless otherwise mutually agreed by Owner and Manager, the arbitration
proceedings will be conducted in New York, New York.  All arbitrators appointed by or on behalf of
either party shall be independent persons with recognized expertise in the
operation of hotels of similar size and class as the Hotels with
not less than five (5) years’ experience in the hotel industry.  The party desiring
arbitration will give written notice to that effect to the other party,
specifying in such notice the name, address and professional qualifications of
the person designated as arbitrator on its behalf.  Within fifteen (15) days after service of
such notice, the other party will give written notice to the party desiring
such arbitration specifying the name, address and professional qualifications
of the person designated to act as arbitrator on its behalf.  The two arbitrators will, within fifteen (15)
days thereafter, select a third, neutral arbitrator.  As soon as possible after the selection of
the third arbitrator, and no later than fifteen (15) days thereafter, the
parties will submit their positions on each disputed item in writing to the
three arbitrators.  The decision of the
arbitrators so chosen shall be given within a period of twenty (20) days after
the appointment of such third arbitrator. 
The arbitrators must, by majority vote, agree upon and approve

 

105

 

the substantive position of either Owner or Manager with respect to
each disputed item, and are not authorized to agree upon or impose any other
substantive position which has not been presented to the arbitrators by Manager
or Owner.  It is the intention of the
parties that the arbitrators rule only on the substantive positions
submitted to them by the parties and the arbitrators are not authorized to
render rulings which are a compromise as to any such substantive position.  A decision in which any two (2) arbitrators
so appointed and acting hereunder concur in writing with respect to each
disputed item shall in all cases be binding and conclusive upon Owner and
Manager and a copy of said decision shall be forwarded to the parties.  The parties will request that the arbitrators
assess the costs and expenses of the Arbitration and their fees against the
parties based on a finding as to which parties’ substantive positions were not
upheld.  Otherwise the fees and expenses
of the Arbitration will be treated as an Operating Cost unless otherwise
determined by the arbitrators.

 

(b)                                 If
the party receiving a request for Arbitration fails to appoint its arbitrator
within the time above specified, or if the two arbitrators so selected cannot
agree on the selection of the third arbitrator within the time above specified,
then either party, on behalf of both parties, may request such appointment of
such second or third arbitrator, as the case may be, by application to any
judge of any court in New York County, New York of competent jurisdiction upon
ten (10) days’ prior written notice to the other party of such intent.

 

(c)                                  If
there shall be a dispute with respect to whether a party has unreasonably
withheld, conditioned or delayed its consent with respect to a matter for which
such party has agreed herein not to unreasonably withhold its consent, such
dispute shall be resolved by Arbitration.

 

(d)                                 Any
disputes under Sections 2.1 or 7.6 shall be resolved by
Arbitration; provided, however, notwithstanding the foregoing,
Owner shall be entitled to seek and obtain injunctive and other equitable
relief if it believes there has been a breach of Manager’s obligation under
either of said Sections.

 

24.21                     Estoppel Certificates.  Each party to this Agreement shall at any
time and from time to time, upon not less than fifteen (15) days’ prior notice
from the other party, execute, acknowledge and deliver to such other party, or
to any third party specified by such other party, a statement in writing:  (a) certifying that this Agreement is
unmodified and in full force and effect (or if there have been modifications,

 

106

 

that the same, as modified, is in full force and effect and stating the
modifications); (b) stating whether or not to the best knowledge of the
certifying party (i) there is a continuing default by the non-certifying
party in the performance or observance of any covenant, agreement or condition
contained in this Agreement, or (ii) there shall have occurred any event
which, with the giving of notice or passage of time or both, would become such
a default, and, if so, specifying each such default or occurrence of which the
certifying party may have knowledge; (c) stating the date to which
distributions of Operating Profits have been made; and (d) stating such
other information as the non-certifying party may reasonably request.  Such statement shall be binding upon the
certifying party and may be relied upon by the non-certifying party and/or such
third party specified by the non-certifying party as aforesaid, including,
without limitation, its and its Affiliates’ lenders and any prospective
purchaser or mortgagee of any Hotel.

 

24.22                     Confidentiality.

 

(a)                                  The
parties hereto agree that the matters set forth in this Agreement and the
information provided pursuant to the terms hereof are strictly confidential and
each party will make every effort to ensure that the information is not
disclosed to any outside person or entities (including the press) without the
prior written consent of the other party except as may be required by law and
as may be reasonably necessary to obtain licenses, permits, and other public
approvals necessary for the refurbishment or operation of the Hotels, or in
connection with financing, proposed financing, sale or proposed sale or as may
be required pursuant to any ground lease of the Hotels.

 

(b)                                 No
reference to Manager or to any of its Affiliates will be made in any
prospectus, private placement memorandum, offering circular or offering
documentation related thereto (collectively referred to as the “Prospectus”), issued by Owner or
any of its Affiliates, which is designated to interest potential investors in a
Hotel, unless Manager has previously received a copy of all such
references.  However, regardless of
whether Manager does or does not so receive a copy of all such references,
neither Manager nor any of its Affiliates will be deemed a sponsor of the
offering described in the Prospectus, nor will it have any responsibility for
the Prospectus, and the Prospectus will so state.  Unless Manager agrees in advance, the Prospectus
will not include any trademark, symbols, logos or designs of Manager or any of
its Affiliates.

 

107

 

(c)                                  Notwithstanding
anything to the contrary contained in this Agreement, the parties (and each
employee, representative, or other agent of the parties) may disclose to any
and all persons, without limitation of any kind, the tax treatment and tax
structure of the transaction, and all materials of any kind (including opinions
or other tax analyses) that are provided to the taxpayer relating to such tax
treatment and tax structure; provided, however, that neither
party (nor any employee, representative or other agent thereof) may disclose
any information that is not necessary to understanding the tax treatment and
tax structure of the transaction (including the identity of the parties and any
information that could lead another to determine the identity of the parties),
or any other information to the extent that such disclosure could result in a
violation of any federal or state securities law.

 

24.23                     Hotel Warranties.  Manager shall be entitled to, and shall,
enforce in the name of Owner, its Affiliates or any of Manager’s Affiliates,
any warranties held by Owner or such Affiliates with respect to the Hotels or
any portion thereof.

