Document:

EXHIBIT
10.3

 

FRANCHISE
LICENSE AGREEMENT

 

HILTON SAN FRANCISCO FINANCIAL DISTRICT

 

SAN FRANCISCO, CA

 

	 

     

     

    

 

Table
of Contents

 

	Section	 	Page
    No.
	 	 	 
	1.  Definitions	1
	a.	The Hotel.	1
	b.	The Marks.	1
	c.	The System.	1
	d.	The Manual.	2
	e.	Including.	2
	f.	License Term.	2
	 	 	 
	2.  Grant of License	2
	 	 	 
	3.  Our Responsibilities	2
	a.	Training.	2
	b.	Reservation Services.	2
	c.	Consultation.	2
	d.	Arrangements for Marketing, Etc.	2
	e.	Inspections/Compliance Assistance.	3
	f.	Manual.	3
	g.	Equipment and Supplies.	3
	 	 	 
	4.  Proprietary Rights	3
	 	 
	5.  Proprietary Marks	4
	a.	Use of Trade Name.	4
	b.	Trademark Disputes.	4
	c.	Web Sites.	4
	d.	Covenant.	5
	 	 	 
	6.  Your Responsibilities	5
	a.	Operational and Other Requirements.	5
	b.	Hotel Quality Assurance.	9
	c.	Staff and Management.	9
	 	 	 
	7.  Fees	9
	a.	Monthly Fees.	9
	b.	Determination and Payment of Fees.	9
	c.	Room Addition Fee.	10
	d.	Other Fees.	10
	e.	Taxes.	10
	f.	Application of Fees.	10
	 	 	 
	8.  Records and Audits	10
	a.	Reports.	10
	b.	Maintenance of Records.	10
	c.	Audit.	11
	d.	Ownership of Information.	11
	 	 	 
	9.  Indemnity	11
	 	 
	10.  Right of First Offer: INTENTIONALLY DELETED	12
	 	 
	11.  Transfer	12
	a.	Our Transfer of this Agreement.	12

 

    	i

    	 

    

 

	b.	Your Transfer.	12
	 	 	 
	12.  Condemnation and Casualty	16
	a.	Condemnation.	16
	b.	Casualty.	17
	c.	No Extensions of Term.	17
	 	 	 
	13.  Term of License.	17
	 	 
	14.  Termination	17
	a.	Termination or Suspension by Us on Advance Notice.	17
	b.	Immediate Termination by Us.	19
	c.	Liquidated Damages upon Termination by Us.	21
	d.	De-identification of Hotel Upon Termination.	21
	e.	Special Termination.	21
	 	 	 
	15.  Relationship of Parties	21
	a.	No Agency Relationship.	21
	b.	Notices to Public Concerning Your Independent Status.	22
	 	 	 
	16. Miscellaneous	22
	a.	Severability and Interpretation.	22
	b.	Controlling Law.	22
	c.	Exclusive Benefit.	23
	d.	Entire Agreement.	23
	e.	Consent; Business Judgment.	23
	f.	Notices.	24
	g.	General Release.	24
	h.	Estoppel Certificate.	24
	i.	Descriptive Headings.	24
	j.	Representations and Warranties.	24
	k.	Time.	24
	l.	Counterparts.	24
	m.	Performance Requirements/Responsibilities.	24
	n.	Informational Copies.	24
	o.	Blocked Persons or Entities.	25
	 	 	 
	17.  WAIVER OF JURY TRIAL	25
	 	 
	ATTACHMENT A - PERFORMANCE CONDITIONS:  CONVERSION	a-1
	ATTACHMENT B - RIDER TO FRANCHISE LICENSE AGREEMENT	b-1

 

    	ii

    	 

    

 

EXHIBIT
10.3

 

FRANCHISE LICENSE AGREEMENT

 

Dated as of the date set forth on
the Rider attached hereto as Attachment B (the “Rider”) between the licensor entity set forth on the Rider (“we,”
“us,” “our” or “Licensor”), and the licensee entity (“you,” “your”
or “Licensee”), the name and address of which is set forth on the Rider.

 

INTRODUCTION

 

We are a subsidiary
of Hilton Hotels Corporation, a Delaware corporation (“HHC”). HHC and its subsidiaries and affiliates (collectively,
“Hilton”) own, lease, operate, manage and provide various services for a network of hotels, inns, conference
centers, time share properties and other operations (the “Network”). HHC and Hilton Hospitality, Inc., a wholly
owned subsidiary of HHC, have authorized us to grant licenses to selected, first-class, independently owned or leased hotel properties,
to operate under the brand name set forth in the Rider (the “Licensed Brand”). You have expressed an interest
in operating the property identified on the Rider under the Licensed Brand. You have confirmed to us that you (i) independently
investigated the risks of operating a hotel under the Licensed Brand, including current and potential market conditions, and competitive
factors and risks, and have made an independent evaluation of all such matters, and (ii) reviewed our uniform franchise offering
circular (“UFOC”). After doing so, you have expressed a desire to enter into a Franchise License Agreement with
us to obtain a license to use the Licensed Brand in the operation of a hotel at the address set forth on the Rider.

 

NOW, THEREFORE, in
consideration of the premises and the undertakings and commitments of each party to the other party as set forth in this agreement
(the “Agreement”), the parties agree as follows:

 

1. Definitions

 

The following capitalized
terms will have the meanings set forth after each term:

 

a.    The
Hotel. The Hotel is the property you will operate under this Agreement. The “Hotel” includes all structures,
facilities, appurtenances, furniture, fixtures, equipment, and entry, exit, parking and other areas located on the site we have
approved for your business, or located on any land we approve in the future for additions, signs, parking or other facilities;
provided, however, that for the purposes of this Agreement, the parking garage attached to the Hotel
shall not be included in the definition of “Hotel.”   Notwithstanding the foregoing, Licensee will, upon
Licensor’s request from time to time, provide a plan, acceptable to Licensor, to ensure that Licensee is able to meet guests’
ongoing parking needs in connection with the Hotel.

 

 

b.    The
Marks. References to the “Marks” will include the Licensed Brand service marks and all other service marks,
copyrights, trademarks, logos, insignia, emblems, symbols, designs, slogans, distinguishing characteristics, trade names, domain
names, and all other marks or characteristics associated or used with or in connection with the System (as we define that term
in Subparagraph 1c.), and similar intellectual property rights, that we designate from time to time to be used in the System.

 

c.    The
System. The “System” is the elements we designate from time to time to identify hotels operating under
the Licensed Brand that provide to the consuming public a similar, distinctive, high quality hotel service. “System hotels”
means hotels we license to operate under the System and to use the Licensed Brand name. The System currently includes the Licensed
Brand and the Marks; access to a reservation service; advertising, publicity and other marketing programs and materials; training
programs and materials, standards, specifications and policies for construction, furnishing, operation, appearance and service
of the Hotel, we refer to in this Agreement or in the Manual (as defined in Subparagraph 1.d.) and programs for our inspecting
the Hotel and consulting with you. We may add elements to the System or modify, alter or delete elements of the System at our
sole discretion.

 

    	 

    	 

    

 

d.    The
Manual. References to the “Manual” will include all written standards and requirements we adopt from time
to time for constructing, equipping, furnishing, supplying, operating, maintaining and marketing System hotels, including the
Hotel. Changes made in the Manual will apply to System hotels as specified and may not apply to all System hotels. We may set
forth these standards and requirements in one or more documents or guides. All of these items, as we modify them from time to
time, will be considered the Manual. We will change the Manual from time to time. We will notify you at least thirty (30) days
before any change becomes effective. You will be responsible for the costs of complying with the Manual, including any changes.

 

e.    Including.
The word “including,” whenever used in this Agreement, will mean “including, by way of example, but
without limitation.”

 

f.    License
Term. References to the “License Term” will mean the period from the date of this Agreement through the
expiration of this Agreement.

 

2. Grant of License - Paragraph
2 of the Franchise License Agreement is deleted in its entirety and a new Paragraph 2 has been inserted in its place on Attachment
B – Rider to Franchise License Agreement.

 

3. Our Responsibilities

 

a.    Training.
We will specify required and optional training programs and provide these programs at various locations. We may charge you
for (i) required training services and materials and (ii) optional training services and materials we provide to you.
You are also responsible for all travel, lodging and other expenses you or your employees incur in attending these programs.

 

b.    Reservation
Services. We will, directly or indirectly, furnish you with the Reservation Service (as defined in Subparagraph 6a(15)
below). This service will be furnished to you on the same basis as is furnished to other System hotels, subject to the provisions
of Subparagraph 14.a.(3) below.

 

c.    Consultation.
We may, from time to time at our sole discretion, make available to you consultation and advice in areas such as operations,
facilities, and marketing on the same basis as other Licensed Brand hotels. We have the right to establish fees in advance or
on a project-by-project basis, for consultation and advice you request.

 

d.    Arrangements
for Marketing, Etc. Periodically, we or one of the Entities will publish and make available to the traveling public a directory
of System hotels, including the Hotel. Additionally, we will include the Hotel, or cause the Hotel to be included in (i) national
or regional group advertising of System hotels, and (ii) international, national and regional market programs offered by
us or the Entities; subject to and in accordance with the general practice for System hotels.

 

    	2

    	 

    

 

We will use your Monthly
Program Fee (as defined in Subparagraph 7.a. below) to pay for various programs to benefit the System, including (i) advertising,
promotion, publicity, public relations, market research, and other marketing programs; (ii) developing and maintaining Licensed
Brand directories and Internet sites; (iii) developing and maintaining the Reservation Service systems and support; and (iv) administrative
costs and overhead related to the administration or direction of these projects and programs. We will have the sole right to determine
how we spend these funds, including sole control over the creative concepts, materials and media used in the programs, and the
placement and allocation of advertising. We may enter into arrangements for development, marketing, operations, administrative,
technical and support functions, facilities, programs, services and/or personnel with any other entity, including our affiliates.
You acknowledge that Monthly Program Fees are intended for the benefit of the System, and will not simply be used to promote or
benefit any one property or market. We will have no obligation in administering any activities paid by the Monthly Program Fee
to make expenditures for you which are equivalent or proportionate to your payments, or to ensure that the Hotel benefits directly
or proportionately from such expenditures. We may create any programs and allocate monies derived from Monthly Program Fees to
any regions or localities, as we consider appropriate in our sole judgment. The aggregate of Monthly Program Fees paid to us by
System hotels does not constitute a trust or “advertising fund” and we are not a fiduciary with respect to the Monthly
Program Fees paid by you and other System hotels. We are not obligated to expend funds in excess of the amounts received from System
hotels. If any interest is earned on unused Monthly Program Fees, we will use the interest before using the principal. The Monthly
Program Fee does not cover your costs of participating in any optional marketing programs and promotions offered by us or Hilton
from time to time in which you voluntarily choose to participate. These fees also do not cover the cost of operating the Hotel
in accordance with the standards in the Manual.

 

e.    Inspections/Compliance
Assistance. We will administer a quality assurance program for the System which may include conducting periodic inspections
of the Hotel and guest satisfaction surveys and audits to ensure compliance with System standards. We have the right to inspect
the Hotel and its operations at any time, with or without prior notice to you, and to determine if the Hotel is in compliance
with the standards and rules of operation set forth in this Agreement and in the Manual. If the Hotel fails to comply with such
standards and rules of operation, we may, at our option and at your cost, require an action plan to correct the deficiencies.
You must then take all steps necessary to correct any deficiencies within the times we establish. You may be charged a fee (“Quality
Assurance Re-Evaluation Fee”), and you will provide complimentary accommodations for the quality assurance auditor,
each time we conduct a special on-site quality assurance re-evaluation (a) after the Hotel has failed a regular quality assurance
evaluation or (b) to verify that deficiencies noted in a quality assurance evaluation report or property improvement plan have
been corrected or completed by the required dates. The Quality Assurance Re-Evaluation fee is subject to change by us from time
to time provided that any change will be established in the Manual. Our approval of an action plan does not waive any rights we
may have under this Agreement, nor does it relieve you of any obligations under this Agreement. We will also have the right to
place materials required for System and Hilton purposes at the Hotel.

 

f.    Manual.
We will issue the Manual to you, and any revisions and updates we may make to the Manual.

 

g.    Equipment
and Supplies. We will make available to you for use in the Hotel various purchase, lease, or other arrangements with respect
to exterior signs, operating equipment, operating supplies, and furnishings, which we or Hilton may have and which we make available
to other System hotels.

 

4. Proprietary Rights

 

You acknowledge, and will not contest,
either directly or indirectly during the License Term or after termination or expiration of this Agreement: (i) our (and/or
any Entities’) ownership of, rights to and interest in the System, Licensed Brand, Marks and any of their element(s) or component(s),
including present and future distinguishing characteristics; (ii) our sole right to grant licenses to use all or any element(s)
or component(s) of the System; (iii) that we (and/or the Entities) are the owner of (or the licensee of, with the right to
sub-license) all right, title and interest in and to the Licensed Brand and the Marks used in any form and in any design, alone
or in any combination, together with the goodwill they symbolize; and (iv) the validity or ownership of the Marks. You acknowledge
that these Marks have acquired a secondary meaning which indicates that the Hotel, Licensed Brand and System is operated by or
with Hilton’s approval. All improvements and additions to, or associated with, the System, all Marks, and all goodwill arising
from your use of the System and the Marks, will inure to our benefit and become our property (or the Entities), even if you develop
them. At our request, you will promptly assign to us any rights or registrations to the Marks that you may obtain. You acknowledge
that you are not entitled to receive any payment or other value from us or any of the Entities for any goodwill associated with
your use of the System or the Marks, or any element(s) or component(s) of the System.

 

    	3

    	 

    

 

5.   Proprietary Marks

 

a.    Use
of Trade Name. You will operate under, and prominently display, the Marks in the Hotel. You will not adopt any other names
in operating the Hotel that we do not approve. You also will not use any of the Marks, or the word “Hilton,” or other
Network trademarks, trade names or service marks, or any similar word(s) or acronyms, in (i) your corporate, partnership,
business or trade name except as we provide in this Agreement or the Manual, or (ii) any Internet-related name (including
a domain name), except as we provide in this Agreement or in the Manual, or (iii) any business operated separately from the
Hotel, including the name or identity of developments adjacent to or associated with the Hotel. You agree that any unauthorized
use of the Marks will be an infringement of our rights and a material breach of this Agreement.

 

b.    Trademark
Disputes. We and you each agree that the protection of the Marks and their distinguishing characteristics as standing for
the System is important to all of us. Accordingly, you will immediately notify us of any infringement or dilution of or challenge
to your use of any of the Marks and will not, absent a court order or our prior written consent, communicate with any other person
regarding any such infringement, dilution, challenge or claim. We will take the action we deem appropriate with respect to such
challenges and claims and have the sole right to handle disputes concerning use of all or any part of the Marks or the System.
You will extend your full cooperation to us at your expense in these matters. You appoint us as your exclusive attorney-in-fact,
to prosecute, defend and/or settle all disputes of this type at our sole discretion. You will sign any documents we believe are
necessary to prosecute, defend or settle any dispute or obtain protection for the Marks and the System and assign to us any claims
you may have related to these matters. Our decision as to the prosecution, defense and settlement of the dispute will be final.
All recoveries made as a result of disputes regarding use of all or part of the System or the Marks will be for our account.

 

c.    Web
Sites. You may not register, own, maintain or use any domain names, World Wide Web or other electronic communications sites
(collectively, “Site(s)”), relating to the Network or the Hotel or that include the Marks. The only domain
names, Sites, or Site contractors that you may use relating to the Hotel or this Agreement are those assigned or otherwise approved
in writing by us. You also agree to obtain our prior written approval concerning any third-party Site in which the Hotel will
be listed, and any proposed links between such Site and any other Site(s) (“Linked Sites”) and any proposed
modifications to same. All Sites containing any of the Marks and any Linked Sites must advertise, promote, and reflect on the
Hotel and the System in a first-class, dignified manner. You acknowledge and agree that our right to approve all materials is
necessitated by the fact that those materials will include and be linked with our Marks. Therefore, any use of the Marks on the
World Wide Web, the Internet, or any computer network/electronic distribution, must conform to our requirements, including the
identity and graphics standards for all System hotels. Given the changing nature of this technology, we have the right to withhold
our approval, and to withdraw any prior approval, and to modify our requirements.

 

You acknowledge that you may not, without
a legal license or other legal right, post on your Site(s) any material in which any third party has any direct or indirect ownership
interest (including video clips, photographs, sound bites, copyrighted text, trademarks or service marks, or any other text or
image in which any third party may claim intellectual property ownership interests). You also agree to incorporate on your Site(s)
any other information we require in the manner we deem necessary to protect our Marks.

 

Upon the expiration or termination of this
Agreement, you agree to irrevocably assign and transfer to us (or to our designee) all of your right, title and interest in any
domain name listings and registrations which contain any reference to our Marks, System, Network or Licensed Brand, and will notify
the applicable domain name registrar(s) of the termination of your right to use any domain name or Site(s) associated with the
Marks or the Licensed Brand, and will authorize and instruct the cancellation or transfer of the domain name to us (or our designee),
as directed by us. You will also delete all references to our Marks, System, Network or Licensed Brand from any other Site(s) you
own, maintain or operate beyond the expiration or termination of this Agreement.

 

    	4

    	 

    

 

d.    Covenant.
You agree, as a direct covenant with Hilton, that you will comply with all of the provisions of this Agreement related to
the manner, terms and conditions of the use of the Marks, and the termination of any right on your part to use any of the Marks.
You agree that any non-compliance by you with this covenant, the terms of this Agreement, or any unauthorized or improper use
of the System or the Marks will cause irreparable damage to us and/or to the Entities. You therefore agree that if you engage
in this non-compliance, or unauthorized and/or improper use of the System or the Marks during or after the License Term, Hilton,
its successors and assigns, separately or along with us, will be entitled to both temporary and permanent injunctive relief against
you from any court of competent jurisdiction, in addition to all other remedies that Hilton or we may have at law. You consent
to the entry of such temporary and permanent injunctions. You will be responsible for payment of all costs and expenses, including,
reasonable attorneys’ fees, which we and/or Hilton and/or the Entities may incur in connection with your non-compliance
with this covenant.

 

6. Your Responsibilities

 

a.    Operational
and Other Requirements. During the License Term, you agree to:

 

(1) promptly pay to us,
or reimburse us for, all amounts due to us and/or Hilton as Monthly Royalty Fees, Monthly Program Fees, and other charges, or for
goods or services purchased by you or your agents, including those set forth in Paragraph 7 below;

 

(2) operate the Hotel
twenty-four (24) hours a day every day, except as we may otherwise permit based on special circumstances;

 

(3) operate, furnish,
maintain and equip the Hotel in a clean, safe and orderly manner and in first-class condition in accordance with the provisions
of this Agreement and the Manual, and in compliance with all applicable local, state, and federal laws, customs and regulations,
including maintaining and conducting your business in accordance with sound business and financial practices;

 

(4) provide efficient,
courteous and high-quality service to the public;

 

(5) adopt, use and comply
with the standards, requirements, services, products, programs, materials, specifications, policies, methods, procedures, and techniques
set forth in the Manual, as it may be amended by us from time to time, and keep your Manual current at all times;

 

(6) comply with System
standards, specifications and requirements regarding the purchase of products and services, including furniture, fixtures, equipment,
food, operating supplies, consumable inventories, merchandise for resale to be used at, and/or sold from, the Hotel, in-room entertainment,
computer networking, and any and all other items used in the operation of the Hotel (collectively, the “Supplies”),
including our specifications for all Supplies. We may from time to time require you to purchase a particular brand of product (“Required
Brand”), however, you may purchase this Required Brand from any authorized source of distribution;

 

(7) comply with System
standards, specifications and requirements as to the types and levels of services, amenities and products that either must or may
be used, promoted or offered at or in connection with the Hotel;

 

(8) install, display,
and maintain signage displaying or containing the Licensed Brand name and other distinguishing characteristics in accordance with
plans, specifications and standards we establish for System hotels;

 

    	5

    	 

    

 

(9) comply with System
requirements for the training of persons involved in the operation of the Hotel, including completion by the general manager and
other key personnel of the Hotel of a training program for operation of the Hotel under the System at a site we designate, except
that if, in our sole opinion, it is not necessary or desirable for the general manager or any other key personnel of the Hotel
to complete that training program, then we may waive this requirement in whole or in part. You will pay us for all fees and charges,
if any, we require for your personnel to attend these training program(s) on the same basis as we charge other System hotels. You
will also be responsible for the wages, room, board and travel expenses of your personnel;

 

(10) purchase and maintain
property management, revenue management, in-room entertainment, telecommunications and other computer and technology systems we
designate as System-wide (or area-wide) programs based on our assessment of the long-term best interests of hotels using the System,
considering the interest of the System as a whole;

 

(11) advertise and promote
the Hotel and related facilities and services on a local and regional basis in a first-class, dignified manner, using our identity
and graphics standards for all System hotels, at your cost and expense. You agree to submit to us samples of all advertising and
promotional materials that we have not previously approved (including any materials in digital, electronic or computerized form,
or in any form of media that exists now or is developed in the future) before you produce or distribute them. You will not begin
using the materials until we approve them. You also agree to immediately discontinue your use of any advertising or promotional
materials we reasonably believe is not in the best interest of the Hotel or System, even if we previously approved the materials;

 

(12) participate in,
and pay all charges in connection with (i) all required System guest complaint resolution programs, which programs may include
chargebacks to the Hotel for guest refunds or credits, and (ii) all required System quality assurance programs, such as guest
comment card and mystery shopper programs; and maintain minimum performance standards and scores for such quality assurance programs
that we may establish from time to time in the Manual;

 

(13) comply with System
standards, specifications and requirements as to maintenance, appearance and condition of the Hotel, and adopt in your business
all changes or additions to the System as we may periodically designate;

 

(14) honor all nationally
recognized credit cards and credit vouchers issued for general credit purposes which are generally honored at other System hotels,
and enter into all necessary credit card and voucher agreements with the issuers of such cards or vouchers;

 

(15) participate in and
use, on the terms set forth in this Agreement and in the Manual, those reservation services which we require (the “Reservation
Service”), including any additions, enhancements, supplements or variants which we or the Entities develop or adopt;
and honor and give first priority on available rooms to all confirmed reservations referred to the Hotel through the Reservation
Service. You agree that the only reservation service or system you may use in regard to outgoing reservations referred by and from
the Hotel to other hotels will be the Reservation Service or other reservation services we or the Entities designate;

 

(16) comply with all
governmental requirements, including the filing and maintenance of any required trade name or fictitious name registrations, pay
all taxes, and maintain all governmental licenses and permits necessary to operate the Hotel in accordance with the System;

 

(17) permit inspection
of the Hotel by our representatives at any time to ensure compliance with System standards, cooperate fully with our representatives
during these inspections and take all steps necessary to correct any deficiencies detected within the time periods we specify.
You will also provide free lodging to our personnel at the Hotel while they are making their inspections on a space-available basis;

 

    	6

    	 

    

 

(18) provide to us statistics
on Hotel operations in the form we specify and using definitions we specify;

 

(19) not engage, directly
or indirectly, in any cross-marketing or cross-promotion of the Hotel with any other hotel, lodging or related business, except
for Affiliated Hotels (as defined in Subparagraph 6.a.21), without our prior written consent;

 

(20) participate in,
and pay all fees of, any System travel agent commission payment program(s) as modified from time to time, and promptly pay as we
require in the Manual and/or specific program terms, all travel agent commissions and third party reservation service charges (such
as airline reservation systems) in accordance with the terms of these programs;

 

(21) refer guests and
customers, wherever reasonably possible, only to, Licensed Brand, Network, Hilton International, and Conrad International hotels
(collectively, the “Affiliated Hotels”) and (if and as we direct) any other hotel systems owned or licensed
by us and/or the Entities (each, an “Other Hotel”) (except that this will not prohibit us from requiring you
to participate in programs designed to refer prospective customers to other hotels, whether in the System or otherwise); display
all material, including brochures and promotional material we provide for Affiliated Hotels and Other Hotel Systems; and allow
advertising and promotion only of Affiliated Hotels and Other Hotel Systems on the Hotel premises;

 

(22) treat as confidential
the Manual, and all other information or materials concerning the methods, techniques, plans, specifications, procedures, information,
systems and knowledge of and experience in the development, operation, marketing and licensing of the System (the “Proprietary
Information”). You acknowledge and agree that you: (i) do not acquire any interest in Proprietary Information other
than the right to utilize the same in the development and operation of the Hotel under the terms of this Agreement, (ii) will
not use the Proprietary Information in any business or for any purpose other than in the development and operation of the Hotel
under the System, (iii) will maintain the absolute confidentiality of the Proprietary Information during and after the License
Term, (iv) will not make unauthorized copies of any portion of the Proprietary Information, and (v) will adopt and implement
all reasonable procedures we may periodically establish to prevent unauthorized use or disclosure of the Proprietary Information,
including restrictions on disclosure to employees and the use of non-disclosure and non-competition clauses in agreements with
employees, agents and independent contractors who have access to the Proprietary Information. These restrictions will not apply
to any information that does not relate or refer in any way or part to the System, Manual, Licensed Brand and/or Marks and that
you can demonstrate came lawfully to your attention before our disclosure or which, at the time of or after our disclosure, becomes
a part of the public domain through lawful publication or communication by others;

 

(23) not own, at any
time during the term of this Agreement, in whole or in part, or be the licensor of, a hotel brand, or trade name, either directly
or through an Affiliate as defined in Subparagraph 11.b.(2)(a)(i)of this Agreement, without our prior written consent. Any
entity that, directly or through an Affiliate, owns in whole or in part, or is the licensor or other owner of a hotel brand or
trade name (whether or not licensed) that, in our judgment, competes with the System, irrespective of the number of hotels comprising
the competitive hotel brand or trade name will be referred to as a “Competitor”. These restrictions do not restrict
you or your Affiliate from (i) owning a minority interest in a Competitor if you or your Affiliate do not provide services
to the Competitor (including as a consultant or employee), do not have any officer, director, or similar position with the Competitor,
and have no control or influence in the business decisions of the Competitor; (ii) being a licensee of a Competitor; or (iii) managing
a property for a Competitor;

 

(24) own fee simple title
(or long-term ground leasehold interest, provided that such interest has been granted to you by an unrelated third party ground
lessor in an arms length transaction for a term equal to, or longer than, the License Term) to the real property and improvements
of the Hotel, or, at our request, cause the fee simple owner or other third party acceptable to us, to provide its guarantee covering
all of your obligations under this Agreement in form and substance acceptable to us;

 

    	7

    	 

    

 

(25) maintain possession
and control of the Hotel and Hotel site, and promptly deliver to us a copy of any notice of default you receive from any mortgagee,
trustee under any deed of trust, or ground lessor for the Hotel, and upon our request, provide any additional information we may
request related to any alleged default or any subsequent action or proceeding in connection with any alleged default;

 

(26) refrain from directly
or indirectly conducting, or permitting by lease, concession arrangement or otherwise, gaming or casino operations in the Hotel
or on its premises without our express written permission, which we may withhold at our sole discretion, and then only to the extent
and subject to the terms set forth in such permission;

 

(27) refrain from directly
or indirectly conducting, or permitting the marketing or sale of timeshares or condominiums at, or adjacent to, the Hotel without
our express written permission, which we may withhold at our sole discretion, and then only to the extent and subject to the terms
set forth in such permission; provided, however, that the foregoing shall not prohibit you from directly or indirectly conducting
timeshare or condominium sales or marketing at and for any property located adjacent to the Hotel that is owned or leased by you
so long as (i) you do not use any of the Marks in such sales or marketing efforts and (ii) you do not use the Hotel or its facilities
in such sales, marketing efforts or business operations;

 

(28) obtain and maintain
in full force and effect from and after the confirmed Opening Date of the Hotel as set forth in Attachment A (conditional or otherwise)
all licenses required for the sale of alcoholic beverages at the Hotel (unless no alcoholic beverages are offered at or from the
premises of the Hotel);

 

(29) promptly provide
to us or Hilton all information we reasonably request with respect to you and your affiliates, including your respective officers,
directors, shareholders, partners or members, and/or the Hotel, title to the property on which the Hotel is constructed and any
other property used by the Hotel. The information requested may include, but not necessarily be limited to, financial condition,
personal and family background, litigation, indictments, criminal proceedings and the like in which any of the aforementioned may
have been involved;

 

(30) participate in,
and pay, all charges related to (i) our and Hilton’s marketing programs (in addition to programs covered by Monthly
Program Fees), and (ii) all guest frequency programs we or Hilton require. You also agree to honor the terms of any discount
or promotional programs (including any frequent guest program) that we or Hilton offer to the public on your behalf, any room rate
quoted to any guest at the time the guest makes an advance reservation, and any award guest certificates issued to Hotel guests
participating in these programs;

 

(31) operate the Hotel
so as to maximize Gross Rooms Revenue (as defined in Subparagraph 7.b.) consistent with sound marketing and industry practice
and not engage in any conduct that is likely to reduce Gross Rooms Revenue in order to further other business activities; and

 

(32) maintain, at your expense, insurance,
of the types, and in the minimum amounts, we specify in the Manual. All such insurance must (i) be with insurers having minimum
ratings we specify, (ii) name as additional insureds the parties we specify in the Manual, and (iii) carry the endorsements
and notice requirements we specify in the Manual. If you fail or neglect to obtain or maintain the insurance or policy limits required
by this Agreement, we have the option, but not the obligation to obtain and maintain such insurance without notice for you, and
you, will immediately upon our demand, pay us the premiums and cost we incur in obtaining this insurance.

 

    	8

    	 

    

 

b.    Hotel
Quality Assurance. We may from time to time require you to modernize, rehabilitate and/or upgrade the Hotel’s fixtures,
equipment, furnishings, furniture, signs, computer hardware and software and related equipment, supplies and other items to meet
the then-current standards and specifications specified in the Manual. These standards will benefit the System as a whole and
you will make all these changes at your sole cost and expense. Nothing in this paragraph will relieve you from the obligation
to maintain acceptable product quality ratings at the Hotel and maintain the Hotel in accordance with the Manual at all times
during the Agreement. We may make limited exceptions to some of those standards based on local conditions or special circumstances,
but we are not required to do so. You may not make any change in the number of approved guest rooms (the “Guest Rooms”)
set forth in the Rider or any other significant change (including major changes in structure, design or decor) in the Hotel without
our prior written approval. Minor redecoration and minor structural changes that comply with our standards and specifications
will not be considered significant.

 

c.    Staff
and Management. You are at all times responsible for the management of the Hotel’s business. You may fulfill this responsibility
only by providing (i) qualified and experienced management, which may be a third-party management company, and (ii) a
general manager, (the “Management”), each approved by us in writing. However, you represent and agree that
you have not, and will not, enter into any lease, management agreement or other similar arrangement for the operation of the Hotel
or any part of the Hotel with any person or entity without our prior written consent. To be approved by us as the operator of
the Hotel, you or any proposed Management must be qualified to manage the Hotel. We may refuse to approve you or any proposed
Management which, in our reasonable business judgment, is inexperienced or unqualified in managerial skills or operating capacity
or capability, or is unable to adhere fully to the obligations and requirements of this Agreement. You understand that we reserve
the right to not approve a Competitor, or any entity that (through itself or an affiliate) is the exclusive manager for a Competitor,
to manage the Hotel. If the Management becomes a Competitor or otherwise becomes unsuitable in our sole discretion to manage the
Hotel at any time during the License Term, you will have ninety (90) days to retain qualified substitute Management acceptable
to us. Any Management must have the authority to perform all of your obligations under this Agreement, including all indemnity
and insurance obligations. In the case of any conflict between this Agreement and any agreement with Management, this Agreement
prevails.

 

7. Fees

 

a.    Monthly
Fees. Beginning on the Opening Date, you will pay to us for each month (or part of a month, including the final month you
operate under this Agreement) the Monthly Royalty Fees as set forth and defined in the Rider and a Monthly Program Fee in the
amount of four percent (4%) of the Hotel’s Gross Rooms Revenue (as the term is defined more specifically in Subparagraph 7.b.
below) for the preceding calendar month. The amount of this Monthly Program Fee is subject to change by us from time to time,
provided that any change will be established in the Manual. However, increase in the Monthly Program Fee, if any, will not exceed
one percent (1%) of the Hotel’s Gross Rooms Revenue in any calendar year, and the cumulative increases in the Monthly Program
Fee, during the Term of this Agreement, will not exceed five percent (5%) of Gross Rooms Revenue.

 

b.    Determination
and Payment of Fees. The monthly fees (described in Subparagraph 7.a.) will be determined in accordance with the accounting
methods of then current Uniform System of Accounts for Lodging Industry (currently, the Ninth Revised Edition, 1996), or such
other accounting methods as may otherwise be specified by Licensor from time to time in the Manual. “Gross Rooms Revenue,”
as used in the calculation of the Monthly Royalty Fee and the Monthly Program Fee under the Agreement, means all revenues derived
from the sale or rental of Guest Rooms (both transient and permanent) of the Hotel, including guaranteed no-show revenue and credit
transactions, whether or not collected, at the actual rates charged, less allowances for any Guest Room rebates and overcharges,
and will not include federal, state and local taxes collected directly from patrons or guests. Gross Rooms Revenue will also include
the proceeds from any business interruption insurance applicable to loss of revenues due to the non-availability of Guest Rooms.
The Monthly Royalty Fee and the Monthly Program Fee will be paid to us at the place we designate on or before the fifteenth (15th)
day of each month and will be accompanied by our standard schedule setting forth in reasonable detail the computation of the Monthly
Royalty Fee and Monthly Program Fee for such month. There will be an annual adjustment within ninety (90) days after the end of
each operating year so that the total Monthly Royalty Fees and Monthly Program Fees paid annually will be the same as the amounts
determined by audit. We reserve the right to require you to transmit the Monthly Royalty Fee and the Monthly Program Fee and all
other payments required under this Agreement by wire transfer or other form of electronic funds transfer. You agree to bear all
costs of wire transfer or other form of electronic funds transfer.

 

    	9

    	 

    

 

c.    Room
Addition Fee. If you desire to add or construct additional Guest Rooms at the Hotel (the “Room Addition”)
at any time after you Open the Hotel under the Licensed Brand, you will pay us a nonrefundable fee equal to the prevailing per
Guest Room initial fee charged to System hotels multiplied by the number of additional Guest Rooms (“Room Addition Fee”).
You must pay the Room Addition Fee to us when you submit an application for the Room Addition, and you must submit that application
to us before you enter into any agreement to construct the Room Addition. As a condition to our granting approval of your Room
Addition application, we may require you to modernize, rehabilitate or upgrade the Hotel, subject to Subparagraph 6.b. of
this Agreement.

 

d.    Other
Fees. You will timely pay all amounts due any of the Entities for any invoices or for goods or services purchased by or provided
to you or paid by any of the Entities on your behalf, including pre-opening sales and operations training.

 

e.    Taxes.
If any gross receipts, sales, use, excise or any similar tax (the “Gross Receipts Tax”) is imposed upon
Hilton based on any payment(s) made by you to Hilton under this Agreement, then you must reimburse us for any such Gross Receipts
Tax to ensure that the amount of your payment(s) we retain after we pay the Gross Receipts Tax, equals the full amount of the
payment(s) you are required to pay us under this Agreement had such Gross Receipts Tax not been imposed on Hilton.

 

This Subparagraph 7.e.,
does not apply to federal or state income taxes payable by Licensor or Hilton as a result of its net income relating to any fees
collected under this Agreement.

 

f.    Application
of Fees. We may apply any amounts received under this Paragraph 7 to any amounts due under this Agreement. If any amounts
are not paid when due, such non-payment will constitute a material breach of this Agreement and, in addition, such unpaid amounts
will accrue a service charge beginning on the first day of the month following the due date of one and one-half percent (1 1⁄2%)
per month or the maximum amount permitted by applicable law, whichever is less. Should we hire counsel to collect any amounts
due under this Agreement, and/or any late charges, you will pay our reasonable attorneys’ fees.

 

8. Records and Audits

 

a.    Reports.
At our request, you will prepare and deliver to us daily, monthly, quarterly and annual operating statements, profit and loss
statements, balance sheets, and other reports (the “Reports”) we require, prepared in the form, and by the
methods and within the time frames, we require in the Manual. The reports will contain all information we require, including daily
rate and room occupancy, and will be certified as accurate in the manner we require. You will also provide us any additional related
information and Reports we may periodically request and permit us to inspect your books and records at all reasonable times. At
least monthly, you will prepare a statement that will include all information concerning Gross Rooms Revenue, other revenues generated
at the Hotel, room occupancy rates, reservation data and other information we require (the “Data”). By the
fifteenth (15th) day of each month, you will submit to us a statement setting forth the Data for the previous month and reflecting
the computation of the amounts then due under Paragraph 7, in the form and detail we reasonably request.

 

b.    Maintenance
of Records. You will, in a manner and form satisfactory to us and using accounting and reporting standards we reasonably require,
prepare on a current basis (and preserve for no less than the greater of four (4) years or our record retention requirements),
complete and accurate records concerning Gross Rooms Revenue and all financial, operating, marketing and other aspects of the
Hotel, and maintain an accounting system that fully and accurately reflects all financial aspects of the Hotel and its business.
These records will include books of account, tax returns, governmental reports, register tapes, daily reports, and complete quarterly
and annual financial statements (including profit and loss statements, balance sheets and cash flow statements).

 

    	10

    	 

    

 

c.    Audit.
We may require you to have the Gross Rooms Revenue or other monies due to us computed and certified as accurate by a certified
public accountant. During the License Term and for two (2) years thereafter, we and our authorized agents will have the right
to verify information required under this Agreement by requesting, receiving, inspecting and auditing, at all reasonable times,
any and all records referred to above wherever they may be located (or elsewhere if requested by us). If any inspection or audit
reveals that you understated or underpaid any payment due to us that is not fully offset by overpayments, you will promptly pay
to us the deficiency plus interest from the date each payment was due until paid at a rate of one and one-half percent (11⁄2%)
per month or the maximum amount permitted by applicable law, whichever is less. If the audit or inspection reveals that the underpayment
is either willful, or is for five percent (5%) or more of the total amount owed for the period being inspected, you will also
reimburse us for all inspection and audit costs (including reasonable travel, lodging, meals, salaries and other expenses of the
inspecting or auditing personnel). Our acceptance of your payment of any deficiency will not condone your breach of this Agreement,
or waive that breach, or any rights we may have for your breach, including our right to terminate this Agreement as provided in
Paragraph 14. If the audit discloses an overpayment, we will credit this overpayment against your future payments under this
Agreement, without interest, or if no future payments are due under this Agreement, we will promptly pay you the amount of the
overpayment without interest.

 

d.    Ownership
of Information. All of the information we obtain from you or about the Hotel or its guests under this Agreement, or under
any agreement ancillary to this Agreement (including agreements relating to the computerized reservation, revenue management,
property management, and other system(s) we provide or require), or otherwise related to the Hotel (the “Information”),
and all revenues we derive from such Information will be our property. However, you may at any time during or after the License
Term use to the extent lawful and at your sole risk and responsibility any information that you acquire from third parties in
operating the Hotel, such as customer data. The Information (except for Information you provide to us or Hilton with respect to
you and your affiliates, including your respective officers, directors, shareholders, partners or members) will become our Proprietary
Information which we may use for any reason as we deem necessary or appropriate, in our discretion, including making an earnings
claim in our UFOC.

 

9. Indemnity

 

You agree, during and
after the License Term, to indemnify us and the Entities, and our successors and assigns, and the members, officers, directors,
employees, agents, predecessors, successors and assigns of each such entity (the “Indemnified Parties”) against,
and hold them harmless from, all losses, costs, liabilities, damages, claims, and expenses, including reasonable attorneys’
fees, arising out of or resulting from (i) any claimed occurrence at the Hotel or arising from, as a result of, or in connection
with the development, construction or operation of the Hotel (including the design, construction, financing, furnishing, equipment,
acquisition of Supplies or operation of the Hotel in any way); (ii) any bodily injury, personal injury, death or property
damage suffered by any guest, customer, visitor or employee of the Hotel; (iii) your alleged or actual infringement or violation
of any patent, mark or copyright or other proprietary right owned or controlled by third parties; (iv) your alleged or actual
violation or breach of any contract, federal, state or local law, regulation, ruling, standard or directive applicable to the Hotel,
or of any industry standard; (v)  any other business conducted by you or a third party in, on or about the Hotel or its grounds;
or (vi) any other of your acts, omissions or obligations or those of anyone associated or affiliated with you or the Hotel or in
any way arising out of or related to this Agreement. However, you do not have to indemnify us to the extent damages otherwise covered
under this Paragraph 9 are adjudged by a court of competent jurisdiction to have been the result of the gross negligence or
willful misconduct of any of the Indemnified Parties so long as the claims are not asserted on the basis of (i) theories of
vicarious liability, including agency, apparent agency or employment or (ii) our failure to compel you to comply with the
provisions of this Agreement. You will give us written notice of any action, suit, proceeding, claim, demand, inquiry or investigation
involving an Indemnified Party within five (5) days of your actual or constructive knowledge of it. At our election, you will defend
us and/or the Indemnified Parties against the same, or we may elect to assume (but under no circumstance will we be obligated to
undertake) the defense and/or settlement of the action, suit, proceeding, claim, demand, inquiry or investigation at your expense
and risk. We may obtain separate counsel of our choice if we believe your and our interests may conflict. Our undertaking of defense
and/or settlement will in no way diminish your obligation to indemnify the Indemnified Parties and to hold them harmless. In either
case, you will also reimburse the Indemnified Parties upon demand for all expenses, including reasonable attorneys’ fees
and court costs the Indemnified Parties incur to protect themselves, or to remedy your defaults. Under no circumstances will the
Indemnified Parties be required to seek recovery from third parties or otherwise mitigate their losses to maintain a claim against
you, and their failure to do so will in no way reduce the amounts recoverable from you by the Indemnified Parties. Further, you
will indemnify the Indemnified Parties for any claim for damages by reason of failure of any contractor, subcontractor, supplier
or vendor doing business with you relating to the Hotel to maintain adequate insurance as required in the Manual.

 

    	11

    	 

    

 

10. Right of First Offer: INTENTIONALLY
DELETED

 

11. Transfer

 

a.     Our
Transfer of this Agreement. We have the right to transfer or assign this Agreement or any of our rights, obligations, or assets
under this Agreement to any person or legal entity. You acknowledge and agree that this Agreement is a license for the Licensed
Brand only, and the programs that are unique to the Licensed Brand. Therefore, if we transfer or assign this Agreement, your right
to use any programs, rights or services related to or provided by the Entities or their designees, including the Reservation Service,
any guest frequency program not unique to the Licensed Brand, and any Marks (except the principal name identified in the Rider),
may terminate. The transferee must assume all of our obligations to you under this Agreement.

 

b.           Your
Transfer. We recognize that at some time, you or other persons associated with you or the Hotel may want to sell or transfer
all or part of an interest in this Agreement, the Licensee or in the Hotel. At the same time, you understand and acknowledge that
the rights and duties set forth in this Agreement are personal to you, and that we are entering into this Agreement in reliance
on your business skill, financial capacity, and personal character (if you are an individual), and that of your officers, directors,
partners, members, stockholders or trustees (if you are a partnership, company, corporation, trust or other legal entity). As
a result, you agree that if you or other persons associated with you or the Hotel desire to sell, transfer or lease an interest
in this Agreement, the Licensee or in the Hotel, or in any entity that has an interest in this Agreement, the Licensee or the
Hotel, you will abide by the terms of this Subparagraph 11.b.

 

For purposes of this Subparagraph 11.b.,
the term “control” in all its forms, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of an entity, or of the power to veto major policy decisions of an entity, whether
through the ownership of voting securities, by contract, or otherwise. References in this Agreement to “Equity Interests”
mean any direct or indirect beneficial interest in the Licensee, the Equity Owners and/or the Hotel (an “indirect”
interest is an interest in an entity other than the Licensee that either itself, or through others, has an interest in the Licensee).
References in this Agreement to “Equity Owners” mean the owners of a direct or indirect Equity Interest in the
Licensee, the Agreement, and/or in the Hotel. “Publicly Traded Equity Interest” means any Equity Interest that
is traded on any securities exchange or is quoted in any publication or electronic reporting service maintained by the National
Association of Securities Dealers, Inc., or any of its successors. In computing changes of Equity Interests, limited partners will
not be distinguished from general partners except as provided below. General partners, managing members and other controlling interests
in Licensee will be considered Equity Owners for purposes of this section, regardless of whether they have any actual ownership
interest in the Licensee. Non-voting equity interests may not qualify as an Equity Interest, at our discretion. Our judgment will
be final if there is any question as to the definition of Equity Interest or as to the computation of relative Equity Interests.
You represent that as of the date of this Agreement the Equity Interests are directly and (if applicable) indirectly owned as shown
on the Rider.

 

    	12

    	 

    

 

(1)           Transfers
That Do Not Require Our Consent or Notification.

 

(a)           Privately
Held Equity Interests: Less than 25% Change/No Change of Control. Equity Interests that are not publicly traded may be transferred
by you and the Equity Owners without notice to us and without our consent, if after the transaction: (i) less than twenty-five
percent (25%) of all Equity Interests in Licensee will have changed hands since the date of this Agreement, and (ii) there
has not been a change of control of the Licensee, of this Agreement or of the Hotel since the date of this Agreement.

 

(b)           Publicly
Held Equity Interests. Publicly Traded Equity Interests may be transferred without notice to us and without our consent if
the transfer does not effectuate a change of control of the Licensee, of this Agreement or of the Hotel since the date of this
Agreement.

 

(c)           Commercial
Leases. You may lease or sublease commercial space in the Hotel that is customarily subject to lease, or enter into concession
arrangements in the ordinary course of business at the Hotel, without notice to us and without our consent.

 

(2)           Other
Transfers. No other direct or indirect interest in the Hotel or in this Agreement, and no direct or indirect Equity Interest
in the Licensee, may be sold, leased, assigned, or transferred in any way (individually or collectively, a “Transfer”),
except as specifically provided in this Subparagraph 11.b.(2). If you or any Equity Owners want to transfer any Equity Interest,
other than in a transaction that meets the requirements of the foregoing clause (1), you must first notify us and you must
first obtain our consent.

 

(a)          Permitted
Transfers. Certain transfers are transfers we describe as “Permitted Transfers.” We will consent to a Permitted
Transfer, so long as you (i) give us sixty (60) days advance written notice of any proposed Permitted Transfer (the “Permitted
Transfer Consent Request”), and (ii) submit to us a nonrefundable processing fee of Two Thousand Five Hundred Dollars
($2,500) with the Permitted Transfer Consent Request to cover our costs to review the Transfer (except that in the case of a Transfer
of Equity Interests which requires registration under any federal or state securities law, you must pay us an additional processing
fee of Two Thousand Five Hundred Dollars ($2,500) as provided for in Subparagraph 11.b.(3) below), and meet the requirements
for the particular Permitted Transfer as described below.

 

(i)          Affiliate
Transfer. You or any Equity Owners as of the date of this Agreement may sell, lease, transfer or otherwise convey any Equity
Interest to an Affiliate (each an “Affiliate Transfer”); provided that such event does not, in our opinion,
result in a change in the ultimate controlling Equity Owners of the Licensee, this Agreement or the Hotel and the following conditions
are met. “Affiliate” means, with respect to any entity, any natural person or firm, corporation, partnership,
association, trust or other entity which, directly or indirectly, controls, is controlled by, or is under common control with,
you or any Equity Owners as of the date of this Agreement. A natural person or entity which has an entity as an Affiliate will
also be deemed to be an Affiliate of that entity. We will not withhold our consent to an Affiliate Transfer if (x) you are not
then in material default under this Agreement; (y) the Affiliate Transfer is not, directly or indirectly, to a Competitor; and
(z) you otherwise satisfy the conditions as set forth in Subparagraphs 11.b.(2)(b)(i)-(vii), (ix) and (x) below that we may require
you to satisfy.

 

(ii)         Family
Transfers. If you or any Equity Owners as of the date of this Agreement are a natural person, and desire to sell, lease, transfer
or otherwise convey any Equity Interest to: (x) a member or member of your or any such Equity Owner’s immediate family i.e.
spouse, children, parents, siblings (“Family Members”) or (y) a trust or trusts for the benefit of Equity Owner
or the Equity Owner’s Family Member(s) (each, a “Family Transfer”), in either case, without causing a
change in the ultimate controlling Equity Owners of the Licensee, this Agreement, or the Hotel, we will not withhold our consent
to a Family Transfer if you otherwise satisfy the conditions set forth in Subparagraphs 11.b.(2)(b)(i)-(vii), (ix), and (x) below
that we may require you to satisfy.

 

    	13

    	 

    

 

(iii)        Transfer
Upon Death. Upon the death of a Licensee or Equity Owner, this Agreement or the Equity Interest (if applicable) may pass in
accordance with such person’s will or, if such person dies intestate, in accordance with laws of intestacy governing the
distribution of such person’s estate, without our consent, provided that (x) the Transfer is to a Family Member or to a legal
entity formed by such Family Member(s), and (y) within one (1) year after the death, such Family Member(s) or entity meets all
our then current requirements for an approved applicant.

 

(iv)        Brick
and Mortar Transfers. You may sell, lease or transfer the Hotel, the Hotel site, or any portion thereof if, in our reasonable
judgment, after the sale, you retain possession and control of the Hotel site and the management control of the Hotel operations
and continue to comply with the requirements of Subparagraph 6.a.(24), provided you give us at least sixty (60) days’
prior notice of the proposed transfer, and any Transfer Information (as defined below) that we request. If, in our reasonable
judgment, the Transfer will result in your loss of possession or control of the Hotel or Hotel site or management of the Hotel,
the sale will then be considered a change of ownership and you must comply with the provisions of Subparagraph 11.b.(2)(b).

 

(v)         Privately
Held Equity Interests: 25% or Greater Change/No Change of Control. You or any Equity Owners as of the date of this Agreement
may sell, lease, transfer or otherwise convey Equity Interests if a twenty-five percent (25%) or more cumulative change in Equity
Interests in Licensee will have changed hands since the date of this Agreement; provided that such event does not, in our opinion,
result in a change in the ultimate controlling Equity Owner of the Licensee, this Agreement or the Hotel and the following conditions
are met: (x) you are not then in material default under this Agreement; (y) the Transfer is not, directly or indirectly, to a Competitor;
and (z) you otherwise satisfy the conditions as set forth in Subparagraphs 11.b.(2)(b)(i)-(vii), (ix) and (x) below that we may
require you to satisfy.

 

(b)          Change
of Ownership.  Any proposed Transfer that does not otherwise qualify as a Permitted Transfer as defined in Subparagraph 11.b.(2)(a)
above will be considered a change of ownership (“Change of Ownership”). If there is a proposed Change of Ownership
and the proposed owner desires to continue to operate the Hotel as a System hotel, the proposed owner must submit to us a complete
application for a new franchise license agreement (the “Change of Ownership Application”) accompanied by payment
of our then prevailing application fee. If we do not approve the Change of Ownership Application, we will refund the application
fee, less Two Thousand Five Hundred Dollars ($2,500) for processing costs. The proposed owner may also be required to pay the then
prevailing property improvement plan (“PIP”) fee for us to determine the renovation requirements for the Hotel.
If we approve the Change of Ownership Application, the new owner will then be required to pay any other applicable fees and charges
we then impose for new Licensed Brand franchise licenses.

 

We will process the Change of Ownership
Application in accordance with our then current procedures, including review of criteria and requirements regarding upgrading of
the Hotel, credit, background investigation, operations abilities and capabilities, prior business dealings, market feasibility,
guarantees, and other factors we consider relevant. We will have sixty (60) days from our receipt of the completed and signed application
to consent or withhold our consent to the proposed owner as Licensee.

 

We may, at our option, or as applicable,
make our consent subject to satisfaction of certain conditions, including:

 

(i)          The
cure of any existing defaults or events that would become defaults with the giving of notice and passage of time, including, the
payment in full at the closing of the Transfer (the “Closing”) of all unpaid obligations owed to us and any
Entities by you, and/or the renovation by you or the proposed owner of all or part of the Hotel;

 

(ii)         Receipt
of evidence from the transferee that insurance coverage, as required by this Agreement, is in full force and effect on the date
of Closing;

 

    	14

    	 

    

 

(iii)        Payment
of the amount of any fees and charges we estimate will accrue to us or any of the Entities through the date of Closing;

 

(iv)        That
you at all times remain in compliance with the terms of this Agreement pending the Closing;

 

(v)         Your
signing of an estoppel and a general release in a form satisfactory to us, of any and all claims, demands and causes of action
that you and your partners, proprietors, directors, officers, shareholders, members, successors and assigns (as the case may be)
may or might have against us or any of the Entities, and their respective officers, directors, shareholders, agents, attorneys,
contractors and employees in their corporate and individual capacities including claims arising under federal, state and local
laws, rules and ordinances;

 

(vi)        That
you submit to us all information related to the Transfer that we may reasonably require, including copies of any proposed agreement(s),
the proposed ownership structure of the proposed transferee if ownership of this Agreement or of the Hotel is being transferred
and/or all entities involved, the names and addresses of the proposed owners of the Equity Interests and of the site at which the
Hotel is operated, and financial statements and business information for all participants in the proposed sale or lease (collectively,
the “Transfer Information”);

 

(vii)       Evidence
of adequate assurances (as determined by us in our sole discretion) of the proposed owner’s assumption of and ability to
perform all, or its pro rata share, of your or any Equity Owners’ obligations under this Agreement;

 

(viii)      Execution
by you of our then-current standard form of voluntary termination agreement covering termination of this Agreement and execution
by the new owner of a new franchise license agreement (“New License”) with us for the then unexpired term of
this Agreement (or for such other term as we may approve in our sole discretion). The New License will (i) be on our then
current form for the grant of new franchise licenses, (ii) contain our then current license terms (except for duration), and
(iii) contain upgrading and other requirements, if any, that we impose.

 

(ix)         Execution
of our then-current standard form of guarantee of franchise license agreement by the same guarantors, if any, of this Agreement
or substitute guarantors we approve; and

 

(x)          Successful
completion by the proposed owner and its management team of any training and orientation programs we require.

 

We have the right to
withhold our consent to any proposed Transfer if any of these conditions are not met to our satisfaction, or if the proposed owner
is a Competitor. If we approve the Change of Ownership Application, we will not assess you any liquidated damages for early termination
of this Agreement as long as the New License is signed by the new owner no later than the Closing of the Change of Ownership transaction.
If we do not approve the Change of Ownership Application, or if you or the new owner do not comply with all these conditions and
the Transfer still occurs, then you will be in material default of this Agreement and we will be entitled to all of our remedies,
including the right to terminate this Agreement, and the right to payment of all amounts set forth in Subparagraph 14.c.

 

(3)            Public
Offering. If you “offer to sell” or “sell” any “securities” in the Licensee or in the
Hotel, you shall do so in accordance with the terms and conditions set forth in this Subparagraph 11.b.(3). All materials
required by federal, state or other applicable law for the offer or sale of those securities must be submitted to us for review
at least twenty (20) days before the date you distribute those materials, or file them with any governmental agency, including
any materials to be used in any offering exempt from registration under federal or state securities laws. You must submit a non-refundable
Two Thousand Five Hundred Dollar ($2,500) processing fee to us with the offering documents, and agree to pay any additional costs
we may incur in reviewing your documents, including reasonable attorneys’ fees. You also may not use any of the Marks or
otherwise imply Hilton’s or our participation or endorsement of any securities offering. We will have the right to approve
any description of this Agreement or of your relationship with us, or any use of the Marks, contained in any “prospectus”
or other communications or materials you use in the sale or offer of any “securities.” You may not imply Hilton’s
or our participation in or endorsement of any such “securities.” To the extent we give you any comments to your documents,
you must modify the documents to address those comments, satisfactory to us, before filing or distributing the documents. Our
review of these documents will not in any way be considered our agreement with any statements contained in those documents, including
any projections, or our acknowledgment or agreement that the documents comply with any applicable laws.

 

    	15

    	 

    

 

You may not sell any
“securities” unless you do so in compliance with all applicable federal and state securities laws, and unless you clearly
disclose to all purchasers and offerees that (i) neither we, nor any Entity, nor any of our or their respective officers,
directors, agents or employees, will in any way be deemed an “issuer” or “underwriter” of said “securities,”
and that (ii) we, the Entities, and our respective officers, directors, agents and employees have not assumed and will not
have any liability or responsibility for any financial statements, prospectuses or other financial information contained in any
“prospectus” or similar written or oral communication. You agree to indemnify, defend and hold the Indemnified Parties
free and harmless of and from any and all liabilities, costs, damages, claims or expenses arising out of or related to the “sale”
or “offer” of any of your “securities” to the same extent as provided in Paragraph 9 of this Agreement.
All terms used in this Subparagraph 11.b.(3) will have the same meaning as in the Securities Act of 1933, as amended.

 

(4)         Transfers
Not in Accordance With This Agreement. Any purported Transfer, by operation of law or otherwise, not in accordance with the
provisions of this Agreement, will be null and void and will constitute a material breach of this Agreement, which will allow us
to terminate this Agreement without giving you any opportunity to cure. Further, we will have all other rights and remedies, including
the right to specific performance or mandatory or prohibitory injunctive relief, to redress any attempt on your part to transfer
this Agreement other than in accordance with the provisions of this Agreement.