 

24.24                     Currency.

 

(a)                                  Except
as otherwise specifically provided herein, each reference herein to any dollar
amount is a reference to such amount of United States dollars.  All remittances to Owner hereunder shall be
in United States dollars.  To the extent
that any amount to be so remitted to Owner or transferred to the Reserve
Account is held by Manager in another currency, Manager shall exchange such
currency to United States dollars, at the best rates then commercially
reasonably available to Manager at the time of such exchange for such purpose,
and all costs of such exchange shall be an Operating Cost.  Manager shall bear no risk or responsibility
and makes herein no covenant of protection to Owner in respect of exchange rate
movements which may work adversely to the interests of Owner hereunder.

 

(b)                                 All
revenues and expenses of the Hotels which are denominated in a currency other
than United States dollars shall be recorded and reported both in United States
dollars and in the currency(ies) in which such amounts are earned or
expended.  Such other currency(ies) shall
be converted to United States dollars using a reasonable method consistent with
the Accounting Principles then employed by Manager and its Affiliates when
accounting for foreign currencies.

 

108

 

24.25                     Baltimore Hotel.

 

(a)                                  The
parties hereto acknowledge and agree that the Baltimore Hotel is part of a
larger multi-use development that includes the Baltimore Parking Garage, an
office building and residential condominiums and that, for purposes of this
Agreement, the Baltimore Hotel includes only certain specific elements of that
development.  The parties hereto
acknowledge and agree that certain building systems and costs are shared among
the various elements of such development and that Owner’s Affiliate owns other
elements in the development besides the Baltimore Hotel.  Further, shared costs are allocated amongst
the various elements of the development in accordance with the terms and
conditions of the Baltimore Declaration and the Baltimore Maintenance
Memorandum.  If a dispute should ever
arise between Owner and Owner’s Affiliate, on the one hand, and Manager, on the
other hand, with respect to the allocation of costs between the Baltimore Hotel
and the other elements in the development or with respect to the proper
classification of any element of the development as a portion of the Baltimore
Hotel or any of the other elements in the development, and the parties are not
able to resolve such dispute within thirty (30) calendar days after it arises,
such dispute shall be subject to Arbitration in accordance with Section 24.20.

 

(b)                                 To
the extent that Manager incurs any personal liability or any personal
obligation to Owner pursuant to this Agreement with respect to any matter that
is (in the reasonable opinion of Owner) covered or off-set by any liability,
obligation, representation, warranty, covenant or indemnity from Baltimore
Seller pursuant to the Baltimore Purchase Agreement, then Owner agrees to cause
Owner’s Affiliate to look to the remedies afforded to it pursuant to the
Baltimore Purchase Agreement prior to looking to any remedies afforded to Owner
under this Agreement.  To the extent that
Manager reasonably incurs any cost which constitutes an Operating Cost with
respect to any matter that is (in the reasonable opinion of Owner) covered or
off-set by any liability, obligation, representation, warranty, covenant or
indemnity from the Baltimore Sellers pursuant to the Baltimore Purchase
Agreement, then Owner and Manager agree to treat such cost as an Operating
Cost; provided, however, Owner agrees to cause Owner’s Affiliate
to look to the remedies afforded to it pursuant to the Baltimore Purchase
Agreement and, should any amount be recovered against the Baltimore Seller
pursuant to the Baltimore Purchase Agreement, then such amount shall be
included in Gross Revenues in the year in which such amount is recovered; provided,
however, all costs incurred by Owner or Owner’s Affiliate in pursuing
any actions against the Baltimore Seller (including, without limitation,

 

109

 

reasonable attorneys’ fees), shall be treated as an Operating Cost with
respect to the Baltimore Hotel.

 

(c)                                  Manager
acknowledges and agrees that, subject to the provisions of Section 24.26(a) regarding
the use of the Baltimore Valet Parking Areas and the provisions of Section 24.26
regarding the Baltimore General Parking License and the Baltimore Employee
Parking License, Owner and Owner’s Affiliates shall be free to sell and convey
such other portions of the development in which the Baltimore Hotel is located
as are not included within the Baltimore Hotel (including, without limitation,
the Baltimore Parking Garage and the “Office Building” as such term is defined
in the Declaration).

 

24.26                     Parking at the Baltimore Hotel.

 

(a)                                  Owner
and Manager acknowledge and agree that the Baltimore Valet Parking Areas and
the Baltimore Vacant Parcels are included as part of the Baltimore Hotel and
are currently used for valet parking for the guests, patrons and other users of
the Baltimore Hotel and its restaurants and other facilities.  In connection with the use of the Baltimore
Valet Parking Areas, Manager shall pay, as Operating Costs on behalf of Owner,
a fee of $4,408 per Fiscal Month (the “Baltimore Valet License Fee”) to
the owner of the Baltimore Parking Garage (which may be an Affiliate of Owner)
or its operator, as such parties may direct. 
The Baltimore Parking Fee shall be paid on or before the first day of
each Fiscal Month in advance.  Owner
acknowledges and agrees that Manager shall have continuous access to the
Baltimore Valet Parking Areas and the Baltimore Vacant Parcels, subject to and
in accordance with all of the terms and conditions of this Agreement.  In addition, Owner acknowledges and agrees
that Manager shall have the authority to designate any spaces within the
Baltimore Valet Parking Areas and the Baltimore Vacant Parcels as reserved
spaces and Manager shall have the authority to operate the Baltimore Valet
Parking Areas and the Baltimore Vacant Parcels as part of the Baltimore Hotel,
subject to and in accordance with all of the terms and conditions of this
Agreement.  Notwithstanding the fact that
the Baltimore Valet Parking Areas are considered a part of the Baltimore Hotel
for purposes of this Agreement, the owner or the operator of the Baltimore
Parking Garage shall be responsible for payment of all costs, expenses, taxes,
charges, capital expenditures, and other charges, costs and expenses related to
the ownership and general maintenance of the Baltimore Valet Parking Areas (as
opposed to the Baltimore Vacant Parcels); provided, however, in
all events Manager shall be responsible for the cost of operating the Baltimore
Valet Parking Areas and

 

110

 

for performing any improvements or alterations thereon or therein in
accordance with the terms of this Agreement.

 

(b)                                 Owner
and Manager acknowledge and agree that the parking spaces located within
Baltimore Valet Parking Areas and the Baltimore Vacant Parcels will not be
sufficient to provide parking for all guests, patrons and other users of the
Baltimore Hotel at all times and that there will be times when the guests,
patrons and other users of the Baltimore Hotel will need to use parking spaces
within the Baltimore Parking Garage (in addition to the Baltimore Valet Parking
Areas and the Baltimore Vacant Parcels) for vehicular parking purposes such as
self-parking, valet overflow parking, banquet/function parking,
restaurant/lounge parking and vendor parking. 
Accordingly, Owner has secured from Owner’s Affiliate which owns the
Baltimore Parking Garage, and Owner hereby irrevocably authorizes and licenses
Manager to use, on Owner’s behalf, a license to use one or more parking spaces
in the Baltimore Parking Garage on up to 14,250 separate occasions in the
aggregate over the course of each Fiscal Year (the “Baltimore General
Parking License”).  Each occasion or
use of a parking space in the Baltimore Parking Garage pursuant to the
Baltimore General Parking License shall be evidenced and documented by a
separate parking “ticket” or other documentation reasonably satisfactory to
Owner and the owner or operator of the Baltimore Parking Garage.  For purposes of calculating the number of
occasions or uses which remain outstanding under the Baltimore General Parking
License, Owner and Manager acknowledge and agree that overnight hotel guests
shall have “in and out” privileges with respect to the Baltimore Parking Garage
and each night for which an overnight hotel guest parks a car in the Baltimore
Parking Garage shall constitute one separate occasion or use under the
Baltimore General Parking.  The use of
parking spaces in the Baltimore Parking Garage pursuant to the Baltimore
General Parking License shall be on a first-come, first-served basis in common
with members of the general public.  In
connection with the Baltimore General Parking License, Manager shall pay, as
Operating Costs on behalf of Owner, a fee for the use of such parking spaces as
set forth on Exhibit F attached hereto and made a part hereof,
which fees shall be subject to increase as set forth on Exhibit F
(as such charges may be increased from time to time, the “Baltimore General
Parking License Fees”).  The
Baltimore General Parking License Fees shall be paid by Manager to the owner or
operator of the Baltimore Parking Garage (which may be an affiliate of Owner)
within ten (10) business days after the end of each Fiscal Month.  Manager shall keep a separate record of the
number of

 

111

 

occurrences or uses of the Baltimore General Parking License and shall
provide such information to the Owner together with the operating statements to
be provided under Section 8.1(b). 
Once the entire allotment of uses or occasions pursuant to the Baltimore
General Parking License in any given Fiscal Year has been used, Manager, on
behalf of Owner, shall negotiate directly with the owner and/or operator of the
Baltimore Parking Garage regarding the terms and conditions on which Manager,
on behalf of Owner, may use the Baltimore Parking Garage for the remainder of
such Fiscal Year; provided, however, that for the 2006 Fiscal
Year, Owner shall cause the owner and/or operator of the Baltimore Parking
Garage not to charge more than the Baltimore General Parking License Fees for
such additional parking privileges.  The
term of the Baltimore General Parking License shall be coterminous with the
Term of this Agreement with respect to the Baltimore Hotel.

 

(c)                                  In
addition to the Baltimore General Parking License, Owner has secured from Owner’s
Affiliate which owns the Baltimore Parking Garage, and Owner hereby irrevocably
authorizes and licenses Manager to use, on Owner’s behalf, a license to use a
total of eighty-two (82) parking spaces (the “Baltimore Employee Parking
License”) within the Baltimore Parking Garage for monthly parking for
Manager’s employees.  The first forty-six
(46) such spaces shall be made available at a rate of $86.00 per month and the
remaining thirty-six (36) such spaces shall be made available at a rate of
$46.00 per month (the “Baltimore Employee Parking Licensee Fee”); provided,
however, that commencing on January 1, 2007 and on every fifth (5th)
anniversary of such date thereafter throughout the Term with respect to the
Baltimore Hotel, the Baltimore Employee Parking License Fee shall be adjusted
upward by the percentage increase in the Consumer Price Index most recently
promulgated as of such January 1st over the Consumer Price
Index that had been most recently promulgated for the January 1st
that was five (5) years prior thereto. 
The Baltimore Employee Parking License may not be used by anyone other
than Manager’s employees and/or short term contractual workers who are employed
at the Baltimore Hotel.  The use of
parking spaces in the Baltimore Parking Garage pursuant to the Baltimore
Employee Parking License shall be on a first-come, first-served basis in common
with members of the general public; provided, however, Manager
shall cause its employees who use the Baltimore Employee Parking License to
park in those portions of the Baltimore Parking Garage which are farthest away
from the Baltimore Hotel so that the spaces which provide the most convenient
access to the Baltimore Hotel remain available for use by the general public
and the guests, patrons 

 

112

 

and other users of the Baltimore Hotel (other than Manager’s
employees).

 

(d)                                 If
there shall be less than an aggregate total of sixty (60) permanent reserved
and exclusive valet parking spaces available to the Owner and Manager between
the Baltimore Valet Parking Areas and the Baltimore Vacant Parcels, then
Manager shall notify Owner thereof.  Within
thirty (30) days after such notification, Owner shall cause the owner of the
Baltimore Parking Garage to grant to Owner a number of exclusive reserved
parking spaces in the Baltimore Parking Garage, so that there shall be an
aggregate total of sixty (60) reserved and exclusive valet parking spaces
available to the Owner and Manager amongst Baltimore Valet Parking Areas, the
Baltimore Vacant Parcels and the Baltimore Parking Garage.  Owner shall be responsible, at Owner’s sole
cost and expense, for any fees or charges imposed by the owner of the Baltimore
Parking Garage in connection with such additional spaces (and such costs shall
not be treated as Operating Costs).  The
location of the such additional spaces shall be approved by Manager, in its
reasonable discretion, and Manager shall have the right to designate such
spaces as reserved.