 

(5)         Pledge
to Lending Institution. Notwithstanding any other provision of this Agreement, you do not need to notify us to obtain our approval
if you want to pledge or mortgage the assets of the Hotel or any Equity Interest to a third-party bank or other commercial lending
institution that is not a Competitor. However, you do need to notify us and obtain our consent if you want to pledge or mortgage
your interest in this Agreement. As a condition to our giving our consent to a pledge or mortgage of this Agreement we will require
the lender to sign a lender comfort letter that describes our requirements on foreclosure, and
includes an estoppel and general release of Claims that you may have against us, Hilton or the Entities, in a form satisfactory
to us. If it desires to continue to operate the Hotel as a System hotel, the lender will be required to conform to the lender
comfort letter signed with us or, if no lender comfort letter was signed, then it must meet the terms and conditions of this Agreement
for a Transfer involving a Change of Ownership.

 

12. Condemnation and Casualty

 

a.   Condemnation.
You will, at the earliest possible time, give us notice of any proposed taking of any portion of the Hotel by eminent domain.
If we agree that the Hotel or a substantial part of the Hotel is to be taken, we may, in our sole discretion and within a reasonable
time of the taking (within four months) transfer this Agreement to a nearby location you select. If we approve a new location,
and if within one (1) year of the closing of the Hotel you open a new hotel (or are diligently proceeding toward opening a new
hotel and ultimately do so) at the new location in accordance with our specifications and in accordance with our timing requirements,
then the new hotel will be deemed to be the Hotel licensed under this Agreement. If a condemnation takes place and a new hotel
does not, for whatever reason, become the Hotel under this Agreement in strict accordance with this Paragraph 12 (or if it
is reasonably evident to us that this will be the case), then we may terminate this Agreement immediately upon notice to you,
and we will not require you to pay a Termination Fee under Subparagraph 14.c.

 

    	16

    	 

    

 

b.   Casualty.
If the Hotel is damaged by fire or other casualty, you will immediately notify us. If the damage or repair requires closing
the Hotel, you may choose to repair or rebuild the Hotel according to our standards, provided you (i) immediately notify
us (ii) begin reconstruction within four (4) months after closing, and (iii) reopen the Hotel for continuous business
operations as soon as practicable (but in any event within one (1) year after the closing of the Hotel), giving us ample advance
notice of the date of reopening. Until we determine that the Hotel can be re-opened as a System hotel, the Hotel will not promote
itself as a System hotel, or otherwise identify itself with any of the Marks without our prior written consent. You and we each
have the right to terminate this Agreement if you elect not to repair or rebuild the Hotel as set forth above in this Paragraph 12,
provided the terminating party gives the other party sixty (60) days written notice, in which case we will not require you to
pay a Termination Fee under Subparagraph 14.c; provided however, if subsequent to such termination notice and prior to the
natural expiration of the License Term, you, or any of your Affiliates, have a controlling interest in and/or operate a hotel
at this Hotel site and such hotel is not operated under a license or franchise from one of the Entities, then you must pay us
the Termination Fee.

 

c.   No
Extensions of Term. Nothing in this Paragraph 12 will extend the License Term.

 

13.    Term of License.

 

a.    Unless
terminated earlier, this Agreement will expire without notice on the date set forth on the Rider. You acknowledge and agree that
this Agreement is non-renewable and that this Agreement confers upon you absolutely no rights of license renewal whatsoever following
the expiration of the License Term.

 

b.    Renewal
Option. Notwithstanding the terms set forth in Paragraph 13.a above, you will have a one-time option to extend the License
Term (“Renewal Option”) for an additional five (5) years provided that you strictly comply with each of the
following conditions:

 

(i)   You
provide written notice of your exercise of the Renewal Option at least twelve (12) months prior to the expiration of the License
Term (the “Renewal Notice”);

 

(ii)   Within
the time frame specified by us, you (a) enter into an amended and restated franchise license agreement for the Hotel upon the then-current
form in use by us, and (b) comply with all terms, conditions, fees and charges then commonly imposed by us for a franchise re-licensing,
including your satisfactory completion of any required renovations and any other work required to ensure that the Hotel meets our
then-current physical and operational requirements necessary to maintain the Hotel as a System hotel; and

 

(iii)
   You are not in default under this Agreement at any time from the date of the Renewal Notice through the effective
date of the amended and restated franchise license agreement. Should you be in default during such period, the Renewal Notice will
be deemed cancelled, your Renewal Option will become void and this Agreement will terminate at the end of the License Term, unless
terminated earlier in accordance with the terms of this Agreement.

 

14.   Termination

 

a.    Termination,
Suspension or Other Interim Remedies by Us on Advance Notice. In addition to our right to immediately terminate this Agreement
upon the occurrence of certain events as provided in Subparagraph 14.b below, we have the right to terminate this Agreement
immediately upon notice to you if you fail to cure an Event of Default (as defined in Subparagraph 14.a.(1)) within thirty
(30) days after we furnish notice of default to you based on the Event of Default, or, if there is a non-monetary Event of Default
that is incapable of cure within thirty (30) days, if you fail to commence to cure within such thirty (30) day period and diligently
pursue cure of such default and fail to cure the default within the additional time periods we set forth in the notice of default.
In lieu of Event of Default termination at such time, we may elect to postpone termination for a period of time we alone determine
and impose one or more of the Interim Remedies listed below in subsection (3), it being expressly understood that, at any time
after doing so, we continue to retain the right – exercisable at any time we determine – to terminate this Agreement.

 

    	17

    	 

    

 

(1)   An
“Event of Default” will occur if you fail to satisfy or comply with any of the obligations, requirements, conditions,
or terms set forth in (i) this Agreement, the Manual (including the standards in the Manual and minimum performance scores
required by the Manual), or any attachment to this Agreement; or (ii) any other agreement you have with us, or any of the
Entities, relating to the Hotel, including, any computer system agreement, or any agreement to manage the Hotel. An “Event
of Default” will also occur if you make any misrepresentations to us, whether in entering into this Agreement, or in the
performance of your obligations to us.

 

(2)   Our
notice of termination will not relieve you of your obligations under this Agreement or any of its attachments.

 

(3)   After
expiration of the applicable notice and cure periods for an Event of Default, we may at anytime elect to postpone termination for
a period of time we alone determine and impose any one or more of the following interim remedies (each, an “Interim Remedy”),
including the suspension of our and/or Hilton’s obligations under this Agreement and/or the Hilton Information Technology
System Agreement, and any other agreement between you and us or any Affiliate related to this Hotel and/or the property upon which
the Hotel is located (collectively, “Your Agreements”):

 

(a)   We
and/or Hilton may suspend you from any reservation and/or website services. We may remove the listing of the Hotel from any directories
we publish, and from any advertising we publish, and/or remove or suspend you from the Reservation Service. If we suspend you from
the Reservation Service, we will have the right to divert reservations previously made for the Hotel to other System hotels.

 

(b)   We
and/or Hilton may disable all or any part of the software provided to you pursuant to Your Agreements, and/or may suspend any one
or more of the information technology and/or network services that we and/or Hilton provide or support under Your Agreements.

 

(c)   We
and/or Hilton may charge you for: the cost of any computer hardware, computer software, other information technology and/or information
technology service which we and/or Hilton provided to you at no additional charge other than the fees you paid under Your Agreements;
costs related to such suspending, disabling, together with intervention or administration fees set forth in the Manual; and, the
cost of any computer hardware, computer software, other information technology and/or information technology service we and/or
Hilton determine to provide you (in our and Hilton’s sole discretion) (each, an “Information Technology Recapture
Charge”). An Information Technology Recapture Charge may, at our sole option, take the form of one or more specific dollar
amounts and/or of a percentage increase to any of the fees charged based on a percentage of your Gross Room Revenues under this
Agreement and/or Your Agreements (a “Percentage Fee”). If an Information Technology Recapture Charge consists
of one or more specific dollar amounts, then you must pay each such amount to us or Hilton immediately upon demand. If an Information
Technology Recapture Charge consists of an increase to a Percentage Fee, you must pay the increased Percentage Fee when and as
provided in Your Agreements (as applicable). You understand and agree that such increases may be levied in any Percentage Fee notwithstanding
any other provision of this Agreement and/or any other of Your Agreements. 

 

If,
after we impose any Interim Remedy, but before we exercise our reserved right to terminate this Agreement (as provided above),
you completely cure to our satisfaction the subject Event(s) of Default, then we may either elect to terminate this Agreement despite
your untimely cure, or, at our sole option, elect not to terminate this Agreement; if the latter, we will withdraw the Interim
Remedy on a going-forward basis.

 

    	18

    	 

    

 

You agree that our exercise
of the right to elect Interim Remedies will not result in actual or constructive termination or abandonment of this Agreement,
and that the rights granted to us in this clause (3) to elect Interim Remedies are in addition to, and apart from, any other
rights we may have in this Agreement, including our right to thereafter at any time we determine terminate this Agreement. If we
exercise the right to elect Interim Remedies, the exercise will not be a waiver of any breach by you of any term, covenant or condition
of this Agreement. You will not be entitled to any compensation, including repayment, reimbursement, refund or offsets, for any
fees, charges, expenses or losses you may directly or indirectly incur by reason of our exercise and/or withdrawal of any Interim
Remedy.

 

(4)   In
addition to the cure requirements specified in our written notice of an Event of Default, we may also require you to cause person(s)
or entity(ies) acceptable to us to guarantee all of your obligations under this Agreement by executing our then-current standard
form guarantee.

 

b.   Immediate
Termination by Us. We have the right to terminate this Agreement immediately upon notice to you (or terminate it at the earliest
time permitted by applicable law) if one or more of the following breaches to this Agreement or any of its attachments occur:

 

(1)   After
curing any material violation of this Agreement or the Manual, you engage in the same noncompliance within any consecutive twenty
four (24) month period, whether or not the noncompliance is corrected after notice; or after we have notified you of your noncompliance
with any of the requirements imposed by this Agreement or the Manual, regardless of materiality, you engage in a pattern of noncompliance
with any of those requirements, whether or not the noncompliance is corrected after notice, which pattern of non-compliance in
and of itself will be deemed material;

 

(2)   You
or any guarantor of your obligations under this Agreement:

 

(a)   Generally
fails to pay its debts as they become due or admits in writing its inability to pay its debts, or makes a general assignment for
the benefit of its creditors;

 

(b)   Commences
any case, proceeding or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of
it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of
a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property;

 

(c)   Takes
any corporate or other action to authorize any of the actions set forth above in clauses (a) or (b);

 

(d)   Suffers
initiation of any case, proceeding or other action against it seeking to have an order for relief entered against it as debtor,
or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating
to bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property, and such case, proceeding or other action (i) results
in the entry of an order for relief against it which is not fully stayed within seven (7) business days after the entry of the
order or (ii) remains undismissed for forty-five (45) days;

 

(e)   Allows
an attachment to remain on all or a substantial part of the Hotel or of its assets for thirty (30) days;

 

(f)    Fails
within sixty (60) days of the entry of a final judgment against it in any amount exceeding One Hundred Thousand Dollars ($100,000)
to discharge, vacate or reverse the judgment, or to stay execution of it, or if appealed, to discharge the judgment within thirty
(30) days after a final adverse decision in the appeal;

 

(g)   Loses
possession or the right to possession of all or a significant part of the Hotel or Hotel site, whether through foreclosure, including,
but not limited to, foreclosure of any lien, trust deed, or mortgage, loss of lease, or for other reasons apart from those described
in Paragraph 12;

 

    	19

    	 

    

 

(h)   Fails
to continue to identify the Hotel to the public as a System hotel, or abandons the operation of the Hotel by failing to operate
the Hotel for five (5) consecutive days, or any shorter period after which it is not unreasonable under the facts and circumstances
for us to conclude that you do not intend to continue to operate the Hotel, unless the failure to operate is due to fire, flood,
earthquake or similar causes beyond your control, provided that you have taken reasonable steps to minimize the impact of such
events;

 

(i)   Contests
in any court or proceeding our ownership of the System or any part of the System, or the validity of any of the Marks;

 

(j)   Takes
any action toward dissolving or liquidating itself, if it is a corporation, limited liability company or partnership, except for
death of a partner;

 

(k)   Any
of the owners of a controlling Equity Interest is discovered to have been convicted of a felony (or any other offense or conduct
if we reasonably determine it is likely to adversely reflect upon or affect the Hotel, the System, us and/or any Entity);

 

(l)   Conceals
revenues, maintains false books and records of accounts, submits false reports or information to us or otherwise attempts to defraud
us;

 

(m)   
Becomes a Competitor (as defined in Subparagraph 6.a.(23));

 

(n)   Transfers
any interest in this Agreement or in the Hotel other than in the transaction that we have approved (unless the Transfer is of a
type described in Paragraph 11 where our approval is not required); or

 

 

(o)   Does
not purchase or maintain insurance required by this Agreement, or does not reimburse us for our purchase of insurance on its behalf;
of

 

(p)   
Becomes a “Specially Designated National or Blocked Person” as defined in Subparagraph 16.o. or fails to comply with
the provisions of Subparagraph 16.o, including a breach of the representations set forth therein or we discover through notice
from you or through our own investigation that the representations set forth in Subparagraph 16.o are or have become false.

 

(3)   Information
involving you or your affiliates, whether provided by you under Subparagraph 6.a.(28) or obtained through Hilton’s or
our own investigation, discloses facts concerning you or your affiliates, including your respective officers, directors, shareholders,
partners or members, and/or the Hotel, or title to the property over which the Hotel is constructed or any other property used
by the Hotel, including leased commercial space, which, in the reasonable opinion of Hilton is likely to adversely reflect upon
or affect in any manner, any gaming licenses or permits held by the Entities or the then current stature of any of the Entities
with any gaming commission, board, or similar governmental or regulatory agency, or the reputation or business of any of the Entities;

 

(4)   We
make a reasonable determination that continued operation of the Hotel by you will result in an imminent danger to public health
or safety; or

 

(5)   Any
guarantor of your obligations under this Agreement breaches its guarantee, if any, or any guarantee fails to be a continuing obligation
fully enforceable against the person(s) signing the guarantee, or if there is any inadequacy of the guarantee or guarantor, and
the guarantor fails to provide adequate assurances to us as we may reasonably request.

 

    	20

    	 

    

 

c.    Liquidated
Damages upon Termination by Us. If we terminate the Agreement under Subparagraphs 14.a. or 14.b. above, you acknowledge that
your default will cause substantial damage to us, the actual amount of which will be difficult to determine. Therefore, you agree
that if we terminate this Agreement under Subparagraphs 14.a. or 14.b. as a result of your default or breach of this Agreement,
or if you unilaterally terminate this Agreement without cause, which is not authorized and which would be a material breach of
this Agreement, then upon termination you must pay us a lump-sum payment equal to the sum of the following: (i) all amounts
owed to us for periods prior to the date of termination, plus (ii) as liquidated damages for the future Monthly Royalty Fees
and Monthly Program Fees we will lose, a “Termination Fee” determined by multiplying the average of the Monthly
Royalty Fees and Monthly Program Fees (collectively, the “Average Monthly Fees”) with respect to the Hotel
for the twenty-four (24) month period immediately preceding the month of termination, by thirty-six (36), or by such lesser multiple
as would represent the remaining full or partial months between the date of termination and the expiration of the License Term.
If the Hotel has been open for less than twenty-four (24) months, then in calculating the Termination Fee we will multiply thirty-six
(36) by the greater of a) the Average Monthly Fees you owed us from the Opening Date through the month immediately preceding the
month of termination, and b) the average Monthly Royalty Fees and Monthly Program Fees per Guest Room owed to us by all System
hotels in operation throughout the same twenty-four (24) month period, multiplied by the number of Guest Rooms in the Hotel. The
Termination Fee is intended to compensate us only for the value lost in Monthly Royalty Fees and Monthly Program Fees as a result
of the early termination of the Agreement, and you agree that you remain liable for all other obligations and claims under the
Agreement, including obligations following termination under Subparagraphs 5.c., 5.d., 8.c., 14.d. and Paragraph 9 and liabilities
arising out of your breach or default.

 

d.    De-identification
of Hotel Upon Termination. Upon expiration or termination of this Agreement for any reason, you will immediately stop holding
yourself out to the public as a System hotel, and will take whatever action is necessary to assure that no use is made of any
part of the System (including the Marks, all forms of advertising and other indicia of operation as a System hotel), and discontinue
use of all distinguishing indicia of System and HHC hotels, including such indicia on exterior and interior signs, stationery,
operating equipment and supplies, Internet sites, brochures and other promotional material at or in connection with the Hotel
or otherwise. You will return to us the Manual and all other proprietary materials, remove all distinctive System features of
the Hotel, including the primary freestanding sign down to the structural steel, and take all other actions (“De-identification
Actions”) required to preclude any possibility of confusion on the part of the public that the Hotel is still using
all or any part of the System or is otherwise holding itself out to the public as a System hotel. If within thirty (30) days after
the termination or expiration of this Agreement, you fail to comply with this paragraph, we and our agents, at your expense, may
enter the premises of the Hotel to perform the De-identification Actions without being deemed guilty of or liable for trespass
or any other tort, and make or cause to be made such changes at your expense. You will pay all such expenses that we incur upon
demand. If you fail to take all De-identification Actions, we and Hilton will be entitled to recover all losses, costs, expenses
and damages caused by that failure. We and Hilton will also be entitled to relief by injunction, and any other right or remedy
at law or in equity to enforce our rights under this Agreement.

 

e.    Special
Termination.You recognize the additional harm by way of confusion for national accounts, greater
difficulty in re-entering the market, and damage to goodwill of the Marks that we will suffer if (i) you (or any of your
Affiliates) cause two (2) or more franchise license agreements for the Licensed Brand between yourself (or any of your Affiliates)
and us to be terminated prior to the expiration date of such agreements within twelve (12) months of each other (if we terminate
those agreements following your breach or default, you (or your Affiliate) will be deemed to have caused the termination) or (ii) this
Agreement terminates or is terminated by us following an unapproved Transfer to a Competitor (each of these will be referred to
as a “Special Termination”). In the case of a Special Termination, the amount
due to us upon termination will be an amount equal to the amount set forth in clause (i) of Subparagraph 14.c., plus
an additional amount equal to two (2) times the Termination Fee payable under clause (ii) of Subparagraph 14.c. This
Subparagraph 14.e. is not triggered upon mutual voluntary termination of this Agreement. For purposes of Subparagraph 14.e.(i)
above only, Licensed Brand includes Hilton and Hilton Suites.

 

    	21

    	 

    

 

15. Relationship of Parties

 

a.    No
Agency Relationship. You are an independent contractor. Neither of us is the legal representative
or agent of the other, or has the power to obligate (or has the right to direct or supervise the daily affairs of) the other for
any purpose. You expressly acknowledge that we have a business relationship based entirely on, and defined by, the express provisions
of this Agreement and that no partnership, joint venture, agency, fiduciary or employment relationship is intended or created by
reason of this Agreement. Neither we nor any of the Entities will have any responsibility to any person for any debts, liabilities,
damages, claims or expenses related to the establishment, construction or operation of the Hotel or arising out of or related to
your policies, procedures, practices or alleged practices in the operation of the Hotel or any other business conducted at the
Hotel.

 

b.    Notices
to Public Concerning Your Independent Status. You will take all steps reasonably necessary to
minimize the chance of a claim being made against us for anything that occurs at the Hotel, or for the acts or omissions of you
or anyone associated or affiliated with you or the Hotel, including steps mandated by us in the Manual or otherwise. You will not
incur any obligation or indebtedness on our behalf. All contracts for the Hotel’s operations and services at the Hotel will
be in your name or in the name of your management company. You will not enter into or sign any contracts in our name or using the
name of the Licensed Brand or the Marks or any acronyms or variations on same. You will disclose in all dealings with suppliers
and third parties that you are an independent entity and that we have no liability for your debts. 

 

		16.	Miscellaneous

 

a.    Severability
and Interpretation. The remedies provided in this Agreement are cumulative. These remedies are
not exclusive of any other remedies to which you or we may be entitled in case of any breach or threatened breach of the terms
and provisions hereof. If any provision of this Agreement is held to be unenforceable, void or voidable, that provision will be
ineffective to the extent of the prohibition without in any way invalidating or affecting the remaining provisions of this Agreement,
and all remaining provisions will continue in effect. If any provision of this Agreement is held unenforceable due to its scope,
but may be made enforceable by limiting its scope, the provision will be considered amended to the minimum extent necessary to
make it enforceable. This Agreement will be interpreted without interpreting any provision in favor of or against either of us
by reason of the drafting of the provision, or either of our positions relative to the other. Any covenant, term or provision of
this Agreement that provides for continuing obligations after the expiration or termination of this Agreement will survive any
expiration or termination. To the extent that the provisions of this Agreement provide for periods of notice less than those required
by applicable law, or provide for termination, cancellation, non-renewal or the like other than in accordance with applicable law,
those provisions will, to the extent they are not in accordance with applicable law, be superseded by said law, and we will comply
with applicable law in connection with each of these matters.

 

b.    Controlling
Law. This Agreement will become valid when signed by both of us. We each agree that the State
of New York has a deep and well developed history of business decisional law. For this reason, we each agree that except to the
extent governed by the United States Trademark Act of 1946 (Lanham Act; 15 U.S.C. ¶ 1050 et seq.), as amended, this Agreement,
all relations between us, and any and all disputes between us, whether sounding in contract, tort, or otherwise, are to be exclusively
construed in accordance with and/or governed by (as applicable) the laws of the State of New York without recourse to New York
(or any other) choice of law or conflicts of law principles. If, however, any provision of this Agreement would not be enforceable
under the laws of New York, and if the Hotel is located outside of New York and the provision would be enforceable under the laws
of the state in which the Hotel is located, then the provision in question (and only that provision) will be interpreted and construed
under the laws of that state. Nothing in this section is intended to invoke the application of any franchise, business opportunity,
antitrust, “implied covenant,” unfair competition, fiduciary or any other doctrine of law of the State of New York
or any other state which would not otherwise apply absent this Subparagraph 16.b.

 

Because, as stated
above, the State of New York has a well developed history of business decisional law and because the courts of the State of New
York are best suited to interpret and apply that law, we each agree that any litigation arising out of or related to this Agreement,
any breach of this Agreement, the relationship between us, and, any and all disputes between us, whether sounding in contract,
tort, or otherwise, will be submitted to and resolved exclusively by a court of competent jurisdiction located in the City and
State of New York. You waive, and agree never to assert, move or otherwise claim that this venue is for any reason improper, inconvenient,
prejudicial or otherwise inappropriate (including, any claim under the judicial doctrine of forum non conveniens).

 

    	22

    	 

    

 

If our mutual choice
of venue in the City and State of New York is not honored by the subject court(s), then we each agree that any litigation arising
out of or related to this Agreement; any breach of this Agreement; the relationship between us; and, any and all disputes between
us, whether sounding in contract, tort, or otherwise, will instead be submitted to and resolved exclusively by a court of competent
jurisdiction located in the City and County of Los Angeles, California. You waive, and agree never to assert, move or otherwise
claim that this substitute venue is for any reason improper, inconvenient, prejudicial or otherwise inappropriate (including, any
claim under the judicial doctrine of forum non conveniens).

 

c.    Exclusive
Benefit. This Agreement is exclusively for our and your benefit, and none of the obligations of either of us in this Agreement
will run to, or be enforceable by, any other party (except for covenants in favor of the Entities, which covenants will run to
and be enforceable by the Entities or their successors and assigns), or give rise to liability to a third party, except as otherwise
specifically set forth in this Agreement.

 

d.   Entire
Agreement. You and we acknowledge that we want all terms of this business relationship defined in this written Agreement,
and that neither of us wants to enter into a business relationship with the other in which any terms or obligations are subject
to any oral statements or in which oral statements serve as the basis for creating rights or obligations different than or supplementary
to the rights and obligations set forth in this Agreement. Therefore, you and we agree that this Agreement and its attachments
will be construed together and will supersede and cancel any prior and/or contemporaneous discussions or writings (whether described
as representations, inducements, promises, agreements or by any other term) between us. We each agree that we placed, and will
place, no reliance on any such discussions or writings. You agree that no claims, representations or warranties of earnings, sales,
profits, success or failure of the Hotel have been made to you. This Agreement and its attachments is the entire agreement between
us and contains all of the terms, conditions, rights and obligations between us with respect to the Hotel and any other aspect
of the relationship between us. No change, modification, amendment or waiver of any of the provisions of this Agreement will be
effective and binding upon us unless it is in writing, specifically identified as an amendment to this Agreement, signed by one
of our officers, and which may include an estoppel and general release of Claims that you may
have against us, Hilton or the Entities, in a form satisfactory to us. If any provision of this Agreement is inconsistent
with the Manual, the provisions of this Agreement will prevail. No failure by us or by any of the Entities to exercise any power
given us under this Agreement or to insist on strict compliance by you with any of your obligations, and no custom or practice
at variance with the terms of this Agreement, will be considered a waiver of our or any Entity’s right to demand exact compliance
with the terms of this Agreement.

 

e.   Consent;
Business Judgment. Wherever our consent or approval is required in this Agreement, unless the provision specifically indicates
otherwise, we have the right to withhold our approval in our discretion taking into consideration our assessment of the long-term
interests of the System overall. You and we recognize, and any arbitrator or judge is affirmatively advised that if those decisions
are supported by our business judgment, neither an arbitrator nor a judge nor any other person reviewing those decisions will
substitute his, her or its judgment for our judgment. When the terms of this Agreement specifically require that we not unreasonably
withhold our approval or consent, if you are in default or breach under this Agreement, any withholding of our approval or consent
will be considered reasonable. Our approvals and consents will not be effective unless given in writing. In no event may you make
any claim for money damages based on any claim that we have unreasonably withheld or delayed any consent or approval to a proposed
act by you under the terms of this Agreement. You also may not claim damages by way of set-off, counterclaim or defense for our
withholding of consent. Your sole remedy for the claim will be an action or proceeding to enforce the provisions of this Agreement
by specific performance or by declaratory judgment.

 

    	23

    	 

    

 

f.    Notices.
All notices must be in writing and will be effective on the earlier of (i) the day it is sent via facsimile with a confirmation
of receipt; or (ii) one business day after it is sent by next business day delivery service; or (iii) the third business
day after it is sent by first-class or certified mail or other form of express delivery to the appropriate party at the following
single address, or such other single address as may be designated by the party to be notified (which, in no event, is a P.O. Box).
If to us, the notice should be sent to our principal executive offices, addressed to “General Counsel.” The current
address of our principal executive offices is as follows: 9336 Civic Center Drive, Beverly Hills, CA 90210. If to you, then to
the address set forth for you in the Rider. Notice to you is deemed given if 1) delivered in writing via one of the delivery methods
set forth above and 2) addressed to the Principal Correspondent at the address you designate in the Rider. Any change to your address
or Principal Correspondent for notice must be delivered to us in writing in accordance with the delivery procedure set forth in
this Subparagraph 16.f. Licensee hereby grants Licensor permission to send communications to the Licensee via facsimile for
the purposes of notices under this Agreement, including this Subparagraph 16.f., and/or to provide information from the Licensor
to the Licensee via facsimile or email, subject to any applicable laws. To the extent there are any regulations or laws prohibiting
such mass communications and to the extent they are waivable, Licensee hereby waives them.

 

g.   General
Release. You and your heirs, administrators, executors, agents and representatives and their respective successors and assigns
release, remise, acquit and forever discharge us and the Entities and their officers, directors, employees, agents, representatives
and their respective successors and assigns from any and all actions, claims, causes of action, suits, rights, debts, liabilities,
accounts, agreements, covenants, contracts, promises, warranties, judgments, executions, demands, damages, costs and expenses,
whether known or unknown at this time, of any kind or nature, absolute or contingent, at law or in equity, on account of any matter,
cause or thing whatsoever that has happened, developed or occurred before you sign and deliver this Agreement to us (collectively,
“Claims”). This release will survive the termination of this Agreement.

 

h.   Estoppel
Certificate. Whenever we reasonably request it, you will deliver to us an estoppel certificate in the form we require as to
the matters described in this Agreement.

 

i.    Descriptive
Headings. The descriptive headings in this Agreement are for convenience only and will not control or affect the meaning or
construction of any provision in this Agreement.

 

j.    Representations
and Warranties. You warrant, represent and agree that all statements made by you in the Application you submitted to us in
anticipation of this Agreement and all other documents and information you submitted to us are true, correct and complete as of
the date of this Agreement and that you will continue to update them so that they are always true, correct and complete. You further
represent and warrant to us that you have the full legal power and authority to enter into this Agreement and that by entering
into this Agreement you will not be breaching any agreement to which you are a party. You hereby indemnify and hold us harmless
from any breach of these representations and warranties. These warranties and representations will survive the termination of this
Agreement.

 

k.   Time.
Time is of the essence in this Agreement.

 

l.    Counterparts.
This Agreement may be signed in counterparts, each of which will be considered an original.

 

m.  Performance
Requirements/Responsibilities. Attachment A, setting forth certain of your performance conditions and requirements, is incorporated
by reference and made a part of this Agreement.

 

n.   Informational
Copies. You acknowledge that we may provide, but are not required to provide, copies of any information we provide to you concerning
the Hotel (such as quality assurance reports and default notices) to the owner and/or lessor of the Hotel.

 

    	24

    	 

    

 

o.    Blocked
Persons or Entities. Licensee represents and warrants to Hilton that to Licensee’s actual or constructive knowledge:
(1) neither Licensee (including its directors and officers), nor any of its Affiliates, or the funding sources for any of the
foregoing, is identified on the list of the Treasury’s Office of Foreign Assets Control (OFAC); (2) neither Licensee nor
any of its Affiliates, is directly or indirectly owned or controlled by the government of any country that is subject to an embargo
imposed by the United States government; and (3) neither Licensee nor any of its Affiliates is acting on behalf of a government
of, or is involved in business arrangements or other transactions with, any country that is subject to such an embargo. Licensee
agrees that it will notify Hilton in writing immediately upon the occurrence of any event which would render the foregoing representations
and warranties of this Subparagraph 16.o. incorrect. Notwithstanding anything to the contrary in this Agreement, no Transfer shall
be made to a Specially Designated National or Blocked Person (as herein defined below) or to an entity in which a Specially Designated
National or Blocked Person has an interest. For purposes of this Agreement, "Specially Designated National or Blocked
Person" means (i) a person or entity designated by OFAC (or any successor office or agency of the U.S. government) from
time to time as a "specially designated national or blocked person" or similar status, (ii) a person or entity described
in Section 1 of U.S. Executive Order 13224, issued on September 23, 2001, or (iii) a person or entity otherwise identified by
government or legal authority as a person with whom Hilton is prohibited from transacting business. Note to Licensee: The U.S.
government has published a list of such designations and the text of the Executive Order are is published under the internet website
address www.ustreas.gov/offices/enforcement/ofac.

 

17. WAIVER OF JURY TRIAL

 

TO THE EXTENT EITHER
PARTY INITIATES LITIGATION INVOLVING THIS AGREEMENT OR ANY ASPECT OF THE RELATIONSHIP BETWEEN US (EVEN IF OTHER PARTIES OR OTHER
CLAIMS ARE INCLUDED IN SUCH LITIGATION), ALL THE PARTIES WAIVE THEIR RIGHT TO A TRIAL BY JURY. THIS WAIVER WILL APPLY TO ALL CAUSES
OF ACTION THAT ARE OR MIGHT BE INCLUDED IN SUCH ACTION, INCLUDING CLAIMS RELATED TO THE ENFORCEMENT OR INTERPRETATION OF THIS AGREEMENT,
ALLEGATIONS OF STATE OR FEDERAL STATUTORY VIOLATIONS, FRAUD, MISREPRESENTATION, OR SIMILAR CAUSES OF ACTION, AND IN CONNECTION
WITH ANY LEGAL ACTION INITIATED FOR THE RECOVERY OF DAMAGES BETWEEN OR AMONG US OR BETWEEN OR AMONG ANY OF OUR OWNERS, AFFILIATES,
OFFICERS, EMPLOYEES OR AGENTS.

 

 [THIS AGREEMENT CONTINUES WITH AN ATTACHMENT
A AND ATTACHMENT B, WHICH ARE A PART OF THIS AGREEMENT.]

 

    	25

    	 

    

  

Attachment A - 1

 

    	 

    	 

    

 

ATTACHMENT A - PERFORMANCE CONDITIONS:

CONVERSION

 

A.           Consultation.
You or your representative(s) will meet with us to consult and coordinate with the project manager we assign to you. The meeting
will take place within forty-five (45) days after we notify you of approval, and the meeting will be held at a location we select.

 

B.           Work
and Purchase Requirement. If applicable, the PIP is attached to this Agreement as Exhibit A, and incorporated herein
by reference. You will perform the renovation and/or construction work and purchase the items described on the PIP (the “Renovation
Work”) on or before the completion date specified on the Rider. The Renovation Work will include your purchasing and/or
leasing and installing all fixtures, equipment, furnishings, furniture, signs, computer terminals and related equipment, supplies
and other items which would be required of a new System hotel under the Manual and other equipment, furnishings and supplies as
we may required for you to operate the Hotel. You will be solely responsible for obtaining all necessary licenses, permits and
zoning variances required for the Hotel.

 

C.           Approval
of Architect/Engineer/Contractors. Before you submit Plans and Designs (as defined in Paragraph D) to us, you will furnish
us with resumes and other information we request pertaining to the architect you desire to retain to prepare your Plans and the
interior designer you desire to retain to prepare your Designs. The Plans and Designs will not be approved until we have approved
the architect and designer who are to prepare the Plans and Designs. Before Renovation Work, you will also submit to us resumes
and other information we request pertaining to the general contractor and/or any major subcontractors for the Renovation Work).
Renovation Work will not begin until we have approved the contractors, which approval may be conditioned on bonding of the contractors.

 

D.           Approval
of Plans and Designs. On or before the date specified on the Rider for submission of the Plans, you must submit to us your
plans, layouts, specifications, and drawings for the Hotel, (collectively, the “Plans”). We may supply you with
representative prototype Guest Room and public area plans and schematic building plans as a guide for preparation of the Plans.
Renovation Work will not begin unless and until we have approved the Plans. You must also submit to us your plans, layouts, specifications,
drawings and designs for the proposed furnishings, fixtures, equipment, signs and décor of the Hotel (collectively, the
“Designs”) when we instruct you to do so. Once we approve the Plans and Designs, no change may be made to the
Plans and Designs without our advance consent. In approving the Plans and Designs, we do not warrant the depth of our analysis
or assume any responsibility for the efficacy of the Plans and Designs, or the resulting Renovation Work. You will cause the Renovation
Work to be in accordance with this Agreement, the approved Plans and Designs, the Manual and the PIP. You will be solely responsible
for obtaining all necessary licenses, permits and zoning variances that may be required for the Renovation Work. It is solely your
responsibility to ensure your Plans comply with our then prevailing standards and specifications as set forth in the Manual and
with all Legal Requirements (as defined below).

 

You are solely responsible for
making certain that the Hotel and the Renovation Work comply in all respects with all Legal Requirements. For purposes of this
Agreement, “Legal Requirements” means all public laws, statutes, ordinances, orders, rules, regulations, permits,
licenses, authorizations, directions and requirements of all governments and governmental authorities, which, now or hereafter,
may apply to the construction, completion, equipping and opening of the Hotel and the operation of the Hotel, including environmental,
zoning, building, and life safety. We and Hilton will have the right to, and you will arrange for us and Hilton to, participate
in all progress meetings during the Renovation Work, to have access to all contract and construction documents relating to the
Hotel and the Renovation Work, and to have access to the Hotel during reasonable business hours to visit the Hotel, its construction,
completion, furnishing and equipping. However, neither we nor Hilton are obligated to participate in progress meetings, or visit
the Hotel, and our and Hilton’s participation and site visits are not to be considered as a representation of the adequacy
of the construction, the structural integrity, or the sufficiency of mechanical and electrical systems for the Hotel or the Renovation
Work. Before we approve your Plans, your architect or other certified professional must certify to us that the Plans comply with,
or do not require compliance with, the Americans with Disabilities Act and its architectural guidelines as well as the applicable
state and local codes for accessible facilities. Upon completion of the Renovation Work and as a condition to Opening of the Hotel,
your architect, general contractor or other certified professional must provide us with a certificate stating that the as-built
premises comply with, or do not require compliance with, the Americans with Disabilities Act and its architectural guidelines and
all state and local codes for accessible facilities.

 

Attachment A - 1

 

    	 

    	 

    

 

 

E.           Commencement;
Completion. You will begin the Renovation Work on or before the date specified on the Rider (the “CCD”)
and will continue the Renovation Work uninterrupted (except to the extent continuation is prevented by events beyond Licensee’s
control, such as acts of God, third party strikes, acts of terrorism, war, or general governmental restrictions (“Force
Majeure”)) until it is completed. For purposes of this Paragraph E, Force Majeure does not include your own financial
inability, inability to obtain financing, inability to obtain permits or any other events unique to you or the Hotel. Notwithstanding
any Force Majeure, or any other matter, the Renovation Work must be completed and the Hotel must be furnished, equipped, and comply
with this Agreement no later than the date specified in the Rider (the “Renovation Work Completion Date”). If
you fail to complete the Renovation Work in accordance with this Agreement on or before the Renovation Work Completion Date and
this failure to meet the Renovation Work Completion Date is due solely to Force Majeure, the Pre-Opening Termination Fee (as defined
in Paragraph S below) will not be assessed. Your failure to complete the Renovation Work by the Renovation Work Completion
Date will be an Event of Default, unless we extend such date. If you want to request an extension of the Renovation Work Completion
Date, you must submit a written request and a Ten Thousand Dollar ($10,000) extension fee before the Renovation Work Completion
Date. If we approve the extension, we will set a new Renovation Work Completion Date and the extension fee will become non-refundable.
If we deny the extension, we will refund the extension fee. We will have the sole right to determine whether the Renovation Work
has been completed in accordance with this Agreement, the approved Plans and Designs, the Manual and the PIP.

 

F.           Site
Visits. During the course of Renovation Work, you and your architect, designer, contractors, and subcontractors will cooperate
fully with us for the purpose of permitting us to visit the Hotel and review the progress of the Renovation Work. In addition,
you and your contractors, architect and designer will (i) supply us with samples of construction materials, supplies, equipment,
materials and reports as we may request and (ii) give our representatives access to the Hotel site and Renovation Work in
order to permit us to carry out our site visits.

 

G.           Progress
Reports. You will submit to us each month (or more frequently if we so request) a report showing progress made toward fulfilling
the terms of this Agreement.

 

H.           Acquisition
of Equipment, Furnishings, and Supplies. You will purchase and/or lease and install all fixtures, equipment, furnishings, furniture,
signs, computer terminals and related equipment, supplies and other items we require in order to assure that the Renovation Work
is completed under this Agreement.

 

I.           Cost
of Construction and Equipping. You will bear the entire cost of the Renovation Work, including the cost of the Plans and Designs,
professional fees, licenses, permits, equipment, furniture, furnishings and supplies.

 

J.           Insurance
During Conversion. In addition to the insurance coverage required under this Agreement, during the course of Renovation Work,
you will maintain or will cause the general contractor to maintain Builder’s Risk coverage for the replacement value of the
Hotel, which policies must name us and the Entities as additional insureds. This coverage must be evidenced by an original certificate
of insurance, submitted to us at least thirty (30) days before you begin Renovation Work and thereafter any time before a change
is made in the coverage. Prior to the Opening, you will submit to us a certificate of insurance evidencing the other types of insurance
we require under subparagraph 6.a.(31) of this Agreement.

 

Attachment A -
2 

 

    	 

    	 

    

 

K.          Limitation
of Liability. We will have no liability or obligation with respect to design and construction of the Hotel. We have furnished
to you that portion of the Manual which contains the technical standards and specifications to assist you in completing the Renovation
Work. You acknowledge you have studied these standards and specifications and satisfied yourself that the Hotel can be designed,
furnished and equipped in accordance with these standards and specifications and that you and your design and construction consultants
and contractors have the necessary resources and skills to do so. The Manual does not encompass the architectural, structural,
mechanical or electrical safety, adequacy, integrity or efficiency of the design or compliance with applicable Legal Requirements.
We do not undertake to approve the Hotel as complying with governmental requirements or as being safe for guests or other third
parties and we have no responsibilities in these areas. You must indemnify us with regard to compliance with these matters to the
extent provided in Paragraph 9 of this Agreement. The Manual may not be used by you or by any design or construction professional
for any hotel project other than the Hotel.

 

L.           Trademarks.
During the Renovation Work, you will have the right, so long as this Agreement is in effect: (i) to place a sign on the Hotel
site, advising the general public that a System hotel is under construction or renovation, and you agree, at your sole expense,
on or before the date specified in the Rider, to erect, install and maintain in complete working order at the site of the Hotel
a large construction sign using the Licensed Brand name and other distinguishing characteristics in accordance with our plans and
specifications for System hotels; (ii) to advertise and promote the development and Opening of the Hotel in the media; (iii) to
purchase, from vendor(s) approved by us, operating supplies and equipment bearing the Marks required for the operation of the Hotel;
and (iv) to purchase, from vendor(s) approved by us, and install the permanent Licensed Brand signage required for the operation
of the Hotel. Once we authorize the Hotel to Open (conditionally or otherwise) as a System hotel, you may use the Marks and the
System in the operation of the Hotel consistent with the terms and conditions of this Agreement. Upon Opening, you will stop using
all other names, symbols, trademarks or trade logos other than those used and associated with the System.

 

		M.	Staffing. Before the Opening Date, you will, at your cost, hire a staff to operate the Hotel,
and train that staff, all in accordance with the Manual and such other instructions as we may furnish to you.

 

N.           Opening.
The Hotel will be considered open for business (“Open” or “Opening”) on the date (“Opening
Date”) we authorize you to make available the facilities, Guest Rooms or services of the Hotel to the general public
under the Licensed Brand name(s). You will not Open the Hotel unless and until you receive our written authorization to do so.
We will only authorize the Hotel to Open when we, in our sole discretion, are satisfied that: (i)  you have complied with
all the terms and conditions set forth in this Agreement; (ii) your staff has received adequate training and instruction;
and (iii) all fees and charges you owe to us or the Entities have been paid. Opening the Hotel before we authorize you to
Open will constitute unauthorized use of our Marks and a material breach of this Agreement. Recognizing the difficulty of ascertaining
damages for such a breach, you agree to pay to us, as liquidated damages, solely for the damage to our Marks, and not as a penalty,
Five Thousand Dollars ($5,000) per day to compensate us for the damage to our Marks. You also agree to reimburse us for our costs,
including attorneys fees, incurred in enforcing our rights. These damages do not limit any other remedies we may have, at law or
in equity.

 

O.           Compliance/Investigation.
You will give us at least fifteen (15) days advance notice that, in your opinion, you have complied with all the terms and conditions
of this Agreement and the Hotel is ready to Open (conditionally or otherwise). We will use reasonable efforts within fifteen (15)
days after we receive your notice to visit the Hotel and to conduct other investigations as we deem necessary to determine whether
to authorize the Opening (conditional or otherwise) of the Hotel, but we will not be liable for delays or loss occasioned by our
inability to complete our investigation and to make this determination within the fifteen (15) day period. If you fail to pass
our initial opening site visit, we may, in our sole discretion, charge you reasonable fees associated with any additional visits.

 

Attachment A – 3

 

    	 

    	 

    

 

P.           Conditional
Opening. Notwithstanding Paragraph N above, we may, in our sole discretion, conditionally authorize you to Open and operate
the Hotel as a System hotel (“Conditional Opening”) even though you have not fully complied with the terms of
this Agreement, if you are meeting your performance obligations under this Agreement and if you agree to fulfill all remaining
terms of this Agreement, including any attachment, on or before the completion date set forth on the Rider, or any extension we
approve. Our determination as to whether to authorize a Conditional Opening will be final and binding.

 

Q.           Performance
of Agreement. You agree to satisfy all of the terms and conditions of this Agreement, and to equip, supply, staff and otherwise
make the Hotel ready to Open under our standards. As a result of your efforts to comply with the terms and conditions of this Agreement,
you will incur significant expense and expend substantial time and effort. You acknowledge and agree that we will have no liability
or obligation to you for any losses, obligations, liabilities or expenses you incur if we do not authorize the Hotel to Open or
if we terminate this Agreement because you have not complied with the terms and conditions of this Agreement.

 

R.           Termination
Prior to Opening. Your failure to satisfy the terms of this Agreement, including your failure to begin or complete the Renovation
Work in accordance with the Plans, the Manual and our requirements (including the milestone and completion dates) will constitute
a material breach of your obligations under this Agreement and will be considered an Event of Default. If an Event of Default occurs
before the Opening, we may terminate this Agreement if that Event of Default continues for ten (10) days (or longer, if required
by law) after written notice to you.

 

S.           Pre-Opening
Termination Fees. If there is an Event of Default by you prior to Opening and, as a result of your failure to cure such Event
of Default, we terminate this Agreement either:

 

		1.	Before you begin the Renovation Work, but only if, within one (1) year of such termination you
(or your affiliate) then, directly or indirectly, (a) enter into a franchise, license and/or management agreement for, and/or (b) begin
construction or commence operation of: a hotel, motel, inn, or similar facility at the Hotel site under a Competitor brand name;
or

 

		2.	After you begin the Renovation Work, but before Opening (unless the Event of Default is due solely
to Force Majeure as provided for in Paragraph E above);

  

then you will be liable to us
for a Pre-Opening termination fee equal to One Thousand Two Hundred Dollars ($1200.00), for each Guest Room, multiplied by three
(3) (the “Pre-Opening Termination Fee”). You must pay the entire Pre-Opening Termination Fee to us in one lump
sum upon demand. The Pre-Opening Termination Fee represents the minimum damages we would incur as a result of the additional time
necessary for us to develop an alternative site in the market. It does not substitute for any other damages we may incur as a result
of any breach by you of any provision of this Agreement before or after the termination date, for which you will remain liable.

 

T.           Termination
after Opening of the Hotel. Termination of this Agreement after the Opening of the Hotel (conditionally or otherwise) will
be governed by Paragraph 14 of this Agreement.

 

(Remainder of page left intentionally
blank.) 

 

Attachment A – 4

 

    	 

    	 

    

 

ATTACHMENT B -

RIDER TO FRANCHISE LICENSE AGREEMENT

 

Effective Date:
NOVEMBER 24, 2004

 

Licensor Name: HILTON INNS, INC., a
Delawarecorporation

 

Licensed Brand: Hilton (excluding Hilton
Suites, Hilton Garden Inn,Homewood Suites by Hilton and any other sub-brands containing Hilton in the name.)

 

Initial Approved Hotel Name (Trade Name):
Hilton San Francisco Financial District

 

Principal Name in Licensed Brand: Hilton

 

	Licensee Name and Address (Principal Correspondent for Notice):	 	JUSTICE INVESTORS
	 	 	750 Kearny Street, Suite 502
	 	 	San Francisco, CA  94108
	 	 	Attn:  Geoffrey Palermo
	 	 	Phone:  415/984-0786
	 	 	Fax:  415/984-0783
	 	 	Email:  geoffreyp@msn.com

 

Address of Hotel: 750 Kearny Street,
San Francisco, CA 94108

 

Initial Number of Approved Guest Rooms:
555

 

Plans Submission Dates:

 

	Preliminary Plans:	N/A
	 	 
	Design Development (50%) Plans and Specifications:	FEBRUARY 24, 2005
	 	 
	Final (100%) Plans and Specifications:	APRIL 24, 2005

 

	Renovation Commencement Date:	APRIL 24, 2005
	 	 
	Renovation Work Completion Date:	Prior to the Opening Date, which in no event will be later than JUNE 1, 2006
	 	 
	 	All references in the PIP to “Conversion” shall mean “Opening”.

 

Licensee agrees that the Renovation Commencement
Date and Renovation Work Completion Date may be extended by written notice from Licensor in its discretion.

 

Expiration
of Term: At midnight on the day before the 15th anniversary of the Opening Date, subject to the Renewal Option set
forth in Subparagraph 13.b.

 

Attachment B - 1

 

    	 

    	 

    

 

Monthly Royalty Fee:  You will pay a
Monthly Royalty Fee representing a percentage of the Gross Rooms Revenue of the Hotel, as defined in Subparagraph 7.b. of the Agreement,
in the amounts set forth below:

 

	Years 1* and 2	Three percent (3%) of Gross Rooms Revenue
	Year 3	Four percent (4%) of Gross Rooms Revenue
	Year 4 through end of Term	Five percent (5%) of Gross Rooms Revenue

 

*through the first twelve (12) full
calendar months after the Opening of the Hotel.

 

Additional Requirements/Special Provisions:

 

		·	Licensee acknowledges and agrees that (i) its right to operate the Hotel under the Licensed
Brand will not become effective until after the existing third-party franchise (or similar) agreement for this Hotel, if any, has
terminated or expired and (ii) Licensee is wholly responsible for ensuring that any such agreement has terminated or expired
on or prior to the Opening Date.

 

		·	Paragraph 1.a – The Hotel: See insert

 

		·	Paragraph 10 – Right of First Offer: Intentionally deleted

 

		·	Paragraph 13.b – Renewal Option: New

 

		·	Paragraph 2 – Grant of License: Paragraph 2 of the Franchise License Agreement is deleted
in its entirety and the following is inserted in its place and stead:

 

2. Grant of License

 

a.   Non-Exclusive
License. We hereby grant to you and you hereby accept a non-exclusive license (the “License”) to use the
System at, and in connection with the operation of, the Hotel, in accordance with the terms of this Agreement. You acknowledge
and agree that you are not acquiring any rights other than the non-exclusive right to use the System to operate the Hotel under
the Licensed Brand at the site licensed under this Agreement and in accordance with the terms of this Agreement.

 

Except
as provided below, this Agreement does not limit our right, or the right of any of our present or future owners, subsidiaries,
and affiliated entities (the “Entities”), to own, license or operate any other business of any nature (“Other
Businesses”), including a hotel, inn, conference center, time share property, lodging facility or similar business, whether
under the Licensed Brand or as a competitive brand, or otherwise. We reserve the right to engage in any Other Businesses, even
if they compete with the Hotel, the System, or the Licensed Brand, whether we start those businesses, or purchase, merge with,
acquire, are acquired by, or affiliate with, those businesses. We may also: (a) use or license to others all or part of the
System; (b) use the facilities, programs, services and/or personnel used in connection with the System inOther Businesses;
and (c) use the System, the Licensed Brand, and the Marks in the Other Businesses. You waive and release any claims, demands
or damages arising from or related to any of the foregoing activities, and you acknowledge and agree that those activities will
not give rise to any liability on our part, including liability for claims for unfair competition, breach of contract, breach of
any applicable implied covenant of good faith and fair dealing, or divided loyalty.

 

Notwithstanding
the foregoing, neither we nor any of the Entities will operate, or allow to operate, a full-service
hotel or motel under the Licensed Brand, as such name may be changed by us from time to time, within the Restrictive Area One
and Restrictive Area Two (defined below) during the two time periods (the “Restrictive Period(s)”) as shown
below. This restriction does not apply to any hotel that is currently open or under construction or has been approved for development
or opening as a Licensed Brand hotel as of the Effective Date (“Existing Hotel”). The term Existing Hotel also
includes any hotel located or to be located within the Restrictive Area that replaces such Existing Hotel under the Licensed Brand.

 

Attachment
B - 2 

 

    	 

    	 

    
  

Restrictive
Period One: The first Restrictive Period will commence on the Effective Date and continue to the FOURTH
(4TH) anniversary of the Opening Date (“Restrictive Period One”). Under Restrictive Period One,
the Restrictive Area is generally outlined on the map attached to, and incorporated by reference into, this Agreement as
Exhibit B-1 (“Restrictive Area One”). Except as may otherwise be specifically provided in this
Subparagraph 2.a., Restrictive Area One means the area located within the boundaries below and
is from the shore or side of the street currently closest to the Hotel. If there is a conflict between Exhibit B-1 and this narrative
description, this description will control.

 

	North Boundary:	Lombard Street between Van Ness and the San Francisco Bay
	East Boundary:	The waterline of San Francisco Bay between Lombard and 1-80
	South Boundary:	Intersection of 17th Street and Van Ness, east along 17th Street to the intersection of 17th Street and Hwy 101. Hwy 101 to 1-80 and the northeast along 1-80 to the waterline of San Francisco Bay. 
	West Boundary:	Van Ness Avenue

 

Restrictive
Period Two: The second Restrictive Period will commence on FOURTH (4TH) anniversary of the Opening Date and
continue to the TENTH(10th) anniversary of the Opening Date(“Restrictive Period Two”). Under
Restrictive Period Two, the Restrictive Area is generally outlined on the map attached to, and incorporated by reference
into, this Agreement as Exhibit B-2 (“Restrictive Area Two”). Except as may otherwise be specifically
provided in this Subparagraph 2.a., Restrictive Area Two means the area located within the boundaries
below and is from the shore or side of the street currently closest to the Hotel. If there is a conflict between Exhibit
B-2 and this narrative description, this description will control.

 

	North Boundary:	Lombard Street between Van Ness and the San Francisco Bay
	East Boundary:	The waterline of San Francisco Bay between Lombard and 1-80
	South Boundary:	Market Street
	West Boundary:	Van Ness Avenue

 

b. You
agree that nothing contained in this Agreement or any laws, prohibits or limits us, Hilton, the Entities or any successors (by
purchase, merger, acquisition or otherwise) from (1) engaging in any of the activities relating to Other Businesses under brand
names other than the Licensed Brand, (2) constructing, owning, leasing, managing, franchising, licensing, operating or authorizing
the operation of any Existing Hotel, and (3) constructing, owning, leasing, managing, franchising, or licensing any hotel other
than an Existing Hotel under the Licensed Brand in the Restrictive Area, as long as the subject hotel does not begin operating
under the Licensed Brand until after the expiration of the Restrictive Period. In addition, the restrictions do not apply to (i)
areas located anywhere outside the Restrictive Area; (ii) any period after the earlier of the expiration of the Restrictive Period
or termination of this Agreement; (iii) any gaming-oriented hotels, facilities, or Other Businesses; (iv) any shared ownership
properties commonly known as “vacation ownership” or “time share ownership” or similar real estate properties;
or (v) any hotel(s), motel(s), or inn(s) that are part of a chain or group of four (4) or more hotels, motels, or inns that we,
Hilton or the Entities, in a single transaction, after the Effective Date own, operate, acquire, lease, manage, franchise, license,
or join through a merger, acquisition or marketing agreement (or otherwise), whether under their existing name or the Licensed
Brand name or any other name.

 

You waive
and release any claims, demands or damages arising from or related to any of the foregoing activities, and you acknowledge and
agree that those activities will not give rise to any liability on our part, including liability for claims for unfair competition,
breach of contract, breach of any applicable implied covenant of good faith and fair dealing, or divided loyalty.

 

Attachment B - 3

 

    	 

    	 

    

 

c. Trade
Name. The Hotel will be initially known by the trade name set forth in the Rider (the “Trade Name”). We
may change the Trade Name and/or the Licensed Brand name and/or any of the Marks at any time at our sole discretion, but we will
not change the principal name identified in the Rider. You may not change the Trade Name without our specific written consent.
You acknowledge and agree that you are not acquiring the right to use any service marks, copyrights, trademarks, logos, designs,
insignia, emblems, symbols, slogans, distinguishing characteristics, trade names, domain names or other marks or characteristics
owned by the Entities that we do not specifically designate to be used in the System.

 

Your Ownership Structure:JUSTICE
INVESTORS

 

	Name	 	 	 	 	 	 
	(Shareholder, Partner, Member, and Manager)	 	Nature of  
Ownership Interest	 	 	% Interest	 
	EVON GARAGE CORPORATION  	 	 	 	 	 	 	 	 
	-Evon Ownership – See Exhibit C-2	 	 	Managing General Partner	 	 	 	0.1100	%
	PORTSMOUTH SQUARE, Inc., a public company	 	 	General Partner	 	 	 	49.8000	%
	LIMITED PARTNERS:  See Exhibit C-1	 	 	Limited Partners	 	 	 	50.0900	%
	TOTAL:	 	 			 	 	100 	% 

  

IN WITNESS WHEREOF, the parties
have executed this Agreement, which has an effective date as of the date set forth in this Rider (the “Effective Date”).