 

(e)                                  Owner
shall cause the owner of the Baltimore Parking Garage to enter into a parking
management agreement on a form which has been approved by Manager, in its reasonable
discretion, for the operation and management of the Baltimore Parking Garage,
on or before the Effective Date with respect to the Baltimore Hotel and from
time to time thereafter.  Any such
management agreement shall be terminable upon not more than thirty (30) days’
prior notice.  Owner acknowledges that
parking is of critical importance to the operation and revenue generation of
the Baltimore Hotel and that the Baltimore Parking Garage should be managed and
operated with the objectives of maintaining and operating the Baltimore Parking
Garage in a first class standard, maximizing and enhancing the Baltimore
Parking Garage guest experience and providing adequate access to parking for
the guests and patrons of the Baltimore Hotel. 
If Owner and Manager reasonably determine that the parking garage
manager is not complying with the terms of the Baltimore General Parking
License or fulfilling such objectives, Owner shall cause the owner of the
Baltimore Parking Garage to terminate the parking management agreement and to
hire a new operator for the Baltimore Parking Garage.  If there is a disagreement between Owner and
Manager regarding whether or not such paring garage operator is complying with
the term of the Baltimore General Parking License or fulfilling its primary
objective, such 

 

113

 

dispute shall be settled by Arbitration in accordance with Section 24.20.

 

(f)                                    Owner
and Manager acknowledge and agree that Manager shall monitor the security
cameras located within the Baltimore Parking Garage, but in no event shall
Manager have any other responsibility or liability for providing any other
security services to any portion of the development within which the Baltimore
Hotel is located (other than the Baltimore Hotel).

 

24.27                     Independent Covenants.  The obligations of each party hereunder shall
be separate and independent covenants and agreements.

 

24.28                     Amendment and Restatement.  This Agreement amends,
restates and replaces the Original Management Agreement in its entirety; provided,
however, that nothing contained in this Agreement shall be deemed to
modify, diminish, impair or otherwise affect the rights, duties and obligations
of the parties under the Original Management Agreement from time to time prior to
the date of this Agreement.  Unless
otherwise expressly provided in this Agreement, the representations and
warranties in this Agreement were true and correct as of each applicable
Effective Date and as of the date hereof and the other terms, covenants and
conditions to be performed by each of the parties hereto shall be deemed to
have commenced as of the applicable Effective Date.

 

114

 

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

 

	
   

  	
  OWNER:

  
	
   

  	
   

  	
   

  
	
   

  	
  HPT TRS IHG-2, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
   

  	
   

  	
  John G. Murray

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MANAGER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  IHG MANAGEMENT (MARYLAND) LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Chitty

  	
   

  
	
   

  	
   

  	
  Robert J. Chitty

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INTERCONTINENTAL HOTELS GROUP

  (CANADA), INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Chitty

  	
   

  
	
   

  	
   

  	
  Robert J. Chitty

  
	
   

  	
   

  	
  Vice President

  
								

 

115

 

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

 

	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  HPT IHG-2 PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
   

  	
   

  	
  John G. Murray

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HPT IHG GA PROPERTIES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
   

  	
   

  	
  John G. Murray

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HPT IHG CANADA PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
   

  	
   

  	
  John G. Murray

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HH HPTCW II PROPERTIES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
   

  	
   

  	
  John G. Murray

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HARBOR COURT ASSOCIATES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  	
   

  
	
   

  	
   

  	
  John G. Murray

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  Date of Execution: January 6, 2006

  
										

 

116

 

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

 

	
  Exhibit

  	
   

  	
  Document

  
	
   

  	
   

  	
   

  
	
  A-1 through

  A-13

  	
   

  	
  The Sites

  
	
   

  	
   

  	
   

  
	
  B

  	
   

  	
  Intentionally Deleted

  
	
   

  	
   

  	
   

  
	
  C

  	
   

  	
  Allocation Of Owner’s Fixed Priority

  
	
   

  	
   

  	
   

  
	
  D

  	
   

  	
  Restricted Area

  
	
   

  	
   

  	
   

  
	
  E

  	
   

  	
  Assignment and Assumption of
  Management Agreement

  
	
   

  	
   

  	
   

  
	
  F

  	
   

  	
  Baltimore General Parking License Fees

  

 

F - 1

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  “8.1(c) Statement”

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  “Accounting Principles”

  	
   

  	
  1

  
	
  1.3

  	
   

  	
  “Affiliate”

  	
   

  	
  2

  
	
  1.4

  	
   

  	
  “Agreed Upon Procedure Letter”

  	
   

  	
  2

  
	
  1.5

  	
   

  	
  “Agreement”

  	
   

  	
  2

  
	
  1.6

  	
   

  	
  “Anaheim Condemnation”

  	
   

  	
  3

  
	
  1.7

  	
   

  	
  “Arbitration”

  	
   

  	
  3

  
	
  1.8

  	
   

  	
  “Austin Hotel”

  	
   

  	
  3

  
	
  1.9

  	
   

  	
  “Authorized Mortgage”

  	
   

  	
  3

  
	
  1.10

  	
   

  	
  “Award”

  	
   

  	
  3

  
	
  1.11

  	
   

  	
  “Baltimore Central
  Plant”

  	
   

  	
  3

  
	
  1.12

  	
   

  	
  “Baltimore
  Declaration”

  	
   

  	
  3

  
	
  1.13

  	
   

  	
  “Baltimore Employee
  Parking License”

  	
   

  	
  4

  
	
  1.14

  	
   

  	
  “Baltimore Employee
  Parking License Fees”

  	
   

  	
  4

  
	
  1.15

  	
   

  	
  “Baltimore General
  Parking License”

  	
   

  	
  4

  
	
  1.16

  	
   

  	
  “Baltimore General
  Parking License Fees”

  	
   

  	
  4

  
	
  1.17

  	
   

  	
  “Baltimore Health
  Club”

  	
   

  	
  4

  
	
  1.18

  	
   

  	
  “Baltimore Hotel”

  	
   

  	
  4

  
	
  1.19

  	
   

  	
  “Baltimore
  Maintenance Memorandum”

  	
   

  	
  4

  
	
  1.20

  	
   

  	
  “Baltimore Parking
  Garage”

  	
   

  	
  4

  
	
  1.21

  	
   

  	
  “Baltimore Purchase
  Agreement”

  	
   

  	
  4

  
	
  1.22

  	
   

  	
  “Baltimore
  Rebranding Amounts”

  	
   

  	
  4

  
	
  1.23

  	
   

  	
  “Baltimore Seller”

  	
   

  	
  5

  
	
  1.24

  	
   

  	
  “Baltimore Site”

  	
   

  	
  5

  
	
  1.25

  	
   

  	
  “Baltimore Vacant
  Parcels”

  	
   

  	
  5

  
	
  1.26

  	
   

  	
  “Baltimore Valet
  License Fee”

  	
   

  	
  5

  
	
  1.27

  	
   

  	
  “Baltimore Valet
  Parking Areas”

  	
   

  	
  5

  
	
  1.28

  	
   

  	
  “Bank Accounts”

  	
   

  	
  5

  
	
  1.29

  	
   

  	
  “Base Management
  Fee”

  	
   

  	
  5

  
	
  1.30

  	
   

  	
  “Base Priority
  Amount”

  	
   

  	
  5

  
	
  1.31

  	
   

  	
  “Base Year”

  	
   

  	
  6

  
	
  1.32

  	
   

  	
  “Brand”

  	
   

  	
  6

  
	
  1.33

  	
   

  	
  “Brand Standards”

  	
   

  	
  6

  
	
  1.34

  	
   

  	
  “Buildings”

  	
   

  	
  7

  
	
  1.35

  	
   

  	
  “Business Day”

  	
   

  	
  7

  
	
  1.36

  	
   

  	
  “Canadian Consumer
  Price Index”

  	
   

  	
  7

  
	
  1.37

  	
   

  	
  “Canadian Hotel”

  	
   

  	
  7

  
	
  1.38

  	
   

  	
  “Canadian Manager”

  	
   

  	
  7

  
	
  1.39

  	
   

  	
  “Canadian Services”

  	
   

  	
  8

  
	
  1.40

  	
   

  	
  “Capital
  Replacements”

  	
   

  	
  8

  
	
  1.41

  	
   

  	
  “Capital
  Replacements Budget”

  	
   

  	
  8

  
	
  1.42

  	
   

  	
  “Closing”

  	
   

  	
  8

  
	
  1.43

  	
   

  	
  “Code”

  	
   

  	
  8

  

i

 

	
  1.44

  	
   

  	
  “Collateral Agency
  Agreement”

  	
   

  	
  8

  
	
  1.45

  	
   

  	
  “Collateral Agent”

  	
   

  	
  8

  
	
  1.46

  	
   

  	
  “Competitor”

  	
   

  	
  8

  
	
  1.47

  	
   

  	
  “Condemnation”

  	
   

  	
  8

  
	
  1.48

  	
   

  	
  “Condemnor”

  	
   

  	
  8

  
	
  1.49

  	
   

  	
  “Consolidated
  Financials”

  	
   

  	
  8

  
	
  1.50

  	
   

  	
  “Consumer Price
  Index”

  	
   

  	
  9

  
	
  1.51

  	
   

  	
  “Crowne Plaza
  Hotels”

  	
   

  	
  9

  
	
  1.52

  	
   

  	
  “Debt Service
  Coverage Ratio”

  	
   

  	
  9

  
	
  1.53

  	
   

  	
  “Deposit”

  	
   

  	
  9

  
	
  1.54

  	
   

  	
  “Deposit Agreement”

  	
   

  	
  9

  
	
  1.55

  	
   

  	
  “Disbursement Rate”

  	
   

  	
  9

  
	
  1.56

  	
   

  	
  “Effective Date”

  	
   

  	
  9

  
	
  1.57

  	
   

  	
  “Environmental
  Notice”

  	
   

  	
  10

  
	
  1.58

  	
   

  	
  “Expiration Date”

  	
   

  	
  10

  
	
  1.59

  	
   

  	
  “Fiscal Month”

  	
   

  	
  10

  
	
  1.60

  	
   

  	
  “Fiscal Year”

  	
   

  	
  10

  
	
  1.61

  	
   

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

  	
   

  	
  10

  
	
  1.62

  	
   

  	
  “Government
  Agencies”

  	
   

  	
  10

  
	
  1.63

  	
   

  	
  “Gross Revenues”

  	
   

  	
  11

  
	
  1.64

  	
   

  	
  “GST”

  	
   

  	
  12

  
	
  1.65

  	
   

  	
  “Guarantor”

  	
   

  	
  12

  
	
  1.66

  	
   

  	
  “Guaranty”

  	
   

  	
  12

  
	
  1.67

  	
   

  	
  “Hazardous
  Substances”

  	
   

  	
  12

  
	
  1.68

  	
   

  	
  “Holiday Inn Hotels”

  	
   

  	
  13

  
	
  1.69

  	
   

  	
  “Hotel”

  	
   

  	
  13

  
	
  1.70

  	
   

  	
  “HPT”

  	
   

  	
  13

  
	
  1.71

  	
   

  	
  “IHG”

  	
   

  	
  13

  
	
  1.72

  	
   

  	
  “IHG Canada”

  	
   

  	
  13

  
	
  1.73

  	
   

  	
  “IHG Maryland”

  	
   

  	
  13

  
	
  1.74

  	
   

  	
  “Incentive
  Management Fee”

  	
   

  	
  13

  
	
  1.75

  	
   

  	
  “Initial Term”

  	
   

  	
  13

  
	
  1.76

  	
   

  	
  “Initial Working
  Capital”

  	
   

  	
  13

  
	
  1.77

  	
   

  	
  “Insurance
  Requirements”

  	
   

  	
  14

  
	
  1.78

  	
   

  	
  “Intellectual
  Property”

  	
   

  	
  14

  
	
  1.79

  	
   

  	
  “InterContinental
  Hotels”

  	
   

  	
  14

  
	
  1.80

  	
   

  	
  “Interest Rate”

  	
   

  	
  14

  
	
  1.81

  	
   

  	
  “Lease”

  	
   

  	
  14

  
	
  1.82

  	
   

  	
  “Legal Requirements”

  	
   

  	
  14

  
	
  1.83

  	
   

  	
  “Management Fees”

  	
   

  	
  14

  
	
  1.84

  	
   

  	
  “Manager”

  	
   

  	
  15

  
	
  1.85

  	
   

  	
  “Manager Default”

  	
   

  	
  15

  
	
  1.86

  	
   

  	
  “Manager Event of
  Default”

  	
   

  	
  15

  
	
  1.87

  	
   

  	
  “Material Repair”

  	
   

  	
  15

  
	
  1.88

  	
   

  	
  “New Management
  Agreement”

  	
   

  	
  15

  
	
  1.89

  	
   

  	
  “NOI”

  	
   

  	
  15

  
	