 

	LICENSEE:	 	LICENSOR:
	 	 	 
	JUSTICE INVESTORS,	 	HILTON INNS, INC.,
	a California limited partnership	 	a Delaware corporation
		 	 
	By:	Evon Garage Corporation,	 	 
	 	a California corporation	 	 
	 	its Managing General Partner	 	By:	/s/ Dawn P. Beghi
	 	 	 
	 	By:	/s/ Geoffrey M. Palermo	 	 	Name:	Dawn P. Beghi
	 	 	 	 	 	 
	 	Name: Geoffrey M. Palermo	 	Title:	Vice President – Franchise Administration
	 	 	 	 	 
	 	Title: President	 	 
	 	 	 	 
	Executed on:     12-10-2004	 	 
	
         

         
	 	 
	By: 	Portsmouth Square, Inc.,	 	 
	 	a California corporation	 	 
	 	its General Partner	 	 
	 	 	 
	 	By:	/s/ Michael G. Zybala	 	 
	 	 	 	 	 
	 	Name: Michael G. Zybala	 	 
	 	 	 	 
	 	Title: Vice President & Secretary	 	 
	 	 	 	 
	Executed on:  12-10-2004	 	 

  

 

Attachment B - 4EXHIBIT 10.4

 

MANAGEMENT AGREEMENT

 

Between

 

JUSTICE INVESTORS,

as Owner

 

And

 

PRISM HOSPITALITY, L.P., a

Texas limited partnership,

as Operator

 

FOR

 

THE HOTEL LOCATED AT 750 KEARNY STREET,

SAN FRANCISCO, CALIFORNIA, currently known as the HILTON SAN FRANCISCO

FINANCIAL DISTRICT

 

DATED: As of February 2, 2007

 

    	 

    	 

    

 

	ARTICLE 1	DEFINITIONS, TERMS AND REFERENCES	1
	 	 	 
	1.1	Definitions	1
	1.2	Terminology	12
	1.3	Exhibits	13
	 	 	 
	ARTICLE 2	MANAGEMENT OF HOTEL	13
	 	 	 
	2.1	Agent/Fiduciary	13
	2.2	Hotel Operations	13
	2.3	Limitations on Operator’s Authority	15
	2.4	Role of Owner	17
	 	 	 
	ARTICLE 3	TERM	17
	 	 	 
	3.1	Original Term	17
	3.2	Option of Owner to Extend	18
	3.3	Meaning of Term	18
	3.4	Early Termination	18
	3.5	Transition Provisions	18
	3.6	Takeover Expenses	19
	3.7	Vacation by Operator at the End of the Term	19
	 	 	 
	ARTICLE 4	USE AND OPERATION OF THE HOTEL	19
	 	 	 
	4.1	Employment	19
	4.2	Executive Staff	20
	4.3	Subsequent Employment of Employees	20
	4.4	Legal Proceedings	21
	4.5	Annual Financial Plan	21
	4.6	Competitive Bidding	24
	4.7	Hotel to Benefit from Operator Expertise	25
	4.8	Emergencies	25
	4.9	Compliance with Government Rules and Regulations, including Environmental Laws	25
	4.10	Owner’s Performance of Operator’s Obligations	26
	4.11	Owner’s Right to Reserve Rooms and Facilities; Meals for Owner Personnel	26
	4.12	Credit and Pricing Policies	27
	4.13	Owner’s Right to Access	27
	4.14	Parking	27
	4.15	Travel Expenses	27
	4.16	Name of Hotel	27
	4.17	Storage Space	27
	 	 	 
	ARTICLE 5	RELATIONSHIP OF THE PARTIES	27

  

    	i

    	 

    

 

	ARTICLE 6	ADVERTISING	28
	 	 	 
	ARTICLE 7	RESERVE	28
	 	 	 
	7.1	Reserve	28
	7.2	Transfer to Reserve	28
	7.3	Annual Adjustment	28
	7.4	Maintenance of Reserve	28
	7.5	Accumulation of Reserve	29
	7.6	Final Remittance	29
	 	 	 
	ARTICLE 8	REPAIRS AND MAINTENANCE AND CAPITAL IMPROVEMENTS	29
	 	 	 
	8.1	Repairs and Maintenance	29
	8.2	Capital Improvements	29
	8.3	Service Contracts	30
	8.4	Liens	30
	8.5	Notice of Unavoidable Interruptions	30
	 	 	 
	ARTICLE 9	WORKING CAPITAL AND BANK ACCOUNTS, DISTRIBUTION OF NET OPERATING INCOME	30
	 	 	 
	9.1	Working Capital	30
	9.2	Operating Account	31
	9.3	Distribution of Net Operating Income	32
	9.4	Final Remittance	32
	9.5	Lender Requirements	32
	 	 	 
	ARTICLE 10	BOOKS, RECORDS AND STATEMENTS	32
	 	 	 
	10.1	Books and Records	32
	10.2	Financial Reports	33
	10.3	Audits by Owner	33
	 	 	 
	ARTICLE 11	OPERATOR’S MANAGEMENT FEES	34
	 	 	 
	ARTICLE 12	INSURANCE	35
	 	 	 
	12.1	Insurance	35
	12.2	Modification of Insurance	36
	12.3	Subcontractor’s Insurance	37
	12.4	Form of Policies	38
	12.5	Certificates	38
	12.6	Waiver of Subrogation	38
	12.7	Lender Requirements	38
	 	 	 
	ARTICLE 13	REAL AND PERSONAL PROPERTY TAXES; UTILITIES	39

  

    	ii

    	 

    

 

	13.1	Taxes	39
	13.2	Utilities, Etc.	39
	 	 	 
	ARTICLE 14	OPERATOR SYSTEM SERVICES	39
	 	 	 
	14.1	Operator System Services	39
	14.2	Operator System Service Costs	39
	 	 	 
	ARTICLE 15	DAMAGE OR DESTRUCTION; CONDEMNATION	40
	 	 	 
	15.1	Damage or Destruction	40
	15.2	Condemnation	40
	 	 	 
	ARTICLE 16	TERMINATION	40
	 	 	 
	16.1	Termination by Owner	40
	16.2	Termination by Operator Based upon a Sale of the Hotel	41
	 	 	 
	ARTICLE 17	RIGHTS AND OBLIGATIONS FOLLOWING TERMINATION	41
	 	 	 
	17.1	Rights and Obligations Following Termination	41
	17.2	Bookings Beyond Expiration of Term	42
	 	 	 
	ARTICLE 18	EVENTS OF DEFAULT	42
	 	 	 
	18.1	Operator Defaults	42
	18.2	Owner Defaults	44
	 	 	 
	ARTICLE 19	TERMINATION UPON EVENT OF DEFAULT; OTHER REMEDIES	45
	 	 	 
	ARTICLE 20	NOTICES	45
	 	 	 
	ARTICLE 21	ASSIGNMENT	46
	 	 	 
	21.1	Assignment by Operator	46
	21.2	Assignment by Owner	47
	 	 	 
	ARTICLE 22	INDEMNITY	47
	 	 	 
	22.1	By Operator	47
	22.2	By Owner	47
	22.3	Survival	49
	 	 	 
	ARTICLE 23	NO REPRESENTATIONS AS TO INCOME OR FINANCIAL SUCCESS OF HOTEL	49
	 	 	 
	ARTICLE 24	REPRESENTATIONS OF OPERATOR	49
	 	 	 
	ARTICLE 25	REPRESENTATIONS OF OWNER	49

  

    	iii

    	 

    

 

	ARTICLE 26	ARBITRATION	50
	 	 	 
	26.1	Disputes to be Resolved by Arbitration	50
	26.2	Procedural Matters	50
	 	 	 
	ARTICLE 27	TERMINATION OF THE FRANCHISE AGREEMENT	51
	 	 	 
	ARTICLE 28	NON-COMPETITION	51
	 	 	 
	28.1	Geographic Limitation.	51
	28.2	Exhibit Halls, Convention Center	51
	 	 	 
	ARTICLE 29	EXCULPATION	52
	 	 	 
	29.1	Limitation on Recourse.	52
	29.2	Limitations on Funding Commitment	52
	 	 	 
	ARTICLE 30	MORTGAGES	53
	 	 	 
	30.1	Right to Mortgage	53
	30.2	Notice of Mortgage	53
	30.3	Modifications Required by Mortgagee	53
	30.4	Mortgagee Requirements	53
	30.5	Mortgagee Information Requests	54
	 	 	 
	ARTICLE 31	MISCELLANEOUS	54
	 	 	 
	31.1	Disputes	54
	31.2	Further Assurances	54
	31.3	Waiver	54
	31.4	Successors and Assigns	54
	31.5	Governing Law	54
	31.6	Amendments	54
	31.7	Estoppel Certificates	54
	31.8	Effect of Approval of Plans and Specifications	55
	31.9	Consent and Approval	55
	31.10	Partial Invalidity	55
	31.11	Entire Agreement	55
	31.12	Time is of the Essence	55
	31.13	Interpretation	55
	31.14	Counterparts	56
	31.15	Interest	56
	31.16	Modifications Required by Franchisor	56

 

    	iv

    	 

    

 

Exhibits:

 

		A.	Major Account Categories

 

		B.	Description of Property

 

		C	Financial Reports

 

		D	Geographic Zone

 

		E.	Budget of Takeover Expenses

 

		F.	Annual Financial Plan Contents

 

		G.	Accounting Policies for Capital Expenses

 

		H.	Description of Storage Spaces

 

    	v

    	 

    
  

MANAGEMENT AGREEMENT

 

This Management Agreement made as of February
2, 2007 between JUSTICE INVESTORS, a California limited partnership (“Owner”), and PRISM HOSPITALITY, L.P., a Texas
limited partnership (“Operator”).

 

WITNES SETH:

 

WHEREAS, certain capitalized terms used in
this Agreement are defined inArticle 1; and

 

WHEREAS, Owner owns the property located at
750 Kearny Street, San Francisco, CA, currently known as the Hilton San Francisco Financial District, containing a total of approximately
549 guest rooms. The Hotel does not include the Chinese Cultural Center premises, TruSpa premises, gift shop premises and the parking
garage that are located in the same structure or on the same property as the Hotel; and

 

WHEREAS, the Hotel is currently managed for
Owner by another operator, but Owner has the right to terminate its management agreement with the current operator at any time
without cause upon 60 days notice; and

 

WHEREAS, Owner desires to have the Hotel managed
by Operator as an agent of Owner pursuant to the First Class Hotel Standard commencing upon the termination of the existing management
agreement; and

 

WHEREAS, Operator is experienced in the management
and operation of hotels directly and through affiliated entities; and

 

WHEREAS, Owner and Operator desire to enter
into this Agreement respecting the operation of the Hotel from and after the Transition Date in accordance with the terms and conditions
and subject to the limitations contained in this Agreement.

 

NOW, THEREFORE, Owner and Operator covenant
and agree as follows:

 

ARTICLE
1  DEFINITIONS, TERMS AND REFERENCES

 

1.1           Definitions.
In this Agreement and any Exhibits, the following terms shallhave the following meanings:

 

“Account Category” shall
include the major account categories set forth in Exhibit A attached hereto and made a part hereof as well as other major account
categories, which are applicable to the Hotel consistent with the Statement of Income as defined by the Uniform System of Accounts
or otherwise approved by Owner.

 

“Accounting Period” shall
mean each month (whether of 28, 29, 30 or 31 days) during each Fiscal Year.

 

    	 

    	 

    

 

“Accounting Period Report”
shall mean a report pursuant to Section 10.2 hereof for each Accounting Period.

 

“Affiliate” An “Affiliate”
of a person means any person which, directly or indirectly, controls, is controlled by or is under common control with, such person.
The term “control” (including, with correlative meaning, the terms “controlled by” and “under common
control with”), as used with respect to any person, means the possession, directly or indirectly, or the power to direct
or cause the direction of the management and policies of such person, whether through the ownership of voting securities or by
contract or otherwise, including, without limitation, control exists when a person is a managing member, managing partner, trustee,
president and/or chief executive officer of a person and/or of an Affiliate of such person. A “person” shall mean an
individual, corporation, partnership, limited liability company, limited partnership and/or trust. A natural person is an Affiliate
to another natural person if he or she is a spouse, parent or lineal descendent of the other person.

 

“Agreement” shall mean
this Management Agreement, as it may be amended or supplemented from time to time.

 

“Annual Financial Plan” (“AFP”)
shall mean the Annual Financial Plan for a Fiscal Year which shall consist of the Annual Operating Budget, the Capital Budget,
the Marketing Plan and the Management Plan and any other material included therein by Operator or Owner as provided in Section
4.5, and which has been approved by Owner.

 

“Annual Operating Budget”
shall mean schedules containing the annual operating projection for the Hotel and prepared and submitted by Operator to Owner in
each Fiscal Year pursuant to Section 4.5(b).

 

“Approved Capital Budget”
shall have the meaning set forth in Section 4.5(d).

 

“Building and Appurtenances”
shall mean (a) the approximately 565 guest room hotel building on the Property, and (b) landscaping and other related facilities,
together with all installations for the operation of the building for hotel purposes including, without limitation, any swimming
pools, walkways, heating, lighting, sanitation equipment, air conditioning, laundry facilities, refrigeration, built-in kitchen
equipment, and elevators.

 

“Capital Budget” shall
mean schedules containing Operator’s proposed estimate of FF&E and Capital Improvements submitted to Owner each Fiscal
Year pursuant to Section 4.5(d).

 

“Cause” shall mean the
occurrence at any time of any material act of fraud, misappropriation of funds, dishonesty, or willful misconduct by Operator in
connection with its management of the Hotel.

 

“CPI” shall mean the Consumer
Price Index for All Urban Consumers, United States City Average, All Items (1982-84-100), issued by the Bureau of Labor Statistics
of the United States Department of Labor.

 

    	2

    	 

    

 

“Effective Date” shall
mean the date when the operation and management of the Hotel by Operator shall commence; however, this Agreement shall be binding
upon execution and delivery of it by the parties.

 

“Environmental Authority”
shall mean any department, agency or other body or component of any government that exercises any form of jurisdiction or authority
under any Environmental Law.

 

“Environmental Laws” shall
mean all applicable federal, state, local and foreign laws and regulations relating to pollution of the environment (including
without limitation, ambient air, surface water, ground water, land surface or subsurface strata), including without limitation
laws and regulations relating to emissions, discharges, Releases or threatened Releases of Hazardous Materials or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.

 

“Environmental Liabilities”
shall mean any and all actual or potential obligations to pay the amount of any judgment or settlement, the cost of complying with
any settlement, judgment or order for injunctive or other equitable relief, the cost of compliance or corrective action in response
to any notice, demand or request from an Environmental Authority, the amount of any civil penalty or criminal fine, and any court
costs and reasonable amounts for attorney’s fees, fees for witnesses and experts, and costs of investigation and preparation
for defense of any claim or any proceeding, regardless of whether such proceeding is threatened, pending or completed, that may
be or have been asserted against or imposed upon Owner, Operator, any predecessor in interest, the Hotel or any property used therein
and arising out of:

 

(a)          the
failure to comply at any time with any Environmental Law applicable to the Hotel;

 

(b)          the
presence of any Hazardous Materials on, in, under, at or in any way affecting the Hotel;

 

(c)          a
Release or threatened Release of any Hazardous Materials on, in, at, under or in any way affecting the Hotel;

 

(d)          the
identification of Operator, Owner or any predecessor in interest as a potentially responsible party under any Environmental Law;

 

(e)          the
presence at any time of any above-ground and/or underground storage tanks, as defined in any applicable Environmental Law on, in,
at or under the Hotel or any adjacent site or Hotel; or

 

(f)          any
and all claims for injury or damage to persons or property arising out of exposure to Hazardous Materials originating or located
at the Hotel, or resulting from operation thereof or any adjoining property.

 

    	3

    	 

    

 

“Event of Default” shall
mean any of the events described in Article 18, provided that any condition contained therein for the giving of notice or
the lapse of time, or both, has been satisfied and any cure period has elapsed without the event having been cured.

 

“Executive Staff’ means
the General Manager, the Financial Controller, the Human Resources Director (if applicable), the Resident Manager (if applicable),
the Chief Engineer, the Director of Marketing and Sales, the Director of Food and Beverage, and the Director of Catering.

 

“First Class Hotel Standard”
shall mean all of the following standards:

 

(a)          with
respect to the physical condition, furnishing and equipping of the Hotel, unless Owner otherwise requires, (i) keeping the Hotel
in its present condition and keeping it furnished and equipped in the same manner as on the Effective Date, provided that following
any renovation or upgrading of the Hotel, its furniture, furnishings and equipment, keeping them in the upgraded or renovated condition,
and (ii) meeting any applicable requirements with respect to the physical condition, furnishing and equipping the Hotel of (A)
any Franchise Agreement in effect, (B) any Mortgage in effect and (C) the Legal Requirements;

 

(b)          With
respect to operational standards, the operation of the Hotel in the manner required to (i) satisfy the operational requirements
of the Franchise Agreement, if any, the Mortgage, if any, and Legal Requirements, and (ii) meet the level of service and quality
generally considered to be “first class;” and

 

(c)          Subject
to compliance with (a) and (b), management and operation of the Hotel in a manner which will be most likely to achieve the objective
of maximizing the present value of the Hotel, while minimizing the capital investment required of Owner.

 

“Fiscal Year” shall mean
the fiscal year which ends on the last day of each calendar year. The first Fiscal Year shall be the period commencing on the Effective
Date and ending on December 31, 2007. The words “full Fiscal Year” shall mean any Fiscal Year containing not
fewer than three hundred sixty-four (364) days. A partial Fiscal Year after the end of the last full Fiscal Year and ending with
the expiration or earlier termination of the Term shall constitute a separate Fiscal Year.

 

“Franchise Agreement” or “Franchise”
shall mean the franchise or license agreement from time to time issued to Owner with respect to the operation of the Hotel, if
any. Presently, “Franchise Agreement” means the Franchise License Agreement having an effective date of November 24,
2004 between Hilton Inns, Inc, as franchisor, and Owner, as franchisee.

 

“Franchisor” shall mean
any issuer of a franchise or license agreement with respect to operation of the Hotel from time to time. Presently, the Franchisor
is Hilton Inns, Inc.

 

    	4

    	 

    

 

“Fully Adjusted NOI” shall
mean for a Fiscal Year the NOI (except that the incentive management fee due under Article 11 shall not be deducted as a
Gross Operating Expense for purposes of determining Fully Adjusted NOI) for that Fiscal Year less: (a) the Owner’s Return
for that Fiscal Year; (b) any additions to Working Capital during that Fiscal Year resulting in total Working Capital exceeding
Seven Hundred Fifty Thousand Dollars ($750,000), less any amount of Working Capital paid back to Owner during that Fiscal Year
as a result of a subsequent reduction in Working Capital during that Fiscal Year; and (c) any other amounts paid or advanced by
Owner toward payment of expenses of the Hotel, including any capital expenses not paid from the Reserve (such capital expenses
in any Fiscal Year to be amortized on a straight line basis (with interest at twelve percent (12%) per year on the unamortized
amount) over the useful life of the capital item for which such capital expenses were incurred, with the amortized annual amount
to be deducted in determining Fully Adjusted NOI for that Fiscal Year and each succeeding Fiscal Year until the useful life of
the capital item has expired, as determined by the Independent Public Accountant in accordance with generally accepted accounting
principles).

 

“Furniture, Fixtures and Equipment”
(“FF&E”) shall mean all furniture, furnishings, wall coverings, fixtures, carpeting, rugs, fine arts, paintings,
statuary, decorations, and hotel equipment and systems located at, or used in connection with, the operation of the Building and
Appurtenances as a hotel, including without limitation, major equipment and systems required for the operation of kitchens, bars,
laundry and dry cleaning facilities, office equipment, dining room wagons, major material handling equipment, major cleaning and
engineering equipment, telephone systems, computerized accounting and vehicles together with all replacements therefor and additions
thereto, but excluding Operating Equipment and Supplies.

 

“Gross Operating Expenses”
shall mean, for any period, all expenses incurred during such period in the operation of the Hotel determined on an accrual basis
other than Operator’s Expenses. Gross Operating Expenses shall include:

 

(a)          Cost
of sales; salaries, wages, bonuses, payroll taxes; the cost of social insurance which shall include, but not be limited to, life,
medical, disability insurance, retirement and other benefits incurred by Operator for the Hotel Employees; and all other costs
incurred by Operator in connection with employment of Hotel Employees, excluding, however, those amounts for which Operator is
required to indemnify Owner pursuant to Section 22.1;

 

(b)          Departmental
expenses; administrative and general expenses; the cost of third party vendor sources engaged to print payroll checks and reports;
advertising and business promotion for the Hotel; franchise fees, chain reservation fees and all other fees relating to the Franchise
Agreement; the cost of utilities, service contracts; and repairs and maintenance made under Section 8.1;

 

(c)          The
cost of replacing Operating Equipment and Supplies and Inventories;

 

(d)          The
cost of uncollectible accounts receivables;

 

(e)          The
cost and expenses of technical consultants and operational experts for specialized services in connection with non-routine Hotel
work including roofing consultants, environmental engineers and others;

 

    	5

    	 

    

 

(f)           The
cost of insurance (less the allocable amount of property insurance premiums applicable to the Chinese Cultural Center, TruSpa,
gift shop and parking garage to the extent and if such insurance cannot be segregated and paid directly, which allocable amount
shall be fair and equitable and shall be proposed by Operator and approved by Owner);

 

(g)          The
amounts paid into the Reserve as provided in Section 7.2 but in no event more than five percent (5%) of the Gross Operating
Revenues for the applicable period;

 

(h)          The
Management Fee as set forth in Article 11;

 

(i)           Real
estate and personal property taxes levied or assessed against the Hotel and other like charges (less the allocable amount of real
estate taxes applicable to the Chinese Cultural Center, TruSpa, gift shop and parking garage to the extent and if such tax(es)
cannot be segregated and paid directly, which allocable amount which allocable amount shall be fair and equitable and shall be
proposed by Operator and approved by Owner);

 

(j)            Political
contributions for which Owner has given its prior written consent;

 

(k)           All
other reasonable costs and expenses incurred in connection with the operation of the Hotel and otherwise approved as part of the
AFP or otherwise allowed by this Agreement;

 

(1)           Charges
for the use of the parking facilities serving the Hotel;

 

(m)          Fees
and other amounts payable pursuant to the Franchise Agreement; and

 

(n)          Takeover
Expenses.

 

“Gross Operating Revenues”
shall be determined in a manner consistent with the Uniform System of Accounts (except in any respect where the same is inconsistent
with the provisions hereof), and shall mean all revenues and receipts of every kind derived by Owner from the operation of the
Hotel and all departments and parts thereof, including, but not limited to all income and revenue received from transient guests,
tenants, licenses, concessionaires and other persons occupying space at and/or rendering services to the guests of the Hotel (but
not the gross receipts received by such tenants, licensees, concessionaires and other persons) from the following:

 

(a)           rental
of rooms and lobby space, exhibit or sales space of any kind;

 

(b)           net
vending income (gross vending revenue less the amount payable to equipment vendors for the use thereof);

 

(c)           health
club membership fees;

 

(d)           retail
sales of merchandise;

 

(e)           service
charges;

 

    	6

    	 

    

 

(f)            license,
lease and concession fees and rentals (but not including the gross receipts of any licensees, lessees and
concessionaires);

 

(g)           food
and beverages sales;

 

(h)           telecommunication
charges;

 

(i)            valet
parking charges;

 

(j)            retail
sales of every kind; and

 

(k)           net
proceeds of business interruption insurance claims or other loss of income insurance.

 

Gross Operating Revenues shall not
include any of the following:

 

(a)           federal,
state and municipal excise, sales and use taxes or similar impositions collected directly from patrons, guests or users of the
Hotel or included as part of the sales price of any goods, services, or displays, such as gross receipts, admission, cabaret or
similar or equivalent taxes;

 

(b)          proceeds
arising from the sale or other disposition of property described in Section 1231 of the Internal Revenue Code or of capital assets;

 

(c)           proceeds
from condemnation or eminent domain;

 

(d)          payments
received on account of insurance policies or items of a similar nature (other than business interruption insurance);

 

(e)           proceeds
from claims for damages suffered by Operator or Owner, unless in recompense for a lost revenue item;

 

(f)           allowances
for rebates and adjustments;

 

(g)          gratuities
or service charges paid by patrons or guests to and retained by employees;

 

(h)          proceeds
or other economic benefit received as a result of any equity raising or borrowing of Owner whether or not secured by the Hotel;

 

(i)           consideration
received for hotel accommodations or other goods or services not accruing to the benefit of the Hotel, although arranged by, for
or on behalf of Operator;

 

(j)           advances
or security deposits from Hotel guests or other users of the Hotel (other than those deposits that are forfeited by such guests
to the Hotel);

 

(k)           any
reversal of any contingency or tax reserve;

 

    	7

    	 

    

 

(1)           any
cash or credit rebates or refunds paid to patrons, guests, lessees,concessionaires or other users of the Hotel, any correction
of overcharges;

 

(m)          any
allowance for bad debts;

 

(n)          any
payments made directly to Owner to induce it to enter into any lease, agreement or other transaction in connection with the Hotel;

 

(o)           the
proceeds of any loan to Owner;

 

(p)          any
deposits made to Owner;

 

(q)          proceeds
from the sale of FF&E;

 

(r)           interest
received or accrued with respect to the funds in the Reserve or the other operating accounts of the Hotel;

 

(s)           proceeds
of collection of accounts receivable to the extent the amount of any receivable was previously included in Gross Operating Revenues;

 

(t)           payments
made under warranties and guaranties from providers of goods or services to the Hotel, whether received by Owner or by Operator
on Owner’s behalf, except to the extent paid in reimbursement for costs included in Gross Operating Expenses;

 

(u)          other
income derived from capital transactions which are not related to the operation of the Hotel;

 

(v)          any
funds furnished by Owner; and

 

(w)          amounts
representing the value or cost of room occupancy, meals or other services provided as compensation to employees of the Hotel or
as complimentary benefits to any other persons.

 

“Hazardous Materials” shall
mean all chemicals, pollutants, contaminants, wastes and toxic substances, including without limitation:

 

(a)          Solid
or hazardous waste, hazardous substances, toxic substances andinsecticides, fungicides, or rodenticides, as defined in any Environmental
Law;

 

(b)          Gasoline
or any other petroleum product or byproduct, polychlorinated biphenyls, asbestos and urea formaldehyde;

 

(c)          Asbestos
or asbestos containing materials;

 

(d)          Urea
formaldehyde foam insulation; and

 

(e)          Radon
gas.

 

    	8

    	 

    

 

“Hotel” shall mean the
Building and Appurtenances, the Property, all FF&E, all Operating Equipment and Supplies, and all Inventories containing a
total of 549 guest rooms (but excluding the Chinese Cultural Center premises, TruSpa premises, gift shop premises and the parking
garage).

 

“hotel” shall mean any
hotel (other than the Hotel), inn, motor inn, motor hotel, motel, suite hotel, conference center, meeting center or any other facility
providing either or both of short-term lodging and meeting arrangements.

 

“Hotel Employees” shall
mean the employees of Owner or any Affiliate of Owner working at the Hotel.

 

“Independent Public Accountant”
shall mean a qualified firm of independent certified public accountants having hotel accounting experience, designated from time
to time by Owner, subject to Operator’s reasonable approval of the firm selected.

 

“Inventories” shall mean
“Inventories of Supplies” as defined in the Uniform System of Accounts, such as soap, toilet paper, stationery, writing
pens, food and beverage inventories, paper products, menus, expendable office and kitchen supplies, fuel, supplies and items similar
to any of the foregoing.

 

“Legal Proceedings” shall
mean all complaints, counterclaims or cross-claims filed in a court of competent jurisdiction by or against the Hotel or by or
against Owner or Operator in connection with the Hotel.

 

“Legal Requirements” shall
mean (a) all laws, ordinances, statutes, regulations and orders relating to the Hotel now or hereafter in effect, including but
not limited to, environmental laws and (b) all terms, conditions, requirements and provisions of (i) all Permits; (ii) all leases;
and (iii) all liens, restrictive covenants and encumbrances affecting the Hotel.

 

“Management Fee” shall
have the meaning set forth in Article 11.

 

“Management Plan” shall
have the meaning set forth in Section 4.5(f).

 

“Marketing Plan” shall
have the meaning set forth in Section 4.5(e).

 

“Mortgage” shall mean any
mortgage, deed of trust, deed to secure debt or similar security instrument from time to time existing on the Project and any indebtedness
of Owner and other obligations secured thereby.

 

“Mortgagee” shall mean
the mortgagee or beneficiary under any Mortgage.

 

“Net Operating Income (NOI)”
shall mean the excess of Gross Operating Revenues over Gross Operating Expenses and specifically excluding any principal and interest
payments from Gross Operating Expenses.

 

    	9

    	 

    

 

“Operating Account” shall
mean a special account or accounts, bearing the name of the Hotel, established by Operator in a federally insured bank or trust
company selected by Owner, subject to Operator’s reasonable approval of the bank or trust company.

 

“Operating Equipment and Supplies”
shall mean supply items which constitute “Operating Equipment and Supplies” under the Uniform System of Accounts, all
miscellaneous serving equipment, linen, towels, uniforms, silver, glassware, china and similar items.

 

“Operator” shall mean Prism
Hospitality, L.P., a Texas limited partnership.