  1.90

  	
   

  	
  “Non-Economic Hotel”

  	
   

  	
  15

  

 

ii

 

	
  1.91

  	
   

  	
  “Offer”

  	
   

  	
  15

  
	
  1.92

  	
   

  	
  “Officer’s
  Certificate”

  	
   

  	
  16

  
	
  1.93

  	
   

  	
  “Operating Costs”

  	
   

  	
  16

  
	
  1.94

  	
   

  	
  “Operating
  Equipment”

  	
   

  	
  18

  
	
  1.95

  	
   

  	
  “Operating Profit”

  	
   

  	
  18

  
	
  1.96

  	
   

  	
  “Operating
  Standards”

  	
   

  	
  18

  
	
  1.97

  	
   

  	
  “Operating Supplies”

  	
   

  	
  18

  
	
  1.98

  	
   

  	
  “Original
  Management Agreement”

  	
   

  	
  18

  
	
  1.99

  	
   

  	
  “Other Documents”

  	
   

  	
  18

  
	
  1.100

  	
   

  	
  “Owner”

  	
   

  	
  18

  
	
  1.101

  	
   

  	
  “Owner’s First
  Priority”

  	
   

  	
  18

  
	
  1.102

  	
   

  	
  “Owner’s First
  Priority Adjustment Rate”

  	
   

  	
  19

  
	
  1.103

  	
   

  	
  “Owner’s Fixed
  Priority”

  	
   

  	
  19

  
	
  1.104

  	
   

  	
  “Owner’s Percentage
  Priority”

  	
   

  	
  19

  
	
  1.105

  	
   

  	
  “Owner’s Second
  Priority”

  	
   

  	
  19

  
	
  1.106

  	
   

  	
  “Parent”

  	
   

  	
  19

  
	
  1.107

  	
   

  	
  “Person”

  	
   

  	
  19

  
	
  1.108

  	
   

  	
  “Pledged Hotels”

  	
   

  	
  20

  
	
  1.109

  	
   

  	
  “Pooled FF&E
  Hotels”

  	
   

  	
  20

  
	
  1.110

  	
   

  	
  “PR Guaranty”

  	
   

  	
  20

  
	
  1.111

  	
   

  	
  “PR Indemnity”

  	
   

  	
  20

  
	
  1.112

  	
   

  	
  “PR Lease”

  	
   

  	
  20

  
	
  1.113

  	
   

  	
  “PR Property”

  	
   

  	
  20

  
	
  1.114

  	
   

  	
  “PR Stock Agreement”

  	
   

  	
  20

  
	
  1.115

  	
   

  	
  “PR Tenant”

  	
   

  	
  20

  
	
  1.116

  	
   

  	
  “Principal
  Documents”

  	
   

  	
  20

  
	
  1.117

  	
   

  	
  “Priority Coverage
  Ratio”

  	
   

  	
  20

  
	
  1.118

  	
   

  	
  “Purchase Agreement”

  	
   

  	
  21

  
	
  1.119

  	
   

  	
  “Purchaser”

  	
   

  	
  21

  
	
  1.120

  	
   

  	
  “Renewal Terms”

  	
   

  	
  21

  
	
  1.121

  	
   

  	
  “Repairs”

  	
   

  	
  21

  
	
  1.122

  	
   

  	
  “Replacement
  Property”

  	
   

  	
  21

  
	
  1.123

  	
   

  	
  “Reservation System”

  	
   

  	
  21

  
	
  1.124

  	
   

  	
  “Reserve Account”

  	
   

  	
  21

  
	
  1.125

  	
   

  	
  “Reserve Effective
  Date”

  	
   

  	
  22

  
	
  1.126

  	
   

  	
  “Reserve Percentage”

  	
   

  	
  22

  
	
  1.127

  	
   

  	
  “Residual
  Distribution”

  	
   

  	
  22

  
	
  1.128

  	
   

  	
  “Restricted Area”

  	
   

  	
  22

  
	
  1.129

  	
   

  	
  “Restricted Period”

  	
   

  	
  22

  
	
  1.130

  	
   

  	
  “Rooms Revenue”

  	
   

  	
  22

  
	
  1.131

  	
   

  	
  “RST”

  	
   

  	
  22

  
	
  1.132

  	
   

  	
  “Sales Tax”

  	
   

  	
  23

  
	
  1.133

  	
   

  	
  “Secured
  Obligations”

  	
   

  	
  23

  
	
  1.134

  	
   

  	
  “Severance Date”

  	
   

  	
  23

  
	
  1.135

  	
   

  	
  “Sites”

  	
   

  	
  23

  
	
  1.136

  	
   

  	
  “Specially
  Designated or Blocked Person”

  	
   

  	
  23

  
	
  1.137

  	
   

  	
  “Staybridge Hotels”

  	
   

  	
  23

  

 

iii

 

	
  1.138

  	
   

  	
  “Subsidiary”

  	
   

  	
  23

  
	
  1.139

  	
   

  	
  “Substitute Tenant”

  	
   

  	
  23

  
	
  1.140

  	
   

  	
  “Successor
  Purchaser”

  	
   

  	
  23

  
	
  1.141

  	
   

  	
  “System Fees”

  	
   

  	
  23

  
	
  1.142

  	
   

  	
  “System Marks”

  	
   

  	
  24

  
	
  1.143

  	
   

  	
  “Term”

  	
   

  	
  24

  
	
  1.144

  	
   

  	
  “Transaction
  Documents”

  	
   

  	
  24

  
	
  1.145

  	
   

  	
  “Transferred Hotel”

  	
   

  	
  24

  
	
  1.146

  	
   

  	
  “Uniform System of
  Accounts”

  	
   

  	
  24

  
	
  1.147

  	
   

  	
  “Ultimate Parent”

  	
   

  	
  24

  
	
  1.148

  	
   

  	
  “Unsuitable for Its
  Permitted Use”

  	
   

  	
  24

  
	
  1.149

  	
   

  	
  “Working Capital”

  	
   

  	
  25

  
	
  1.150

  	
   

  	
  “Yearly Budget”

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
  SCOPE OF AGREEMENT

  	
   

  	
  25

  
	
  2.1

  	
   

  	
  Engagement of Manager

  	
   

  	
  25

  
	
  2.2

  	
   

  	
  Additional Services

  	
   

  	
  28

  
	
  2.3

  	
   

  	
  Use of Hotels

  	
   

  	
  28

  
	
  2.4

  	
   

  	
  Right to Inspect

  	
   

  	
  29

  
	
  2.5

  	
   

  	
  No Right of Offset

  	
   

  	
  29

  
	
  2.6

  	
   

  	
  Condition of the Hotels

  	
   

  	
  29

  
	
  2.7

  	
   

  	
  Non-Economic Hotels

  	
   

  	
  30

  
	
  2.8

  	
   

  	
  No Early Termination of Manager;
  Nature of Relationship etc.

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
  TERM AND RENEWALS

  	
   

  	
  33

  
	
  3.1

  	
   

  	
  Term

  	
   

  	
  33

  
	
  3.2

  	
   

  	
  Renewal Term

  	
   

  	
  33

  
	
  3.3

  	
   

  	
  Owner’s Termination Right at End
  of Term

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  	
  TITLE TO HOTEL

  	
   

  	
  34

  
	
  4.1

  	
   

  	
  Covenants of Title

  	
   

  	
  34

  
	
  4.2

  	
   

  	
  Non-Disturbance

  	
   

  	
  34

  
	
  4.3

  	
   

  	
  Financing

  	
   

  	
  35

  
	
  4.4

  	
   

  	
  Sale of a Hotel to an Affiliate

  	
   

  	
  37

  
	
  4.5

  	
   

  	
  Sale of All the Hotels

  	
   

  	
  38

  
	
  4.6

  	
   

  	
  The Lease

  	
   

  	
  38

  
	
  4.7

  	
   

  	
  Restricted Sale

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
  REQUIRED FUNDS

  	
   

  	
  38

  
	
  5.1

  	
   

  	
  Working Capital

  	
   

  	
  38

  
	
  5.2

  	
   

  	
  Reserve Account

  	
   

  	
  40

  
	
  5.3

  	
   

  	
  Additional Requirements for
  Reserve

  	
   

  	
  44

  
	
  5.4

  	
   

  	
  Ownership of Replacements

  	
   

  	
  44

  
	
  5.5

  	
   

  	
  No Additional Contributions

  	
   

  	
  44

  
	
  5.6

  	
   

  	
  Pooled Reserves

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  	
  BRAND STANDARDS AND MANAGER’S
  CONTROL

  	
   

  	
  44

  

 

iv

 

	
  6.1

  	
   

  	
  Brand Standards

  	
   

  	
  44

  
	
  6.2

  	
   

  	
  Manager’s Control

  	
   

  	
  45

  
	
  6.3

  	
   

  	
  Arbitration

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  	
  OPERATION OF THE HOTEL

  	
   

  	
  45

  
	
  7.1

  	
   

  	
  Permits

  	
   

  	
  45

  
	
  7.2

  	
   

  	
  Equipment and Supplies

  	
   

  	
  46

  
	
  7.3

  	
   

  	
  Personnel

  	
   

  	
  46

  
	
  7.4

  	
   

  	
  Sales, Marketing and Advertising

  	
   

  	
  48

  
	
  7.5

  	
   

  	
  Reservation and Communication
  Services

  	
   

  	
  49

  
	
  7.6

  	
   

  	
  Maintenance and Repairs

  	
   

  	
  50

  
	
  7.7

  	
   

  	
  Material Repairs

  	
   

  	
  51

  
	
  7.8

  	
   

  	
  Liens; Credit

  	
   

  	
  52

  
	
  7.9

  	
   

  	
  Real Estate and Personal
  Property Taxes

  	
   

  	
  52

  
	
  7.10

  	
   

  	
  GST and RST

  	
   

  	
  52

  
	
  7.11

  	
   

  	
  Contest

  	
   

  	
  53

  
	
  7.12

  	
   

  	
  Privacy

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  	
  FISCAL MATTERS

  	
   

  	
  53

  
	
  8.1

  	
   

  	
  Accounting Matters

  	
   

  	
  53

  
	
  8.2

  	
   

  	
  Yearly Budgets

  	
   

  	
  56

  
	
  8.3

  	
   

  	
  Bank Accounts

  	
   

  	
  58

  
	
  8.4

  	
   

  	
  Consolidated Financials

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  	
  FEES TO MANAGER

  	
   

  	
  59

  
	
  9.1

  	
   

  	
  Management Fees

  	
   

  	
  59

  
	
  9.2

  	
   

  	
  System Fees

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  	
  DISBURSEMENTS

  	
   

  	
  61

  
	
  10.1

  	
   

  	
  Disbursement of Funds

  	
   

  	
  61

  
	
  10.2

  	
   

  	
  Residual Distribution

  	
   

  	
  63

  
	
  10.3

  	
   

  	
  Owner’s First Priority

  	
   

  	
  64

  
	
  10.4

  	
   

  	
  Owner’s Percentage Priority

  	
   

  	
  65

  
	
  10.5

  	
   

  	
  Owner’s Second Priority

  	
   

  	
  65

  
	
  10.6

  	
   

  	
  No Interest

  	
   

  	
  65

  
	
  10.7

  	
   

  	
  Calculation of Interim
  Disbursements

  	
   

  	
  65

  
	
  10.8

  	
   

  	
  Amounts Outstanding at End of
  Term

  	
   

  	
  66

  
	
  10.9

  	
   

  	
  Allocation of Owner’s Fixed
  Priority

  	
   

  	
  66

  
	
  10.10

  	
   

  	
  Survival

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
   

  	
  CERTAIN OTHER SERVICES

  	
   

  	
  66

  
	
  11.1

  	
   

  	
  Optional Services

  	
   

  	
  66

  
	
  11.2

  	
   

  	
  Purchasing

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
   

  	
  SIGNS AND SERVICE MARKS

  	
   

  	
  67

  
	
  12.1

  	
   

  	
  Signs

  	
   

  	
  67

  
	
  12.2

  	
   

  	
  System Marks

  	
   

  	
  67

  
	
  12.3

  	
   

  	
  System Mark Litigation

  	
   

  	
  68

  

 

v

 

	
  12.4

  	
   

  	
  Other Intellectual Property
  Provisions

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
   

  	
  INSURANCE

  	
   

  	
  69

  
	
  13.1

  	
   

  	
  Insurance Coverage

  	
   