 

“Operator’s Expenses”
shall mean the following:

 

(a)          All
costs, expenses, salaries, wages or other compensation of any corporate, regional or other headquarters/corporate level employees
of Operator, except to the extent such employees are regularly employed full time at the Hotel by Operator;

 

(b)          Any
expenses of Operator’s principal or branch offices;

 

(c)          Any
part of Operator’s capital expenses;

 

(d)          Operator’s
overhead or general expenses, including but not limited to telex, duplicating, stationery and postage expenses incurred at Operator’s
principal or branch offices, except as may be expressly assumed by Owner pursuant to the terms of this Agreement;

 

(e)          All
costs and expenses of providing centralized data processing and accounting services to the Hotel;

 

(f)           Any
expenses for advertising or promotional materials that feature Operator’s name or activities but which do not promote
the Hotel, unless and to the extent approved in advance by Owner to be a Gross Operating Expense;

 

(g)          Any
travel expenses of Operator’s corporate, regional or headquarters office employees for a period that are (i) in excess
of the amount shown on the Annual Financial Plan for Operator’s travel expenses for such period (ii) are not reasonable
and necessary travel expenses incurred while engaged in the performance of this Agreement, (iii) in the case of air travel,
exceed the coach or economy fare reasonably available under the circumstances for the flight in question; provided, however,
that for purposes of including travel expenses in GrossOperating Expenses, all expenses incurred on any trip which includes
visits to more than one property managed by Operator or its Affiliates or is otherwise for purposes related to the Hotel and
other properties managed by Operator or its Affiliates shall be equitably allocated among all the properties visited or
benefited;

 

(h)          Any
interest or penalty payment with respect to an imposition or lien upon the Hotel imposed on Owner by reason of (1) the failure
of Operator to make a payment required to be made by Operator under this Agreement when the funds therefor were available, or (2)
the funds therefor were not available and Operator failed to so notify Owner; and

 

    	10

    	 

    

 

(i)          Any
cost for which Operator is liable under Section 22.1 or any other provision of this Agreement.

 

“Operator System Service”
shall have the meaning set forth in Section 14.1.

 

“Owner” shall mean Justice
Investors, a California limited partnership.

 

“Owner Indemnified Parties”
shall have the meaning set forth in Section 22.1.

 

“Owner’s Return”
shall mean an amount equal to Seven Million Dollars ($7,000,000.00) for each Fiscal Year, prorated for any partial Fiscal Year.

 

“Partially Adjusted NOI”
shall mean for a Fiscal Year the Fully Adjusted NOI for that Fiscal Year, before deduction of the capital expenses described in
(c) of the definition of Fully Adjusted NOI.

 

“Permits” shall mean all
governmental or quasi-governmental licenses and permits necessary for the operation of and issued in connection with the Hotel.

 

“Permitted Investments”
shall mean (subject to modification, addition or deletion from time to time at the option of Owner (Operator may request that Owner
make modifications, additions and deletions)):

 

(a)          interest-bearing
deposit accounts (which may be represented by certificates of deposit, time deposit open account agreements or other deposit instruments)
in commercial banks approved by Owner; or

 

(b)         all
other investments designated or approved by Owner.

 

“Project” shall mean the
Hotel, the parking garage underlying the Hotel, the Chinese Cultural Center premises, TruSpa premises, the gift shop and all other
parts of the structure and improvements in which the Hotel is located.

 

“Property” shall mean the
land on which the Hotel is located, which land is described in Exhibit B attached hereto.

 

“Release” shall mean a
“Release” as defined in any Environmental Law, unless such Release has been properly authorized and permitted in writing
by all applicable Environmental Authorities or is allowed by such Environmental Law without authorizations or permits.

 

“Repairs and Maintenance”
shall have the meaning set forth in Section 8.1.

 

“Reserve” shall mean an
account maintained by Owner in a commercial bank selected by Owner as a Reserve for Replacement for Furniture, Fixtures and Equipment
and Other Capital Improvements as described in Section 7.1 and funded as provided in Section 7.2, which may be invested
in Permitted Investments at the direction of Owner.

 

    	11

    	 

    

 

“State” shall mean the
State of California.

 

“Takeover Expenses” shall
mean all reasonable and proper non recurring Operator’s Expenses attributable to the installation of Operator as the manager
of the Hotel, which are shown on Exhibit E attached to and made a part of this Agreement, incurred by Operator in accordance
with Section 3.6.

 

“Term” shall mean the Term
of this Agreement, which shall be an initial ten (10) year period commencing on the Effective Date and expiring at midnight on
the tenth (10th) anniversary of the Effective Date as such Term may be (x) extended or canceled pursuant to Article
3, or (y) shortened by termination pursuant to any provision of this Agreement.

 

“Unavoidable Interruptions”
shall mean interruptions in the operation of the Hotel or any of its essential services on account of an interruption in any one
or more of the utility services described in Section 13.2, or on account of labor disputes, strikes, lockouts, fire or other
casualty, acts of God and similar causes beyond Operator’s reasonable control. Operator’s obligations hereunder (other
than obligations to pay money) shall be suspended during the period of an Unavoidable Interruption to the extent adversely affected
by the cause of the Unavoidable Interruption and such effect cannot be mitigated with reasonable diligence. Operator shall immediately
notify Owner, following commencement of an Unavoidable Interruption, of the nature and existence thereof, any actions recommended
by Operator to mitigate the effect of the cause of the Unavoidable Interruption.

 

“Uniform System of Accounts”
shall mean the Uniform System of Accounts for the Lodging Industry, 10th Revised Edition, 2006, by the Hotel Association of New
York City, Inc. or at the option of Owner, any later edition thereof.

 

“Union” shall mean Bartenders
and Service Employees Culinary Local 2; Stationary Engineers Local 39; Front Desk, Accounting, Reservations Teamsters Local 856
and any other labor unions at any time representing Hotel employees.

 

“Union Agreement” shall
mean any collective bargaining agreement or other agreement entered into by Operator with any Union with respect to employees of
the Hotel, which has been approved by Owner.

 

“Working Capital” shall
mean the funds which are reasonably necessary for the day-to-day operation of the Hotel’s business, including, without limitation,
amounts sufficient for the maintenance of petty cash funds, operating bank accounts, receivables, payrolls, prepaid expenses, advance
deposits, funds required to maintain inventories, and amounts due to/or from Operator and/or Owner less accounts payable and accrued
current liabilities.

 

1.2         Terminology.
All personal pronouns used in this Agreement, whetherused in the masculine, feminine or neuter gender, shall include all genders;
the singular shall include the plural, and the plural shall include the singular. The Table of Contents, and titles of Articles,
Sections and Subsections in this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement,
and all references in this Agreement to Articles, Sections, Subsections, paragraphs, clauses, subclauses or exhibits shall refer
to the corresponding Article, Section, Subsection, paragraph, clause or subclause of, or exhibit attached to, this Agreement, unless
specific reference is made to the articles, sections or other subdivisions of, or exhibits to, another document or instrument.

 

    	12

    	 

    

 

1.3         Exhibits.
All exhibits attached hereto are by reference made a part hereof.

 

ARTICLE
2  MANAGEMENT OF HOTEL

 

2.1         Agent/Fiduciary.
Owner hereby authorizes and contracts for Operator,pursuant to the terms of this Agreement, to operate and manage the Hotel as
its agent and its fiduciary, and Operator hereby agrees and contracts to operate and manage the Hotel pursuant to such terms as
a fiduciary of Owner, in all ways preferring Owner’s interests to Operator’s interests. Operator shall operate and
manage the Hotel for Owner in strict compliance in all material respects with the First Class Hotel Standard, the Franchise Agreement,
the Mortgage, if any, the Annual Financial Plan, Legal Requirements and the requirements of any Union Agreements. Operator shall
also operate and manage the Hotel for Owner in a commercially reasonable, business-like, prudent and professional manner.

 

2.2        Hotel
Operations.Hotel operations shall be under the exclusivesupervision and control of Operator which, except as otherwise specifically
provided in this Agreement, shall be responsible for the proper and efficient operation of the Hotel in accordance with the terms
of this Agreement. Except as specifically hereinafter set forth, Operator shall have discretion and control in all matters relating
to management and operation of the Hotel, including, without limitation, charges for rooms and commercial space, credit policies,
food and beverage services, other Hotel services, employment policies, granting of concessions or leasing of shops and agencies
within the Hotel, receipt, holding and disbursement of funds, maintenance of bank accounts, procurement of inventories, supplies
and services, promotion and publicity and, in general, all activities necessary for operation of the Hotel. Unless Owner agrees,
the Hotel shall be operated as a Union hotel. Without limiting the generality of the foregoing, Operator’s engagement under
this Agreement shall include the responsibility and authority (subject to the limitations on Operator’s authority set forth
in this Agreement), on behalf of and at the expense of Owner to do the following, at all times in material compliance with the
AnnualFinancial Plan, the Franchise Agreement, Mortgage, if any, Legal Requirements and the First Class Hotel Standard:

 

(a)          Train,
supervise, discharge and determine and pay the compensation, fringe benefits, pension and retirement plans and other policies and
terms of employment of all personnel as may be reasonably required to provide proper operation, supervision, and management of
the Hotel in a professional manner suitable to the character of the Hotel;

 

(b)          Determine
the terms for guest admittance to the Hotel and establish all prices, price schedules, rates and rate schedules for rooms, and
other amenities and services provided at or in connection with the Hotel;

 

    	13

    	 

    

 

(c)          Develop,
revise, and implement all prudent policies and practices relating to all aspects of the Hotel, which shall be set forth in one
or more policy manuals or other writings, and train and supervise all Hotel employees for compliance with all such policies and
practices, including policies and practices relating to: (i) terms and conditions of employment, applicant screening, background
checks, selection, hiring, training, supervision, compensation, employee benefits, discipline, dismissal, transfer and replacement;
(ii) compliance with laws, including but not limited to anti-discrimination, sexual harassment and Environmental Laws; and (iii)
safety procedures, including those relating to the handling of hazardous and other dangerous materials;

 

(d)         Assist
Owner in the selection for purchase and installation of all FF&E, Inventories and Operating Supplies for the Hotel;

 

(e)          Negotiate
and enter into service contracts on Owner’s behalf which are necessary or desirable in the ordinary course of business in
operating the Hotel, including, without limitation, contracts for provision of electricity, gas, water, telephone and other utility
services, cleaning services, security services, vermin extermination, trash removal, elevator and boiler maintenance, air conditioning
maintenance, master television service, laundry and dry cleaning, entertainment satellite systems and other services necessary
for operation of the Hotel in accordance with this Agreement. Unless Owner otherwise elects, all such service contracts shall be
entered into in Owner’s name;

 

(f)          Establish
all credit policies, and enter into agreements with credit card companies, in connection with the Hotel;

 

(g)         Apply
for, and obtain and maintain in the name of Owner or Operator, as required by Legal Requirements and this Agreement, all licenses
and permits required of Owner or Operator in connection with the management and operation of the Hotel;

 

(h)          Institute
and defend in the name of Operator or Owner (or both), utilizing legal counsel selected by Owner, any and all legal actions or
proceedings (i) involving routine collection litigation and similar matters respecting ordinary day-to-day operations of the Hotel
where the amount in controversy is less than $10,000; or (ii) which Owner shall deem necessary or proper in connection with the
operation of the Hotel and requests Operator to institute or defend;

 

(i)          Establish,
supervise and implement a sales and marketing program for the Hotel consistent with the sales and marketing plan approved by Owner
as part of the Annual Financial Plan for the then-current year;

 

(j)          Plan,
prepare, arrange and contract for all advertising, publicity and promotional activities for the Hotel, including advertising and
promotional activities in conjunction with other hotels owned, operated or franchised by Operator and its Affiliates, and all discount
and complimentary policies with respect to bona fide travel agents, tourist officials, airline representatives, and employees of
Owner, Operator and their Affiliates in accordance with the customary practices of the travel industry;

 

(k)          Engage
such persons, as have been approved by Owner (in Owner’s sole discretion) for providing services of a specialist nature (such
as legal counsel and independent accountants) related to matters within Operator’s responsibility under this Agreement;

 

    	14

    	 

    

 

(l)          Use
diligence and best business practices in the collection of all GrossOperating Revenues;

 

(m)         Perform
(or cause to be performed and supervised) such maintenance and repairs to the Hotel as shall be required to maintain the Hotel
in all material respects in accordance with the First Class Hotel Standard;

 

(n)         Perform
any obligations of Owner under any Mortgage which are applicable to the operation and management of the Hotel;

 

(o)          Pay
all Gross Operating Expenses, including but not limited to the Hotel’s allocable share of real property taxes and assessments
and insurance premiums, and gross receipts, transient occupancy and similar taxes, and comply with all Legal Requirements and the
requirements of insurance companies which are applicable to the operation and management of the Hotel;

 

(p)          Perform
each and all of the obligations of Owner and Operator under the Franchise Agreement;

 

(q)          Upon
request by Owner, pay, as and when due, all payments due under any Mortgage or other loans relating to the Project;

 

(r)          Operate
and/or lease to third parties approved by Owner the food and beverage, banquet and room service facilities of the Hotel;

 

(s)          Do
any and all other acts and things as Operator may deem necessary and appropriate to carry out its responsibilities under this Agreement;
and

 

(t)          Comply
with the provisions of any covenants, conditions and restrictions recorded against the Hotel.

 

2.3        Limitations
on Operator’s Authority. Operator shall have no authority onbehalf of Owner to do any of the following without Owner’s
prior written approval in each instance, which may be withheld in Owner’s sole and absolute discretion:

 

(a)          Borrow
money, guaranty the debts of any third person, or mortgage, pledge, grant a security interest in or otherwise encumber all or any
part of the Hotel;

 

(b)          Enter
into any lease for the use of any item of Furnishings and Equipment or other property;

 

(c)          Enter
into any agreement, lease, license or concession agreement for office, retail, lobby or other commercial space at the Hotel;

 

(d)          Incur
any liabilities or obligations to third parties which are unrelated to the operation, maintenance and security of the Hotel or
to the performance of Operator’s responsibilities under this Agreement;

 

    	15

    	 

    

 

(e)          Engage
in collective bargaining with the bargaining representative or representatives of Hotel employees enter into collective bargaining
agreements, or modify or renew existing Union Agreements;

 

(f)          Enter
into any contract or other arrangement (or series of related contracts or arrangements) if (i) the contract or other arrangement
would, or are reasonably anticipated to, exceed $10,000 in the aggregate, (ii) the term of such contract or other arrangement is
in excess of one year, or (iii) the contract or other arrangement is not terminable by Owner or Operator without payment or penalty
upon not less than thirty (30) days notice. Operator shallnevertheless promptly report to Owner the execution of each such contract
having a liability to the Hotel of in excess of $5,000;

 

(g)          Settle
any casualty and insurance claims which involve, or which are reasonably estimated to involve, amounts in excess of $10,000, and
any condemnation awards regardless of amount;

 

(h)          Institute
or defend any Legal Proceedings with respect to the Hotel, other than as required by Section 2.2 (h);

 

(i)          Employ
any professional firm for more than $10,000 in the aggregate except as set forth in the Annual Plan, or enter into any arrangement
for the employment of any attorney or accountant (other than legal counsel retained to collect accounts receivable);

 

(j)          Prosecute
or settle any tax claims or appeals;

 

(k)          Purchase
goods, supplies and services from itself or any Affiliate ofOperator, or enter into any other transaction with an Affiliate of
Operator, unless prior to the consummation of such transaction all of the prices and other terms thereof and the identity of the
vendor and its relationship to Operator shall have been disclosed to and approved by Owner, which may be withheld in Owner’s
sole discretion. Owner may require that the supplier of anygoods, supplies or services for the Hotel be selected through competitive
bidding by qualified independent third parties, with the transaction being awarded to the lowest bidder. Except to the extent disclosed
to Owner in advance and approved by Owner in its sole and absolute discretion, neither Operator nor any Affiliate of Operator shall
charge or receive any mark-up, profit or purchasing fee on the purchase by or for the Hotel of any goods, supplies or services.
Manager shall use its best efforts to obtain the maximum available discounts and rebates on purchases and the most favorable terms
available. Any allowances, credits, rebates, discounts and the like received with respect to any such purchases shall be for the
account of Owner, and if received by Operator or any of its Affiliates, shall be turned over to Owner;

 

(l)         Provide
complimentary rooms or services to any guests, employees orother persons except in accordance with Operator’s policies approved
by Owner or for which the business purpose for the benefit of the Hotel is properly documented;

 

(m)         Acquire
on behalf of Owner any land or any interest therein;

 

(n)          Consent
to any condemnation or participate in any condemnation proceeding relating to the Hotel, the Site or any portion thereof;

 

    	16

    	 

    

  

(o)          Sell,
transfer or otherwise dispose of all or any portion of the Hotel or any capital assets of the Hotel or other interest therein,
except for dispositions of Furnishings and Equipment to the extent expressly provided for in the Annual Plan;

 

(p)          Perform
any alterations to the Hotel or any portion thereof except to the extent Operator’s performance of any such alteration shall
be expressly provided for in the Annual Plan;

 

(q)          Take
any other action which, under the terms of this Agreement, is prohibited or requires the approval of Owner;

 

(r)          Lease
or rent any one or more of the Hotel’s ballroom, bar or restaurant for periods in excess of two (2) consecutive weeks; and

 

(s)          Do
or take any other action that shall be contrary to any directions of Owner or limitations on Operator’s authority imposed
by Owner pursuant to any other provision of this Agreement.

 

2.4        Role
of Owner. Owner has an office in the Building and Appurtenancesand intends to oversee actively the operation of the Hotel.
Operator recognizes that Owner has interests in other operations located in the same structure as the Hotel whose operations and
success will be dependent upon the operations and success of the Hotel. Owner may engage an asset manager for the purpose of overseeing
Operator’s management of the Hotel. Operator, acting through its senior executives, agrees to consult regularly with Owner
regarding the operations and condition of the Hotel and take into account Owner’s recommendations in its operation of the
Hotel. Owner and Operator shall meet at least monthly (or on such more frequent basis as Owner shall reasonably require) to provide
Owner with a status report on the Hotel operations and discuss any other matters concerning the operation or condition of the Hoteldesired
by Owner. Operator, through its headquarters office, shall determine the corporate staff of Operator and members of the Executive
Staff; as appropriate, to attend the meetings. However, upon reasonable advance notice of Owner, Operator shall cause any of its
corporate executives as may be appropriate to attend any of the meetings. In furtherance of the foregoing, Operator shall, and
shall instruct the Executive Staff, to provide Owner with access to real-time information concerning the Hotel, which shall be
in addition to the periodic reports on the operation of the Hotel required elsewhere in this Agreement.

 

ARTICLE
3  TERM

 

3.1        Original
Term. The original term of this Agreement shall commence onthe Effective Date and shall continue for an aggregate term of ten
(10) years thereafter, unless this Agreement shall be extended or sooner terminated as herein provided. Operator agrees to commence
management and operation of the Hotel when the existing management agreement of the Hotel has terminated and the existing manager
has vacated the Hotel. Owner will endeavor to give at least seven (7) days’ advance notice to Operator of the anticipated
Effective Date.

 

    	17

    	 

    

  

3.2        Option
of Owner to Extend. Owner shall have the right (amounting to one(1) separate renewal option) to extend the original term for
one (1) successive period (“renewal term”) of five (5) years, provided that Owner shall give notice to Operator of
its election to extend the term at least three (3) months prior to the time when the original term wouldotherwise expire.

 

3.3        Meaning
of Term. As used herein the “Term” shall mean the original termand any renewal term or terms.

 

3.4        Early
Termination. Owner shall have the right to terminate thisAgreement upon seven (7) days advance notice to Operator without any
liability to Operator, except for any amounts due to Operator for Takeover Expenses incurred prior to the date of early termination,
if for any reason on or before thirty (30) days after the date of this Agreement:

 

(a)          Owner’s
agreement with its current hotel operator has not terminated, or Owner has not recovered possession of the Hotel from its current
operator;

 

(b)          Franchisor
has not approved this Agreement and the management of the Hotel by Operator; or

 

(c)          Any
mortgagee of Owner having a right to approve or consent to the termination of Owner’s agreement with the existing operator
or Owner’s entry into this Agreement has not given its approval or consent.

 

The foregoing matters described in (a) through (c) are conditions
subsequent in favor of Owner upon the full effectiveness of this Agreement.

 

3.5       Transition
Provisions.Operator agrees to perform the followingobligations in all material respects in connection with the transition of
operation of the Hotel that will occur on the Effective Date:

 

(a)          Operator
shall honor any reservations for Hotel guest rooms and other Hotel facilities on or after the Effective Date which have been made
by guests or customers before the Effective Date with the current operator of the Hotel. Owner shall cause to be transferred to
Operator any guest and customer deposits held by the current operator of the Hotel with respect to those reservations;

 

(b)         Operator
shall comply with all obligations binding upon Owner following the Effective Date under the Union Agreements;

 

(c)          Operator
shall assume responsibility for guest tray ledger transferred by the current operator of the Hotel and the care and protection
of the contents of safe deposit boxes and any luggage, parcels, packages, faxes, messenger and overnight courier packages and mail
of guests held by the current Hotel operator on the Effective Date;

 

(d)          Operator
shall accept and perform the obligations being assumed by Owner from and after the Effective Date under space leases, concession
and license agreements, equipment leases and service contracts of the current Hotel operator or lessee;

 

    	18

    	 

    

 

(e)          Operator
shall assist Owner with the transfer of existing Permits, to the extent transferable, and in applying for and obtaining all other
necessary Permits for the lawful operation of the Hotel from and after the Effective Date;

 

(f)          If
requested by Owner, Operator shall acquire from the existing hotel operator or its affiliates and lawfully transfer into its name
or one of its affiliates acceptable to Owner the liquor license for the sale of alcoholic beverages at the Hotel and the liquor
inventory of the Hotel; and

 

(g)          Operator
shall otherwise assist and cooperate with Owner in the orderly and smooth transition of operation of the Hotel from the current
operator to Operator on the Effective Date.

 

3.6          Takeover
Expenses. Subject to the limitations in the approved budget ofTakeover Expenses attached as Exhibit E, following the
Effective Date, Operator may reimburse itself for the Takeover Expenses following Owner’s approval of an invoice for the
Takeover Expenses as and when funds in the Operating Account are available for such purpose, and the Takeover Expenses shall be
charged as a Gross Operating Expense, unless otherwise agreed by Owner.

 

3.7          Vacation
by Operator at the End of the Term. On the expiration or soonertermination of the Term, Operator shall vacate the Property and
otherwise perform its obligations under Article 17 respecting the transition of operations of the Hotel upon the termination
of this Agreement.

 

ARTICLE
4   USE AND OPERATION OF THE HOTEL

 

4.1        Employment.
Subject to the terms of this Agreement, Operator shall beresponsible for selecting, hiring, establishing salary and payroll benefits,
promoting, terminating where appropriate, supervising, directing, training, and assigning the duties of a sufficient number of
Hotel Employees whom Operator reasonably determines to be necessary or appropriate for the proper, adequate, safe and economical
operation and management of the Hotel including, without limitation, the general manager, sales manager, controller and food and
beverage director of the Hotel; provided, however, that the employees paid from the Hotel shall not include any persons who are
properly the personnel of Operator’s regional or central office or any other personnel of Operator. The Hotel Employees in
all respects will be the employees of Owner or at Owner’s option, an Affiliate of Owner. Operator shall be responsible for
compliance by Owner or its Affiliates with all Legal Requirements and Union requirements having to do with worker’s compensation,
social security, unemployment insurance, hours or labor, wages, working conditions, and other employer-employee related subjects
respecting the Hotel Employees. Operator shall cause the Hotel’s general cashier and all employees having check signing authority
to be adequately bonded to the satisfaction of Owner, and the cost of bonding shall be a Gross Operating Expense. The salaries,
payroll benefits and other costs of such employment arrangements shall be charged as Gross Operating Expenses of the Hotel and
shall be accrued in accordance with the Uniform System of Accounts. The costs provided for in the immediately preceding sentence
shall include, by way of example and not limitation, severance pay, unemployment compensation and health insurance and related
costs (i.e. in order to comply with COBRA-type regulations) as a result of the termination of employees and which shall have been
paid or accrued in accordance with the Uniform System of Accounts. Operator shall use all commercially reasonable efforts and exercise
reasonable care to select qualified, competent, and trustworthy employees. To the extent possible, Operator shall use local labor
in the operation of the Hotel. Notwithstanding anything to the contrary herein, Operator agrees to select for hiring a sufficient
number of former employees of the Hotel (or of Owner’s previous third party manager of the Hotel) who desire employment by
Operator on sufficient terms and conditions to avoid the notification requirements of the Federal Worker Adjustment and Retraining
Notification Act (29 U.S.C. Sec. 2101, et seq.) and similar state law requirements. The Operator may not hire any individuals for
employment at the Hotel who are related to the officers, directors or shareholders of Operator without Owner’s prior approval.
Operator shall use its best efforts to design, promote and implement employment practices which emphasize the continuity of management
(including but not limited to the Executive Staff), minimize training and moving costs and reduce personnel turnover and shall
make all staffing and employee transfer and retirement decisions with the objective of minimizing Gross Operating Expenses.

 

    	19

    	 

    

 

4.2        Executive
Staff. The Executive Staff shall be selected by Operator subjectto approval by Owner. Operator shall deliver the resume of
any candidate for an Executive Staff position to Owner for its review, and Owner shall have an opportunity to meet the candidate
at the Hotel or another location in the City of San Francisco before making a decision about whether to approve the hiring of
the candidate. Owner will endeavor to notify Operator of its opinion of a candidate within five (5) business days after its meeting
with the candidate. If Owner does not notify Operator, whether orally or in writing, of its opinion of the candidate within the
five (5) business day period, Owner shall be deemed to have approved that candidate. Operator shall hire qualified Executive Staff
and cause members of the Executive Staff to commence full-time employment at the Hotel on or before the Effective Date. If any
of the Executive Staff shall resign or be terminated or shall be absent from the Hotel for any period in excess of ordinary vacations
and leave time, Operator shall replace such Executive Staff with qualified persons approved by Owner as soon as reasonably practicable.
Operator acknowledges that Owner is vitally interested in the qualifications of those persons designated as the Executive Staff.
Operator shall, from time to time, consult with Owner and consider Owner’s recommendations as to the appointment of individuals
to such positions and shall discuss with Owner and give good-faith consideration to any request by Owner during the Term that
one or more of the Executive Staff of the Hotel be replaced. However, Operator shall not transfer any Executive Staff employee
to other hotels or resorts owned or managed by Operator or any of its Affiliates, unless it first delivers to Owner at least fifteen
(15) days advance written notice (which may be delivered by e-mail to geoffreyp@msn.com or another e-mail address provided
by Owner to Operator for such purpose) of the transfer, and the transfer is being made to promote the career advancement of the
employee or at the employee’s request.

 

4.3        Subsequent
Employment of Employees. During the Term and for a periodof three (3) years after the termination of this Agreement, Operator
agrees not to solicit Hotel Employees for employment by Operator or any of its Affiliates or at another hotel, and Operator shall
not, directly or indirectly, induce or encourage any employee of Owner or person employed at the Hotel to terminate his or her
employment, except that the foregoing covenants of Operator shall not be applicable to persons employed by Operator immediately
before or as of the Effective Date and who are subsequently transferred to the Hotel and employed by Owner.

 

    	20

    	 

    

 

4.4       Legal
Proceedings. Operator shall furnish Owner with quarterly statusreports with respect to all Legal Proceedings instituted or
being defended by Operator pursuant to Section 2.2(h). All claims against Owner and/or Operator arising out of the management
or operation of the Hotel which are covered in whole or in part by insurance shall promptly be forwarded by Operator to the appropriate
insurer (with a copy thereof to Owner in the case of claims against Owner).

 

4.5         Annual
Financial Plan.

 

(a)        On
or before sixty (60) days after the Effective Date, Operator shalldeliver to Owner a proposed Annual Financial Plan (excluding
a Capital Budget) for the period between the Effective Date and December 31, 2007 for Owner’s approval. Pending Owner’s
approval of the proposed Annual Financial Plan for that period, Operator shall operate the Hotel based upon budgeted expenses consistent
with the historical practices for the Hotel, as required by the Franchise Agreement, or as otherwise directed by Owner. On or before
November 1st of each Fiscal Year thereafter commencing November 1, 2007, Operator shall submit to Owner for its approval a proposed
Annual Financial Plan (“AFP”) consisting of an Annual Operating Budget, Capital Budget, Marketing Plan and Management
Plan as set forth hereunder, including the information described on Exhibit F attached to and made a part of this Agreement.
Owner’s approval may be withheld in its sole and absolute discretion. On or before December 1 of each year commencing December
1, 2007 or thirty (30) days after receipt of the proposed AFP, whichever is later, Operator shall at the request of Owner consult
with Owner and meet withOwner if necessary (either members of the Executive Staff or corporate executives of Operator or both,
as deemed appropriate by Owner), and Owner either shall accept the AFP submitted to Owner as provided above or shall submit to
Operator a detailed list of Owner’s objections or questions to the AFP (“Owner’s AFP Objections”). Within
fifteen (15) days after Operator’s receipt of Owner’s AFP Objections, Owner and Operator shall meet and discuss Owner’s
AFP Objections with the goal of agreeing upon an AFP for the subject Fiscal Year. If Owner objects to any specific item of expense
in the AFP and Owner and Operator are unable to reach agreement thereon as provided above prior to commencement of the Fiscal Year
in question, pending such agreement, unless Owner otherwise determines, the AFP or the specific item or items of expense (not revenue)
in question shall be suspended, and except as to Capital Budget items which shall be suspended until approved by Owner in its sole
and absolute discretion, be replaced for such period that the AFP or such item is in question by an amount equal to the greater
of (a) one hundred and five percent (105%) of the amount for such actual item of expense in the immediately preceding Fiscal Year,
or (b) such actual items of expense for the immediately preceding Fiscal Year subject to an adjustment for each item equal to the
percentage increase in the CPI over the twelve (12) month period immediately preceding the start of the Fiscal Year in question.

 

    	21

    	 

    

 

(b)         The
Annual Operating Budget shall be prepared in accordance with the Uniform System of Accounts. The Annual Operating Budget shall
incorporate Operator’s good faith reasonable estimates of the items of revenue and expense contained therein, including without
limitation, (a) a separate itemization of an estimate of Operator’s Management Fee and any other income or expense reimbursements
to the Operator or its Affiliates applicable to the period covered by the Annual Operating Budget, (b) a separate itemization of
the amount and timing of any irregular payments that are to be made by Owner at times when cash flow may be insufficient to meet
the Hotel’s obligations, and (c) any other items required by any other provision of this Agreement or reasonably required
by Owner. The Annual Operating Budget shall include a summary of the estimated income and expenses for the two (2) succeeding Fiscal
Years following the Fiscal Year otherwise covered by the Annual Operating Budget. Owner shall have the right, from time to time,
upon reasonable notice to Operator, to require reasonable additions, deletions and changes to the format, style and contents of
the Annual Operating Budget.

 

(c)        Operator
agrees to diligently employ all commercially reasonable efforts to ensure that the actual costs of maintaining and operating the
Hotel shall not exceed the Annual Operating Budget either in total or in any one Account Category. Notwithstanding theforegoing,
Owner and Operator acknowledge that the Annual Operating Budget will be an estimate of revenue and expense. Except for those emergency
expenses provided for below, if Operator anticipates that a Significant Variation (as defined below) is reasonably likely to occur
for a Monthly Period or on cumulative basis for the Fiscal Year, Operator shall immediately deliver notice thereof to Owner, and
Operator shall review with Owner (and meet with Owner respecting the expected Significant Variation if necessary for a complete
review of it), and Operator shall propose any modifications of the Annual Operating Budget as may be appropriate based upon the
expected Significant Variation for Owner’s approval. “Significant Variation” means a “Significant Variation”
with respect to the Annual Operating Budget shall mean for any period shown thereon:

 

(i)          With
respect to Gross Operating Expenses for the Rooms, Food and Beverage departments, after excluding workers compensation premiums,
governmental license and permit fees, cable television charges and other similar expenses that are beyond the control of Operator,
the percentage of the remaining departmental Gross Operating Expenses as compared to departmental Gross Operating Revenues exceed
such percentage as shown on the Approved Financial Plan by more than five percent (5%) (by way of example, if in the Annual Financial
Plan the percentage of such departmental Gross Operating Expenses as compared to departmental Gross Operating Revenues is 30%,
an actual percentage of departmental Gross Operating Expenses as compared to departmental Gross Operating Revenues of more than
31.5% would constitute a Significant Variation);

 

(ii)         With
respect to Gross Operating Expenses for the Administrative & General, Sales and Marketing and Maintenance departments, after
excluding costs of franchise reward programs, utility expenses, worker’s compensation premiums, utility and waste removal
expenses and other similar expenses that are beyond the control of Operator, percentage of the remaining departmental Gross Operating
Expenses as compared to departmental Gross Operating Revenues exceed such percentage as shown on the Approved Financial Plan by
more than five percent (5%) (see example in (i) above); and.

 

    	22

    	 

    

 

(iii)        In
the case of total costs and expenses for any separate project identified in the approved Capital Budget, actual costs and expenses
which exceed the total budgeted for such project (including the contingency) set forth in the approved Capital Budget.

 

To the extent that revenues do not achieve
budgeted levels, Operator shall use its best efforts to decrease Gross Operating Expenses below budgeted levels in a corresponding
amount to maintain the level of overall profitability previously budgeted. Owner and Operator shall meet periodically at a time
and place designated by Owner, for the purpose of reviewing Hotel operations including profit and loss statements, Operator’s
performance, capital expenditures, forecasts of cash available for disbursement for the balance of the current Fiscal Year and
making any revisions to the previously approved Annual Operating Budget required by Owner in its sole discretion in order to maintain
or improve the departmental profits or margins as originally budgeted.

 

As part of the budgeting process, Operator
shall provide to Owner, with each proposed Annual Operating Budget, a complete list of all service and other contracts for the
Fiscal Year which is the subject of the Annual Operating Budget having a liability to the Hotel in excess of $5,000 for such Fiscal
Year for or covering the Hotel and the payments or expenditures connected or anticipated therewith.

 

(d)          The
Capital Budget shall contain the budget for expenditures (i) from theReserve, and (ii) for other major improvements, renovations
and expansion (“Capital Improvements”) for the succeeding Fiscal Year. Operator shall submit good faith reasonable
estimates for capital expenditures for FF&E purchases for the two Fiscal Years following the Fiscal Year otherwise covered
by the Annual Operating Budget and for Capital Improvements for the then current Fiscal Year and, in general, for the five (5)
Fiscal Years following the Fiscal Year otherwise covered by the Annual Operating Budget. The expenditures for CapitalImprovements
and FF&E purchases shall be listed in order of priority and shall include a cost/benefit analysis as to each. The Capital Budget
shall include an analysis of alternate methods of acquiring and purchasing FF&E and Capital Improvements. When approved by
Owner, the Capital Budget, or such items as may be specifically approved by Owner, is collectively referred to in this Agreement
as the “Approved Capital Budget”. Owner’s approval of the Capital Budget may be withheld in its sole and absolute
discretion, and Operator shall not be authorized to incur any capital expenses unless shown on an Approved Capital Budget. Unless
Owner otherwise directs Operator, approval of the Capital Budget constitutes an authorization for Operator to expend money for
Capital Improvements as provided in the Approved Capital Budget. However, in any event, any expenditure in excess of $25,000 shall
require Owner’s specific authorization. Any changes, substitutions or additions to the Capital Budget by Operator must be
approved by Owner in writing in its sole and absolute discretion. Owner may make changes, substitutions and additions to the Capital
Budget without Operator’s approval. Owner will consult with Operator respecting any such changes, substitutions and additions
to the Capital Budget. For purposes of this Agreement, the determination of whether an expense is capital in nature shall be made
in accordance with the policies and procedures set forth on Exhibit G attached to and made a part of this Agreement.

 

    	23

    	 

    

 

Competitive bid rules outlined in Section
4.6 will be observed at all times by Operator for any FF&E purchases and Capital Improvements.

 

(e)          The
Marketing Plan shall contain advertising, sales and promotional plans prepared by Operator to be used in connection with the marketing
of the Hotel, including a full analysis of such plans, setting forth the estimated cost of each component of such plans with specific
details of marketing and promotion expenditures. The Marketing Plan shall be written with the goal of achieving Gross Operating
Revenues as submitted in the Annual Operating Budget for the Fiscal Year or, if less than a full Fiscal Year, the period between
the Effective Date and the December 31 next following the Effective Date. Operator shall not use Owner’s name in any advertising
or promotional material without Owner’s expressed prior written approval in each instance. Advertising and promotional materials
shall be prepared in full compliance with applicable Federal, State and Municipal fair housing laws, ordinances, regulations and
orders. Owner shall have the right, from time to time, to require reasonable additions, deletions and changes to the format, style
and contents of the Marketing Plan. Owner agrees that it will not use to the detriment of the Hotel or to Operator any proprietary
information of Operator which is furnished to Owner as part of the Marketing Plan.

 

(f)          The
Management Plan shall contain (i) estimated contributions and distributions from or to Owner; (ii) a leasing plan for the leasing
of concessions and other space in the Hotel; (iii) plans and budgets for the disposition of FF&E to be replaced; (iv) a business
plan, strategy and operational policy with a discussion of long-term objectives; (v) a discussion and analysis of the forecasted
operating conditions for the Fiscal Year and a comparison to the previous Fiscal year’s actual performance, with an explanation
for changes and variations; (vi) a detailed training program for Hotel Employees together with the estimated cost thereof; (vii)
details of future bookings, commitments, deposits taken, expressions of interest to make future bookings, together with Operator’s
assessment of the likelihood of such expression of interest being exercised; (viii) an overview explanation of the pricing policy
for the Hotel including aschedule of prices to be charged and discount policy for each profit center at the Hotel; and (ix) such
management issues, proposals and projections or modifications as Operator may recommend for the efficient management of the Hotel.
Owner shall have the right, from time to time, to require reasonable addition, deletions and changes to the format, style and
contents of the Management Plan.

 

4.6        Competitive
Bidding. All contracts for repairs, capital improvements,foods and services exceeding $20,000 and other contracts designated
by Owner shall be awarded on the basis of competitive bidding, solicited in the following manner:

 

(a)          A
minimum of two (2) written bids shall be obtained for each purchase or contract up to $35,000. Purchases over $35,000 will require
a minimum of three (3) bids;

 

(b)          Each
bid will be solicited in a uniform format;

 

(c)          Unless
Owner directs, for any contract involving a total expenditure of $50,000 or less, Operator may accept a low bid without prior approval
from Owner if the expenditure is for a budget approved item and will not result in an excess of the annual budgeted Account Category
of the applicable Capital or Annual Operating Budget;

 

    	24

    	 

    

 

(d)          If
Operator desires to accept a bid other than the lowest bid, then Operator shall so advise Owner in writing and recommend that such
bid be accepted with support for such recommendation; and

 

(e)          Owner
shall have the right to accept or reject any and all bids for repair or capital expenditures.

 

Subject to the provisions of Article 14
and any other limitations in this Agreement on the contracting authority of Operator, in its operation of the Hotel under this
Agreement, Operator may purchase goods, supplies and services from itself, or Owner or Owner’s representatives, or any affiliated
or subsidiary companies or individuals so long as the quality, prices and terms thereof are competitive with, and are not less
favorable than prices and terms which could be obtained from independent parties and, if required by this Section 4.6 or
any other provision of this Agreement, are in compliance with competitive bidding rules, provided that Operator will provide Owner
with prompt notice of any contract in excess of $2,500 regarding such an arrangement entered into with an Affiliate of Operator
or Owner.

 

4.7        Hotel
to Benefit from Operator Expertise. If, in Operator’s activities as anexperienced manager and operator of hotels, Operator
develops, negotiates, contracts for or acquires any method, system, agreement or arrangement which would enhance the operations
or management of the Hotel, Operator shall promptly make available to Owner for the Hotel such method, system, agreement or arrangement
on terms at least as favorable as Operator is offering it to the other hotels managed by Operator, and Owner may elect to have
such method, system, agreement or arrangement be used at the Hotel.

 

4.8        Emergencies.
If any circumstance shall occur which Operator reasonably and in good faith judges to be an emergency threatening the safety of
persons or property (an “Emergency”) then Operator shall take such action and cause such things to be done as Operator
reasonably and in good faith believes necessary. Operator shall inform Owner of any and all emergencies as soon as practicable.
If practicable, Operator shall obtain Owner’s prior approval of any action in response to an Emergency. If action must be
taken before Operator can practicably contact Owner for its approval, which may be oral or in writing, Operator may make such expenditures
not included in the approval Annual Operating Budget or Capital Budget, provided that the expenditure for any one Emergency may
not exceed $25,000.

 

4.9          Compliance
with Government Rules and Regulations, including Environmental Laws.

 

(a)          Operator
shall conduct the business of the Hotel in compliance with all applicable federal, state and local laws and insure that no activity
or condition occurs on or about the Hotel in violation of any laws. If Operator shall have reason to believe that any laws may
be violated on or about the Hotel, then Operator shall promptly so notify Owner.

 

    	25

    	 

    

 

(b)          At
all times during the term of this Agreement, Operator shall comply in all material respects with Environmental Laws applicable
to the Hotel and its operations. Operator shall use diligent efforts to determine if any Hazardous Material is being used, released,
disposed or discharged at or from the Hotel, including, without limitation, the engagement of professional environmental engineers
to perform such environmental studies or tests as may be approved by Owner in its sole and absolute discretion. If any Hazardous
Material is discovered at the Hotel, Operator shall not disturb, release or dispose of (or permit to be disturbed, released or
disposed of) any such Hazardous Material except in strict compliance with a remediation and/or removal program approved by Owner
in its sole and absolute discretion. Additionally, without the prior consent of Owner, which may be withheld in its sole and absolute
discretion, Operator shall not permit on the Hotel (a) any dry cleaning operations, (b) any activity requiring a permit under any
Environmental Laws, even if the permit has been or can be obtained, (c) any activity generating any Hazardous Materials as waste
or using Hazardous Materials, other than (i) kitchen grease traps, and (ii) pool and spa chemicals, fertilizers and pesticides
in reasonable quantities relative to the needs of the Hotel which are properly stored, handled and disposed of.

 

(c)          Operator
and Owner each agrees to give the other prompt written notice of (1) all Environmental Liabilities; (2) all pending, threatened
or anticipated proceedings, and all notices, demands, requests or investigations, relating to any Environmental Liability or relating
to the issuance, revocation or change in any permit or authorization under Environmental Laws required for operation of the Hotel;
(3) all Releases at, on, in, under or in any way affecting the Hotel, or any Release known by Owner or Operator, as the case may
be, at, on, in or under any property adjacent to the Hotel; and (4) all facts, events or conditions that could reasonably lead
to the occurrence of any of the above-referenced matters.

 

4.10      Owner’s
Performance of Operator’s Obligations. If Operator fails to perform any of its obligations and undertakings hereunder,
Owner may, after giving Operator fifteen (15) business days’ prior written notice thereof (unless such default creates an
emergency in Owner’s reasonable judgment, in which case no notice need be given by Owner) perform any of Operator’s
obligations (including payment of any monies due), and Owner shall beimmediately reimbursed by Operator from the Hotel Operating
Account for any monies so expended (to the extent there are funds in such Hotel Operating Account). Any performance by Owner of
any obligation of Operator hereunder shall not be deemed a waiver by Owner of any other right or remedy Owner has under this Agreement
or in law or equity by reason of such default or a waiver of any such rights or remedies Owner has by reason of a future default
by Operator.

 

4.11       Owner’s
Right to Reserve Rooms and Facilities; Meals for Owner Personnel. Notwithstanding Operator’s responsibility to set room
rates and occupancy policies for the Hotel, Owner shall have at all times the right to reserve Guest Rooms or other facilities
of the Hotel (including banquet, reception, catering and other services) at the prevailing rates then charged by the Hotel or other
special rates set forth in the Annual Plan. Owner shall have the right within reason to use or grant others the right to use guest
rooms and facilities of the Hotel and receive meals at Hotel restaurants on a complementary basis, as determined by Owner, upon
reasonable notice to Operator. All complementary rooms, facilities and meals given under this Section 4.11 must be approved
in advance in writing by an authorized representative of Owner.

 

    	26

    	 

    

 

4.12       Credit
and Pricing Policies. Operator will propose in connection with each Operating Budget, the rate and price schedules for all
rooms, products and services provided at the Hotel.

 

4.13       Owner’s
Right to Access. Owner and all of its duly authorized officers and representatives and other persons duly authorized by Owner
are entitled to have access to the Hotel and to all of the facilities in the Hotel at all times. In gaining access to the Hotel,
Owner and duly authorized persons must use reasonable care not to disrupt the operation of the Hotel in any material respect.

 

4.14       Parking.
The Hotel is served by a parking garage that is located in the Project beneath the Hotel. The parking garage is not part of the
Hotel. Parking rates will be determined by Owner and the parking operator or other person in control of the parking garage for
Hotel employees, Hotel guests (on a 24 hour in and out basis) and banquet patrons, taking into account parking rates charged at
comparable hotels in the San Francisco central business district.

 

4.15       Travel
Expenses. Operator shall use reasonable efforts to economize on airfares and other travel expenses incurred in connection with
Operator’s performance of its obligations under this Agreement that Operator desires to have reimbursed to it as Gross Operating
Expenses, and in no event shall Operator be entitled to pay or include in Gross Operating Expenses any airfare in excess of the
coach or economy fare reasonably available for the flight in question.

 

4.16         Name
of Hotel. Subject to compliance with any requirements of the Franchise Agreement, the name of the Hotel shall be selected
by Owner in its sole and absolute discretion and may be modified by Owner in its sole and absolute discretion. Owner
recognizes that Operator has experience in naming and marketing of hotels and will consult with Operator before
changing the Hotel name, but the final decisions on the name of the Hotel and any change in the name shall be that of Owner
in its sole and absolute discretion.

 

4.17       Storage
Space. Operator shall have the right to use for purposes of storage in connection with the operation of the Hotel the spaces
located in the Project parking garage shown on Exhibit H attached to and made a part of this Agreement or other storage
spaces of similar size located in the Project parking garage that may be designated from time to time by Owner as being for Hotel
use.

 

ARTICLE
5  RELATIONSHIP OF THE PARTIES

 

In the performance of this Agreement, Operator
shall act as an agent and fiduciary. Neither this Agreement nor any agreements, instruments, documents or transactions contemplated
hereby shall in any respect be interpreted, deemed or construed as making either Operator or Owner a partner or joint venturer
with the other party or as creating any similar relationship or entity, and Owner and Operator each agree that it will not make
any contrary assertion, contention, claim or counterclaim in any action, suit or other legal proceeding involving Operator and
Owner. This Agreement is a contract for the provision of services by Operator to Owner. This Agreement does not grant, and Operator
does not have, by virtue of this Agreement, or otherwise any interest in the Property. Neither this Agreement nor any rights of
Operator under this Agreement constitute or create a lien or encumbrance on the Hotel or any part thereof.

 

    	27

    	 

    

 

 

ARTICLE
6  ADVERTISING

 

Subject to and in strict compliance with
the provisions of the Franchise Agreement, if any, and the other provisions of this Agreement, Operator shall arrange and contract
for all advertising which Operator may reasonably deem necessary, in accordance with this Agreement, for the operation of the
Hotel. The Hotel generally shall be advertised by Operator under the name designated in the Franchise Agreement, or if none, the
name designated from time to time by Owner. Subject to any limitations contained in the Franchise Agreement, Operator in its advertising
and marketing of the Hotel shall feature the existence of the spa in the Hotel and promote the spa as a prominent amenity of the
Hotel.

 

ARTICLE
7  RESERVE

 

7.1        Reserve.
The Reserve shall be funded pursuant to Section 7.2, and theamounts in the Reserve shall be used to cover the cost of FF&E
expenditures as described in Section 4.5(d) in accordance with the Approved Capital Budget. All FF&E acquired and installed
and all capital improvements, whether done in accordance with this Section 7.1 or otherwise, shall be the property of Owner.

 

7.2       Transfer
to Reserve. Subject to the terms and provisions of this Section 7.2, during each Accounting Period, Operator shall deposit
out of Gross Operating Revenues into the Reserve an amount specified by Owner or required by the Franchise Agreement or any mortgagee
of Owner.

 

7.3        Annual
Adjustment. At the end of each Fiscal Year and following receiptby Operator of the annual accounting referred to in Article
10, an adjustment will be made to such annual account, if necessary and if available, so that the appropriate amount shall
have been deposited in the Reserve.

 

7.4        Maintenance
of Reserve. Checks or other documents of withdrawal shallbe signed by representatives of Owner, and Operator shall not have
any signing or otherauthority to make withdrawals from the Reserve, unless Owner otherwise agrees. The proceeds from the sale of
FF&E no longer needed for the operation of the Hotel shall at the option of Owner be deposited in the Reserve, but not be credited
against the obligation of Operator to deposit cash in such fund for the then current Fiscal Year. The Reserve shall be maintained
in an interest bearing account for the benefit of Owner. All interest earned or accrued on amounts invested from the Reserve shall
at the option of Owner either be paid to Owner or be added to the Reserve (but shall not be credited against Owner’s obligations
to fund the Reserve), and shall not constitute Gross Operating Revenues or be included therein.

 

    	28

    	 

    

 

7.5        Accumulation
of Reserve. At the end of each Fiscal Year, any amountsremaining in the Reserve shall be carried forward to the next Fiscal
Year, and shall be in addition to the amount to be reserved in the next Fiscal Year.

 

7.6        Final
Remittance. Upon expiration or termination of this Agreement,Owner may withdraw all the funds remaining in the Reserve.

 

ARTICLE
8  REPAIRS AND MAINTENANCE AND CAPITAL IMPROVEMENTS

 

8.1        Repairs
and Maintenance. Operator shall, from time to time, make suchexpenditures from Gross Operating Revenues for repairs and maintenance
including service contracts (“Repairs and Maintenance”) as required by any Mortgage or Legal Requirements or as are
reasonably necessary to maintain the Hotel in good operating condition and in material compliance with the First Class Hotel Standard,
including but not limited to repairs and maintenance of HVAC, mechanical and electrical systems, exterior and interior repainting,
resurfacing building walls, waterproofing of exterior surfaces of floors, and roofs, or the like. Except in the event of an emergency
due to casualty or act of God under circumstances in which it would be unreasonable to seek to obtain prior approval and provided
that Operator shall notify Owner of any such expenditure within 24 hours thereof, all expenditures for the foregoing shallbe as
provided in the Annual Operating Budget and the Approved Capital Budget. If any such Repairs and Maintenance shall be made necessary
by any condition against the occurrence of which Owner has received the guaranty or warranty of a builder or of any supplier of
labor or materials for the Hotel or its construction, Operator may invoke said guarantees or warranties inOwner’s or Operator’s
name, and Owner will cooperate in all reasonable respects with Operator in the enforcement thereof.

 

8.2        Capital
Improvements. Owner may, from time to time, at its sole expense,make such replacements, substitutions, alterations, additions
or improvements (exclusive of FF&E) in or to the Hotel as Owner shall determine, or as may be necessary to comply with any
Mortgage, the Franchise Agreement, or Legal Requirements, or to maintain the Hotel pursuant to a First Class Hotel Standard. Owner
will consult with Operator concerning such replacements, substitutions, alterations, additions and improvements. If structural
repairs or changes in the Hotel or extraordinary repairs to or replacements of any equipment (exclusive of FF&E) included in
the definition of Building and Appurtenances (collectively, “Capital Improvements”) shall be required at any time during
the term of this Agreement by the terms of any Mortgage or the Franchise Agreement or to maintain the Hotel in good operating condition
or by reason of any Legal Requirements, or by order of any governmental or municipal power, department, agency, authority or officer,
or otherwise, or because Operator and Owner jointly agree upon the desirability thereof, then in such event Owner may make any
and all such repairs, changes or replacements at Owner’s expense, to the extent funds are not allocated in the Approved Capital
Budget from the Reserve for such purposes. Such repairs, changes and replacements shall be made with as little hindrance to the
operation of the Hotel as reasonably possible. Notwithstanding the foregoing, as long as the Hotel can continue to operate without
interruption, Owner shall have the right to contest the need for any such repairs, changes or replacements required by any Legal
Requirements and may postpone compliance therewith, if so permitted by law. Any recommendations of Operator of Capital Improvements
shall be submitted in conjunction with the Capital Budget for the Fiscal Year.

 

    	29

    	 

    

 

8.3        Service
Contracts. Subject to any limitations on Operator’s authoritycontained in Article 2 or elsewhere in this Agreement,
Operator, without requiring the consent of Owner, shall enter into any contract for cleaning, maintaining, repairing or servicing
the Hotel or any of the constituent parts of the Hotel as Operator deems necessary for the operation of the Hotel.

 

Unless otherwise approved by Owner, all service
contracts shall: (a) be in the name of Operator, (b) be assignable, at Owner’s request, to a nominee, (c) to the extent customary,
include a provision for cancellation thereof by Owner or Operator upon not more than thirty (30) days’ written notice, and
(d) shall require that all contractors provide evidence of such insurance as is customarily carried by other contractors involved
in similar servicing arrangements. If this Agreement is terminated, Operator shall assign to Owner or Owner’s nominee, all
service agreements pertaining to the Hotel; Owner, or Owner’s nominee, agree, or will agree, to accept or assume the obligations
of Operator under such agreements arising from and after the date of the assignment.

 

8.4        Liens.
Owner and Operator shall use all commercially reasonable effortsto prevent any liens from being filed against the Hotel which arise
from any maintenance, changes, repairs, alterations, improvements, renewals or replacements in or to the Hotel and, if any such
liens are filed, Operator shall obtain the release thereof prior to the institution of legal proceedings in connection therewith.
The cost of obtaining such release shall be included in Gross Operating Expenses, unless the imposition of the lien results from
a default by Operator or Owner, in which event the cost of obtaining such release shall be borne by Operator or Owner, as applicable;
provided, however, that if the underlying expense for which the lien was recordedwould have been a Gross Operating Expense if paid
before the lien was recorded, such expense shall be included in Gross Operating Expenses, and only any additional costs, such as
interest, penalties and attorney’s fees paid or incurred in obtaining the release of the lien, shall be charged to the defaulting
party.

 

8.5        Notice
of Unavoidable Interruptions. In the event of any occurrenceconstituting an Unavoidable Interruption, Operator shall promptly
notify Owner of such occurrence and shall keep Owner informed as to the extent and impact thereof on the Hotel.

 

ARTICLE
9  WORKING CAPITAL AND BANK ACCOUNTS, DISTRIBUTION OF

NET OPERATING INCOME

 

9.1        Working
Capital. Owner shall provide initial Working Capital in theamount of $550,000 which will be deposited by Owner in the Operating
Account on or before the Effective Date and will provide to Operator for use in the operation of the Hotel any inventories left
at the Hotel by the prior operator. To assure that the appropriate amount of Working Capital is maintained for the uninterrupted
and efficient operation of the Hotel, Operator may propose to Owner that the level of Working Capital to be maintained in the Operating
Account be increased or decreased on an annual basis by Operator, and upon approval by Owner of the change in the amount of Working
Capital, either any excess Working Capital shall be distributed to Owner or used as Owner directs or with respect to any increase
in the Working Capital approved by Owner, either Owner at its option shall authorize Operator to retain the additional amount from
Gross Operating Revenues or fund the additional amount of Working Capital into the Operating Account. Owner will authorize retention
of Gross Operating Revenues in the Operating Account as Working Capital in the amount approved by Owner. If the Gross Operating
Revenues are not adequate therefor, Operator may deliver a notice to Owner requesting that Owner deposit the funds needed for Working
Capital within thirty (30) days after delivery of the request to Owner. All unexpended Working Capital, Inventories and Operating
Equipment and Supplies purchased with Working Capital shall remain the property of Owner.

 

    	30

    	 

    

 

9.2        Operating
Account. Operator shall open one or more Operating Accounts,at one or more banks in the city where the Hotel is located designated
by Owner, all of which accounts may only be drawn upon by the signatories authorized under this Section 9.2. Operator shall
deposit into the Operating Account as and when received all items of Gross Operating Revenues and all other income and revenues
derived from operation of the Hotel. All of such funds, whether or not deposited into such accounts, shall be solely the property
of Owner. All funds (exclusive of funds deposited in the Reserve and house banks at the Hotel) received by Operator in the operation
of the Hotel, and funds for Working Capital provided by Owner or retained by Operator from Gross Operating Revenues, shall be deposited
in the Operating Account. Amounts in the Operating Account may be temporarily withdrawn and invested by Operator in any Permitted
Investments, having due regard for the timing of cash needs. From the Operating Account, Operator shall pay all Gross Operating
Expenses (other than the excess FF&E if funded by Owner) before any penalty or interest accrues thereon, however, taking into
account sound cash management. All interest earned or accrued on amounts invested from theOperating Account shall be added to the
Operating Account but shall not constitute Gross Operating Revenues and unless Owner otherwise directs Operator, the interest shall
be paid to Owner as part of its monthly distributions pursuant to Section 9.3. The following shall be the requirements for
the signing and authorization of all checks or other documents of withdrawal from the Operating Accounts: (a) withdrawals for payments
otherwise permitted or required by this Agreement not exceeding $10,000 shall be signed by two or more authorized signatories of
Operator; and (b) withdrawals for payments otherwise permitted or required by this Agreement of more than $10,000 shall be signed
by two or more authorized signatories of Operator designated in accordance with policies mutually approved by Owner and Operator,
and if over $25,000 must also be approved in advance by Owner. Additionally, representatives of Owner shall have the right to withdraw
funds from such accounts provided reasonable notice of such is given to Operator and such withdrawal does not have a material adverse
impact on the operations of the Hotel. During any period that Operator is in default under this Agreement, in addition to any other
rights and remedies, Owner may suspend in whole or in part the authority of Operator and its authorized signatories to draw upon
the Operating Accounts.