  	
  69

  
	
  13.2

  	
   

  	
  Insurance Policies

  	
   

  	
  71

  
	
  13.3

  	
   

  	
  Insurance Certificates

  	
   

  	
  72

  
	
  13.4

  	
   

  	
  Insurance Proceeds

  	
   

  	
  72

  
	
  13.5

  	
   

  	
  Manager’s Insurance Program

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
   

  	
  INDEMNIFICATION AND WAIVER OF
  SUBROGATION

  	
   

  	
  73

  
	
  14.1

  	
   

  	
  Indemnification

  	
   

  	
  73

  
	
  14.2

  	
   

  	
  Waiver of Subrogation

  	
   

  	
  73

  
	
  14.3

  	
   

  	
  Survival

  	
   

  	
  74

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
   

  	
  DAMAGE TO AND DESTRUCTION OF THE
  HOTEL

  	
   

  	
  74

  
	
  15.1

  	
   

  	
  Termination

  	
   

  	
  74

  
	
  15.2

  	
   

  	
  Restoration

  	
   

  	
  75

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 16

  	
   

  	
  CONDEMNATION

  	
   

  	
  76

  
	
  16.1

  	
   

  	
  Total Condemnation

  	
   

  	
  76

  
	
  16.2

  	
   

  	
  Partial Condemnation

  	
   

  	
  77

  
	
  16.3

  	
   

  	
  Temporary Condemnation

  	
   

  	
  78

  
	
  16.4

  	
   

  	
  Anaheim Taking

  	
   

  	
  78

  
	
  16.5

  	
   

  	
  Baltimore Taking

  	
   

  	
  78

  
	
  16.6

  	
   

  	
  Effect of Condemnation

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 17

  	
   

  	
  DEFAULT AND TERMINATION

  	
   

  	
  79

  
	
  17.1

  	
   

  	
  Manager Events of Default

  	
   

  	
  79

  
	
  17.2

  	
   

  	
  Remedies for Manager Defaults

  	
   

  	
  81

  
	
  17.3

  	
   

  	
  Owner Events of Default and
  Remedies for Owner Defaults

  	
   

  	
  82

  
	
  17.4

  	
   

  	
  Post Termination Obligations

  	
   

  	
  83

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 18

  	
   

  	
  NOTICES

  	
   

  	
  85

  
	
  18.1

  	
   

  	
  Procedure

  	
   

  	
  85

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 19

  	
   

  	
  RELATIONSHIP, AUTHORITY AND
  FURTHER ACTIONS

  	
   

  	
  87

  
	
  19.1

  	
   

  	
  Relationship

  	
   

  	
  87

  
	
  19.2

  	
   

  	
  Further Actions

  	
   

  	
  87

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 20

  	
   

  	
  APPLICABLE LAW

  	
   

  	
  87

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 21

  	
   

  	
  SUCCESSORS AND ASSIGNS

  	
   

  	
  88

  
	
  21.1

  	
   

  	
  Assignment

  	
   

  	
  88

  
	
  21.2

  	
   

  	
  Binding Effect

  	
   

  	
  91

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 22

  	
   

  	
  RECORDING

  	
   

  	
  92

  
	
  22.1

  	
   

  	
  Memorandum of Agreement

  	
   

  	
  92

  

 

vi

 

	
  ARTICLE 23

  	
   

  	
  FORCE MAJEURE

  	
   

  	
  92

  
	
  23.1

  	
   

  	
  Operation of Hotel

  	
   

  	
  92

  
	
  23.2

  	
   

  	
  Extension of Time

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 24

  	
   

  	
  GENERAL PROVISIONS

  	
   

  	
  92

  
	
  24.1

  	
   

  	
  Trade Area Restriction

  	
   

  	
  92

  
	
  24.2

  	
   

  	
  Environmental Matters

  	
   

  	
  94

  
	
  24.3

  	
   

  	
  Authorization

  	
   

  	
  96

  
	
  24.4

  	
   

  	
  Severability

  	
   

  	
  96

  
	
  24.5

  	
   

  	
  Merger

  	
   

  	
  96

  
	
  24.6

  	
   

  	
  Formalities

  	
   

  	
  96

  
	
  24.7

  	
   

  	
  Consent to Jurisdiction; No Jury
  Trial

  	
   

  	
  97

  
	
  24.8

  	
   

  	
  Performance on Business Days

  	
   

  	
  97

  
	
  24.9

  	
   

  	
  Attorneys’ Fees

  	
   

  	
  97

  
	
  24.10

  	
   

  	
  Section and Other Headings

  	
   

  	
  97

  
	
  24.11

  	
   

  	
  Documents

  	
   

  	
  97

  
	
  24.12

  	
   

  	
  No Consequential Damages

  	
   

  	
  98

  
	
  24.13

  	
   

  	
  No Political Contributions

  	
   

  	
  98

  
	
  24.14

  	
   

  	
  REIT Qualification

  	
   

  	
  98

  
	
  24.15

  	
   

  	
  Further Compliance with Section 856(d) of
  the Code

  	
   

  	
  99

  
	
  24.16

  	
   

  	
  Adverse Regulatory Event

  	
   

  	
  101

  
	
  24.17

  	
   

  	
  Adverse Canadian Event

  	
   

  	
  101

  
	
  24.18

  	
   

  	
  Commercial Leases

  	
   

  	
  104

  
	
  24.19

  	
   

  	
  Nonliability of Trustees

  	
   

  	
  105

  
	
  24.20

  	
   

  	
  Arbitration

  	
   

  	
  105

  
	
  24.21

  	
   

  	
  Estoppel Certificates

  	
   

  	
  106

  
	
  24.22

  	
   

  	
  Confidentiality

  	
   

  	
  107

  
	
  24.23

  	
   

  	
  Hotel Warranties

  	
   

  	
  108

  
	
  24.24

  	
   

  	
  Currency

  	
   

  	
  108

  
	
  24.25

  	
   

  	
  Baltimore Hotel

  	
   

  	
  108

  
	
  24.26

  	
   

  	
  Parking at the Baltimore Hotel

  	
   

  	
  110

  
	
  24.27

  	
   

  	
  Independent Covenants

  	
   

  	
  114

  
	
  24.28

  	
   

  	
  Amendment and Restatement

  	
   

  	
  114

  

 

vii

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}]]