 

    	31

    	 

    

 

9.3        Distribution
of Net Operating Income. Operator shall distribute to Ownerwithin seventeen (17) days after the close of business of each Accounting
Period the Net Operating Income for such Account Period, less any amount required to restore the Operating Account cash reserves
to an amount not less than the Working Capital (provided that there has been sufficient positive cash flow to build the Operating
Account balance to such an amount). Owner may from time to time provide Operator with instructions regarding the distribution of
cash flow for any purpose, including without limitation, satisfaction of reserve or other cash requirements established by Owner
or any lender pursuant to any loan agreement, mortgage note, mortgage or other security instrument related to the Hotel. Operator
shall thereupon make distributions only in accordance with such instructions.

 

9.4       Final
Remittance. Upon the expiration or termination of this Agreement,all remaining amounts in (a) the Reserve and (b) the Operating
Account, after payment of all Gross Operating Expenses for which bills were received to date and after payment of Operator’s
Management Fee, shall be transferred forthwith to Owner by Operator. Except as provided in Section 22.1, Owner shall pay,
or cause to be paid, and shall hold Operator harmless from and against all Gross Operating Expenses accrued in accordance with
the Uniform System of Accounts and this Agreement and invoices related to Gross Operating Expenses received after Operator has
transferred all funds to Owner.

 

9.5        Lender
Requirements. The provisions of this Article 9 and any otherprovisions of this Agreement regarding cash management or
the handling of Hotel funds are subject to any requirements regarding cash management and handling of Gross Operating Revenues
and other Hotel funds, including but not limited to lock box or similar arrangements, of the holder of any Mortgage, and within
ten (10) days after being requested in writing to do so, Operator will join in any commercially reasonable agreement, acknowledgment
or consent with respect thereto required by the holder of any Mortgage.

 

ARTICLE
10  BOOKS, RECORDS AND STATEMENTS

 

10.1       Books
and Records. Operator shall keep full and adequate books of account and other records reflecting the results of operation of
the Hotel in accordance with the Uniform System of Accounts and generally accepted accounting principles. The books of account
and all other records relating to or reflecting the operation of the Hotel, including accounts receivable, accounts payable, and
general ledger, all on an accrual basis in accordance with the Uniform System, files, correspondence, information regarding group
bookings, reservation lists, ledgers, bank statements for the Operating Account and Reserve, accounting books and records, electronic
data relating to the Hotel, insurance policies, bonds and other documents, agreements, leases, licenses, records and plans (including,
without limitation, the as-built or record set plans) relating to the operation of the Hotel shall be kept at the Hotel and shall
be available to Owner and its representatives and its auditors or accountants, at all reasonable times for examination, audit,
inspection, transcription and photocopying at Owner’s sole cost and expense. Copies of any or all books and records may be
kept at Operator’s offices in Dallas, Texas. All of such books and records pertaining to the Hotel, including, without limitation,
books of account, guest records, front office records, centralized books and records and books and records in electronic form,
at all times shall be the property of Owner and except for centralized records, shall not be removed from the Hotel by Operator
without Owner’s approval and consent. Operator shall, on behalf of Owner, be responsible for the processing of all credit
card accounts and other accounts receivable, the preparation and maintenance of all forms and records relating to sales and use
taxes, including but not limited to transient and hotel occupancy taxes, with respect to Hotel operations, and the establishment
and maintenance of payroll systems for Hotel employees and related personnel records. Upon any termination of this Agreement, Operator
shall immediately turn over all of such books and records forthwith to Owner at a location designated by Owner so as to insure
the orderly continuance of the operation of the Hotel, but such books and records shall thereafter be available to Operator at
allreasonable times for inspection, audit, examination and transcription for a period of seven (7) years. Whether before or after
the expiration of this Agreement, Operator shall not use any Hotel guest records or other guest information for any purposes, other
than as necessary to perform its obligations under this Agreement, and subject to the rights of the Franchisor under the Franchise
Agreement, all guest information shall belong to Owner.

 

    	32

    	 

    

 

10.2      Financial
Reports. Operator shall deliver to Owner reports of all transactions occurring during the Accounting Period. For each Accounting
Period, the Accounting Period Report is to be received no later than the 21st day following the close of each Accounting Period
and must provide all items and reports as required by Owner in accordance with the example set forth in Exhibit C. The reports
shall include a comparison of periodic and year-to-date actual revenues and expenses with the Annual Operating Budget as well as
a periodic and year-to-date comparison of such actual revenues and expenses with those of the prior Fiscal Year; a balance sheet
as of the last day of the Accounting Period; Operator’s Management Fee; and any expense reimbursement to Operator or its
Affiliates; calculation and computation of the distribution of Net Operating Income; a reserve reconciliation showing acquisition
and disposal report of FF&E; the Capital Budget and any expenditures year-to-date and all other reports or information as required
by Owner. On or before two (2) business days after the delivery of any internal financial and operational reports concerning the
Hotel,including but not limited to month end “flash” reports, Operator shall deliver to Owner a copy of the report.

 

Financial reports must be accompanied by a
certificate of Operator’s designated accounting officer certifying that such statement was prepared under such officer’s
direction and in such officer’s opinion is true and correct. Within seventy-five (75) days after the end of each Fiscal Year,
Operator shall deliver to Owner an annual accounting, which, at Owner’s request, shall be audited and certified by the Independent
Public Accountant, showing the results of operation of the Hotel during the Fiscal Year and a computation of Gross Operating Revenues,
Gross Operating Expenses, and Net Operating Income, if any, and any other information necessary to make the computations required
hereby or which may be requested by Owner, all for such Fiscal Year. The annual accounting for any Fiscal Year shall be controlling
over the interim accountings for such year.

 

10.3        Audits
by Owner. Owner shall have the right or on such more or less frequent basis as Owner shall desire, to perform a complete audit
of the Hotel (including inventories) either by Owner’s internal personnel or by a third party auditor retained by Owner.
The audit may cover all items of expense and revenue under this Agreement including, but not limited to, Gross Operating Revenues,
Gross Operating Expenses, depreciation, and the Management Fee. The cost of one such audit during each Fiscal Year shall be a Gross
Operating Expense, provided such cost is reasonable and customary for such audits within the City of San Francisco. If, as a result
of such audit, it is ultimately determined that amounts paid or reimbursed to Operator exceeded the amounts required to be paid
or reimbursed pursuant to this Agreement, Operator shall within ten (10) after delivery of Owner’s demand, pay to Owner the
amount of the excess payment, together with interest thereon from the date paid to Operator until the date payment is made to Owner
at the rate set forth in Section 31.15. In the absence of manifest error, any audit conducted by a qualified third party
auditor retained by Owner shall be binding upon the parties, and if the audit shows a difference of more than 3% between the Gross
Operating Revenues or Gross Operating Expenses reported by Operator and the Gross Operating Revenues or Gross Operating Expenses
determined by the qualified third party auditor, in addition to any other rights and remedies of Owner, Operator shall pay the
cost of the audit, and it shall not be entitled to charge the cost as a Gross Operating Expense or recover it as an Operator’s
Expense.

 

    	33

    	 

    

 

ARTICLE
11  OPERATOR’S MANAGEMENT FEES

 

In respect to the management services hereunder,
Operator shall receive or shall be entitled to receive the following management fees (“Management Fee”):

 

(a)        for
each Fiscal Year, Operator shall be entitled to a base management feeof up to two and one half percent (2.5%) of the Gross Operating
Revenues for the Fiscal Year. Of that amount, one and three fourths percent (1.75%) of the Gross Operating Revenues for an Accounting
Period shall be paid on or before seventeen (17) days after the end of thatAccounting Period, and the balance of three fourths
percent (.75%) of the Gross Operating Revenues shall be deferred, subordinated and paid only to the extent that the Partially AdjustedNOI
for the Fiscal Year exceeds the amount of the Owner’s Return for that Fiscal Year and Owner has received from distributions
of NOI for the Fiscal Year an amount equal to or greater than its Owner’s Return for such Fiscal Year. Provided that as of
the end of an Accounting Period the amount that Owner has received during a Fiscal Year from distributions of NOI for that Fiscal
Year, less any payments made by Owner during that Fiscal Year for Working Capital or other amounts that are deductible from NOI
in determining Partially Adjusted NOI, exceeds the full Owner’s Return for that Fiscal Year, Operator shall be paid, to the
extent funds are available for that purpose in the Operating Account as of the end of that Accounting Period, the amount of the
unpaid subordinated Management Fee accrued as of the end of that Accounting Period, and if thereafter for such Fiscal Year (including
at the end of such Fiscal Year) as a result of payments by Owner that are deductible in determining Partially Adjusted NOI, the
net amount received by Owner is less than the full Owner’s Return, Operator shall be required to pay to Owner within ten
(10) days the lesser of the subordinated Management Fee received by Operator for that Fiscal Year or the amount of the deficiency
in payment of the full Owner’s Return to Owner. If sufficient Partially Adjusted NOI after payment of the Owner’s Return
for a Fiscal Year is not available to pay any part of the deferred base management fee, such deferred amount shall be forfeited,
shall not be carried forward to any other Fiscal Year, and Operator shall not have any right to payment of such deferred amount;
and

 

(b)        for
each Fiscal Year, subject to the limitation on the total Management Feefor a Fiscal Year set forth below, Operator shall be entitled
to an incentive management fee equal to (i) five percent (5%) of the first Two Million Dollars ($2,000,000.00) of Fully Adjusted
NOI for that Fiscal Year, plus (ii) ten percent (10%) of the next Two Million Dollars ($2,000,000) of Fully Adjusted NOI, plus
(iii) fifteen percent (15%) of the amount by which Fully Adjusted NOI for that Fiscal Year exceeds Four Million Dollars ($4,000,000).
For any partial Fiscal Year, the dollar amounts in this subparagraph (b) shall be prorated;

 

    	34

    	 

    

 

provided that the aggregate Management Fee (consisting of the
base management fee and incentive management fee) payable for each Fiscal Year shall not exceed four percent (4%) of the Gross
Operating Revenues of the Hotel for that Fiscal Year.

 

ARTICLE
12  INSURANCE

 

12.1        Insurance.
Throughout the Term, to the extent available on commercially reasonable terms, Owner shall provide and maintain the following insurance
coverages, unless Owner shall by notice in writing to Operator elect to have Operator provide any such insurance (which election
may be made, canceled and remade, from time to time, at Owner’s election):

 

(a)        special
form property damage insurance sufficient to cover thereplacement cost of the Project and each of its component parts, including
real and personal property, against direct damage from special form risks (including earthquake and, flood, if applicable, at the
direction of Owner). Boiler and machinery insurance, debris removal, demolition, increased cost of construction and electronic
data processing shall also be covered at sub-limits established by Owner. Business interruption and extra expense rental loss,
as further described in (e) below, shall be included for Owner’s interest (for purposes of such coverage,Gross Operating
Expenses shall include ongoing Management Fees as if no loss had occurred payable to Operator only out of insurance proceeds paid
on account thereof from which Owner shall continue to pay Operator its Management Fees for the period of coverage). Coverage shall
be written with a replacement cost endorsement where applicable or its equivalent for the special form coverage and in aggregate
amounts to be specified by Owner for earthquake, flood and other additional coverages. Initially, the deductible amount shall not
be more than the lesser of $20,000 for each occurrence or 1% of the total insurable value of the Project for the special form coverage,
and the deductibles for earthquake and other additional coverages shall be established by Owner. If Operator is arranging the property
insurance, it shall arrange such other or additional insurance in such amounts and against such risks as Owner shall reasonably
deem necessary with respect to the buildings, facilities and contents of the Project, including any insurance coverages required
by the Franchise Agreement or any Mortgage. The cost of the special form property damage insurance and any other property insurance
on the Project shall be allocated between the Hotel, Chinese Cultural Center, spa premises, gift shop premises and parking garage
on a fair and equitable basis by Owner;

 

(b)         Commercial
general liability insurance in amounts satisfactory to Owner, but in any event not less than $1,000,000 for each occurrence and
$2,000,000 in the aggregate (with a per location aggregate), for personal injury and death and property damage, which shall, among
other risks, include coverage against liability arising out of the ownership or operation of motor vehicles, as well as coverage
in the said amount against all claims brought in the United States, Canada or United States possessions arising out of alleged
(i) bodily injury, (ii) death, (iii) property damage, (iv) assault or battery, (v) false arrest, detention or imprisonment or malicious
prosecution, (vi) libel, slander, defamation or violation of the right of privacy, (vii) liquor law or dram shop liability, (viii)
product liability, (ix) advertising liability, (x) products and completed operation coverage, and (xi) terrorism coverage, as long
as terrorism coverage is reasonably available on terms reasonably acceptable to Owner. The insuring party shall also carry excess
liability coverage in an amount not less than $25,000,000;

 

    	35

    	 

    

 

(c)          Worker’s
compensation insurance and employers liability insurance or insurance required by similar employee benefit acts as well as insurance
having a minimum per occurrence limit as Operator may deem advisable against all claims which may be brought for personal injury
or death of Hotel employees, but in any event not less than $1,000,000 or the amounts prescribed by the law of the State whichever
is greater;

 

(d)          Fidelity
bonds, with a blanket limit of $500,000, covering the Hotel’s employees having check signing authority, and comprehensive
crime insurance to the extent that Owner deems such to be necessary for the Hotel (including money and securities, loss inside
Hotel, loss outside Hotel sublimited at $25,000 each. Depositor’s forgery with a limit of $300,000 and deductible of $5,000
and counterfeit currency with a limit of $5,000 and a $1,000 deductible shall be carried;

 

(e)        Business
interruption insurance and rental loss insurance, as applicable, covering loss of income to Owner arising from Project operations
and rental for a minimum period of twelve (12) months resulting from interruption of business caused by the occurrence ofany of
the risks insured against under the property insurance (including earthquake, unless otherwise agreed by Owner);

 

(f)          Bailee
coverage applicable to Hotel operations only (broad form including safety deposit box legal liability), with a limit of $25,000
per occurrence and a deductible of $1,000, including innkeeper’s legal and checkroom legal coverages;

 

(g)         Comprehensive
automobile liability insurance at $1,000,000 Combined Single Limit;

 

(h)          Employment
practices liability insurance, including coverage for sexual harassment, wrongful discharge and discrimination; and

 

(i)           Garagekeepers
legal liability insurance applicable to Hotel operations only.

 

The cost of such insurance shall be charged as a part of Gross
Operating Expenses. Operator shall notify Owner and the insurance carrier within twenty-four (24) hours after Operator receives
notice of any such loss, damage or injury.

 

12.2       Modification
of Insurance. Owner may elect to increase or decrease the limits of the above insurance coverage and to carry other or additional
reasonable and customary insurance. All premiums on any increased limits of, or other or additional, insurance coverage required
by Owner under the immediately preceding sentence shall be paid by Operator and shall be included in the Gross Operating Expenses.
If any of the required coverages is not available, Owner shall not have any obligation to provide such coverages, and if Owner
has previously elected to have Operator provide the coverages, Operator shall inform Owner of the deviation from the requirements
and shall continue to provide coverage meeting all of the other requirements of this Article 12. If Owner has elected to
have Operator provide any of the coverages and the unavailability of coverage is due to insurer restrictions, provided that Operator
has conducted a process of due diligence to comply with the requirement, the failure to satisfy the insurance requirement in question
shall not be a default by Operator under this Agreement.

 

    	36

    	 

    

 

12.3      Subcontractor’s
Insurance. Operator shall require that all majorsubcontractors performing work on the Hotel or Hotel Property carry at their
expense Worker’s Compensation, Employer’s Liability and Commercial General Liability in commercially reasonable coverage
amounts, and that all major subcontractors performing work on the Hotel have coverage at the subcontractor’s expense in the
following minimum amounts:

 

(a)          Worker’s
Compensation - Statutory amount or its equivalent under applicable law.

 

(b)          Employer’s
Liability - $1,000,000 minimum, where required by applicable or equivalent law.

 

(c)          Commercial
General Liability

 

		(i)	$100,000 Bodily Injury per Person

$1,000,000 per Occurrence

$1,000,000 Property Damage

 

-or-

 

		(ii)	$1,000,000 Combined Single Limit

Each major subcontractor shall also carry excess liability coverage in an amount not less than $5,000,000.

 

(d)         Automobile
Liability-$1,000,000 minimum.

 

A major subcontractor is any subcontractor (i) receiving compensation
in excess of $100,000 (subject to adjustment for increases in the CPI between the date hereof and the date of such services) or
(ii) performing hazardous services. Operator must obtain Owner’s permission to waive any of the above requirements. Higher
amounts may be required if the work to be performed is sufficiently hazardous in nature. Operator shall obtain and keep on file
a Certificate of Insurance which shows that the subcontractor is so insured.

 

    	37

    	 

    

 

12.4      Form
of Policies. All insurance required by Sections 12.1,12.2 and 12.3 shall be in such form (if ISO forms are used,
the “Special” form should be used for those coverages for which it is available) and with such companies as shall be
reasonably satisfactory to Owner provided that such company shall have a minimum Best rating of A- Class VIII, and shall comply
with the requirements of any Mortgage and the Franchise Agreement. Insurance may be provided under blanket policies of insurance
on an agreed value basis with no co-insurance. All property insurance (including business interruption, extra expense and rental
loss coverages) shall name Owner as insured, and so long as the Hotel is mortgaged pursuant to any Mortgage or otherwise shall
be subject to a standard mortgagee clause in favor of the mortgagee or mortgagees. Operator shall not be an insured or loss payee
under the property insurance, including business interruption coverage. With respect to the policies maintained under Section
12.1(b), (c) and (e) through (g) and 12.3, Owner and the Owner Indemnified Parties and Operator shall
be named as either additional or named insureds, at the option of Owner, and Operator will be named as an additional insured, to
the extent commercially feasible. Policies of insurance (to the extent applicable) shall (i) provide that the insurance company
will have no right of subrogation against the mortgagee, Owner, Operator or any of their respective affiliated or subsidiary companies
or the agents or employees thereof and (ii) provide that the proceeds thereof in the event of loss or damage shall, to the extent
payable to any mortgagee, be payable notwithstanding any act of negligence or breach of warranty by Owner or Operator which might
otherwise result in the forfeiture or nonpayment of such insurance proceeds. The liability insurance policies shall provide that
the insurance will be deemed primary for Operator’s indemnification obligations under this Agreement and that any other insurance
available to Owner shall not be called upon by these policies to contribute to Liabilities indemnified by Operator. The insuring
party shall deliver to the other party complete certified copies of all of the insurance policies obtained by the insuring party
containing coverages required by this Agreement, including but not limited to blanket and master policies, and all amendments,renewals
and replacements thereof at least five (5) business days before the Effective Date as to the policies that will be in effect on
the Effective Date and within ten (10) days after receipt in the case of any new policies, renewal policies, replacement policies
and amendments. If Operator has obtained any of the coverages and Owner elects to obtain any of the required insurance, Operator
shall cause the coverage being replaced to be canceled without penalty and with a pro rata refund of any prepaid premiums.

 

12.5       Certificates.
For the purpose of insuring compliance with this Article 12, the insuring party shall furnish to the party certificates
of all insurance required to be maintained pursuant to this Article 12. All such certificates for insurance obtained by
Operator shall specify that the policies to which they relate cannot be canceled on less than thirty (30) days’ prior written
notice to Owner (with the “endeavor to” and “failure to” language of the certificate omitted)

 

12.6       Waiver
of Subrogation. Owner and Operator each waive any and all rights of recovery against the other (and against the partners, officers,
employees and agents of the other party) for loss of or damage to such waiving party or its property or the property of others
under its control, to the extent such loss or damage is covered by, or if the responsible party fails to maintain the required
insurance hereunder, would have been covered by, the insurance required to be obtained by such waiving party; provided, however,
that this waiver does not apply to any rights that any party may have to insurance proceeds from their respective insurance policies
at the time of such loss or damage. Each party obtaining any of the insurance described in this Article 12 shall obtain
from their insurance carriers a consent to such waiver.

 

12.7       Lender
Requirements. If any Mortgage requires that funds be delivered into an impound account for purposes of payment of insurance
premiums, Operator shall comply with the requirements of the Mortgage respecting payment of insurance premiums, including but not
limited to the necessary deposits in the impound account for payment of insurance premiums.

 

    	38

    	 

    

 

ARTICLE
13  REAL AND PERSONAL PROPERTY TAXES; UTILITIES

 

13.1      Taxes.
Operator shall, on behalf of Owner, pay from the Gross Operating Revenues, on or before the dates the same become delinquent, with
the right to pay the same in installments to the extent permitted by law, the Hotel’s allocable share (see (i) of the definition
of Gross Operating Expenses) all real estate taxes, all personal property taxes and all assessments levied against the Hotel or
any of its component parts. Operator shall promptly deliver to Owner all notices of assessments, valuations and similar documents
to be filed by Operator or Owner which are received from taxing authorities by Operator. Owner shall have the right to hire property
tax consultants or like professionals that reasonably provide economic benefits to Owner and the costs thereof shall be a part
of Gross Operating Expenses. Notwithstanding the foregoing obligations of Operator, Owner may, at its sole expense, contest the
validity or the amount of any such tax or assessment, provided that such contest does not materially jeopardize Operator’s
rights under this Agreement. Operator agrees to cooperate with Owner and execute any documents or pleadings required for such purpose,
provided Owner agrees to reimburse Operator for any out-of-pocket costs occasioned to Operator by any such contest. If anyMortgage
requires that funds be delivered into an impound account for purposes of payment of real estate taxes and assessments, Operator
shall comply with the requirements of the Mortgage respecting payment of real estate taxes and assessments, including but not limited
to the necessary deposits in the impound account for payment of real estate taxes and assessments.

 

13.2       Utilities,
Etc. Operator shall pay when due all fuel, gas, light, power, water, sewage, garbage disposal, telephone and other utility
bills incurred in connection with the Hotel from the Gross Operating Revenues or Working Capital.

 

ARTICLE
14  OPERATOR SYSTEM SERVICES

 

14.1       Operator
System Services. Owner and Operator contemplate that certain services, such as advertising, training and computer payroll,
can be provided for the Hotel better, more efficiently and more economically on a central, regional or group basis rather than
on an individual hotel basis (each such service, an “Operator System Service”).

 

14.2       Operator
System Service Costs. Operator may provide an Operator System Service to the Hotel, and in such event the Hotel’s fair
and equitable share of the cost thereof (excluding general administrative, overhead or other indirect expenses, profit or capital
expense) shall constitute a Gross Operating Expense, so long as (a) the cost of the Operator System Service shall be allocated
on a fair and equitable basis among the Hotel and the other hotels benefiting therefrom; (b) the basis for such allocation shall
be explained by Operator in each Annual Operating Budget; (c) both the cost of the Operator System Service and the allocation of
a share of that cost to the Hotel and such other hotels shall be subject to audit by Owner pursuant to Section 10.3 of this
Agreement; (d) Owner has given its prior written approval of each such service, which may be withheld in its sole and absolute
discretion; and (e) the cost of each such service shall be itemized in the Annual Operating Budget which shall contain a separate
line item for travel expenses and a separate line item for Operator System Services. A schedule of Operator System Services shall
be approved by Owner at the time of the AFP. The schedule shall specify the specific services that will be provided for the Fiscal
Year and shall address the pro rata bases for reimbursable expenses by type of expense. Other system reimbursable expenses shall
be approved by Owner before expensed. Operator shall, at Owner’s request, provide Owner with sufficient detail to support
any charges relating to the line items for Operating System Services and travel expenses allocated to the Hotel. Operator shall
identify the person in the corporate office to respond to questions.

 

    	39

    	 

    

 

ARTICLE
15  DAMAGE OR DESTRUCTION; CONDEMNATION

 

15.1      Damage
or Destruction. If the Hotel or any portion thereof shall be damaged or destroyed at any time or times during the Term by fire,
casualty or any other cause, Owner may, at its election, repair, rebuild and replace the Hotel, in which case this Agreement shall
remain in effect. If Owner elects to repair, rebuild or replace the Hotel, Owner shall undertake such work without expense to Operator.
If Owner does not elect to repair, rebuild or replace the Hotel, and in its damaged condition, the Hotel cannot be operated in
accordance with the First-Class Hotel Standard, then either Operator or Owner shall have the right to terminatethis Agreement upon
no less than ninety (90) days’ notice to the other party. Operator shall not be entitled to any termination fee or other
compensation as a result of the termination.

 

15.2        Condemnation.
If the whole of the Hotel shall be taken or condemned in any eminent domain, condemnation, compulsory acquisition or like proceeding
by any competent authority or if such a portion thereof shall be taken or condemned as to make it imprudent or unreasonable, in
the sole opinion of Owner, to operate the remaining portion of the Hotel in accordance with the First Class Hotel Standard, then
the Term shall terminate as of the date title vests in the condemning authority. Operator shall not be entitled to any termination
fee or other compensation as a result of the termination. Operator has no interest in any award paid to Owner. Nothing herein shall
limit Operator from filing a separate claim against the condemnor for any loss to its business as a result of such condemnation,
unless it would result in a reduction in Owner’s award. If only a part of the Hotel shall be taken or condemned and the taking
or condemnation of such part does not, in the opinion of Owner, make it unreasonable or imprudent to operate the remainder in accordance
with the First Class Hotel Standard, this Agreement shall not terminate, and so much of any award to Owner shall be made available
as shall be reasonably necessary for making alterations or modifications of the Hotel, or any part thereof determined by Owner
in its sole discretion, so as to make it a satisfactory architectural unit as a hotel or similar type and class as prior to the
taking or condemnation. The balance of the award, after deduction of the sum necessary for such alterations or modifications, shall
be retained by Owner, and Operator shall not have interest therein. Operator shall be entitled to make a separate claim against
the condemnor (if allowed by law) for loss to its business as a result of such condemnation, provided the claim of Operator does
not reduce the award available to Owner.

 

ARTICLE
16  TERMINATION

 

16.1      Termination
by Owner. This Agreement may be terminated by Owner (i) upon at least sixty (60) days written notice to Operator in Owner’s
sole discretion without cause; or (ii) upon foreclosure of any Mortgage, or (iii) upon or following the sale of the Hotel with
at least fifteen (15) days written notice by Owner or the purchaser to Operator, provided that the notice is given on or before
six (6) months after the date of closing of the sale, or (iv)immediately without notice by Owner for “Cause” as defined
in this Agreement.

 

    	40

    	 

    

 

16.2      Termination
by Operator Based upon a Sale of the Hotel. This Agreement may be terminated by Operator in accordance with this Section
16.2, if Owner sells the Hotel to a person (“Prohibited Contract Party”) that Operator is prohibited from doing
business by the terms of any other bona fide, arms length contract between Operator and an unaffiliated third party. To exercise
this termination right, Operator must deliver notice thereof to Owner on or before fifteen (15) days after Operator is notified
of the name of the purchaser, and if Operator timely exercises its right to terminate, then unless earlier terminated under any
other provision of this Agreement, this Agreement shall terminate one (1) year after the date of closing of the sale of the Hotel
to the purchaser. Owner may deliver the names of prospective purchasers to Operator to determine whether a prospective purchaser
is a Prohibited Contract Party, in which case Operator shall notify Owner of whether Operator considers the prospective purchaser
to bea Prohibited Contract Party, and if Operator does not so notify Owner on or before fifteen (15) days after Owner’s delivery
of the name of a prospective purchaser, Operator shall not have the right to terminate this Agreement based upon a sale to the
prospective purchaser or any Affiliate of the prospective purchaser.

 

ARTICLE
17  RIGHTS AND OBLIGATIONS FOLLOWING TERMINATION

 

17.1       Rights
and Obligations Following Termination. In addition to the rights and remedies otherwise available to the parties at law or
in equity, the following provisions will apply following Termination pursuant to Article 16 or any other provision of this
Agreement.

 

(a)          Operator
shall quit, vacate, surrender, and deliver to Owner peacefully and promptly the Hotel and all Licenses and Permits and all books,
records, accounts, contracts, keys, Working Capital, and all other pertinent and necessary documents and records pertaining to
the Hotel and the operation thereof;

 

(b)          Operator
shall deliver to Owner any and all of Owner’s properties and assets within the possession of Operator, including keys, locks
and safe combinations, files, correspondence, information regarding group bookings, reservation lists, ledgers, bank statements
for the Operating Account and Reserve, accounting books and records, all electronic data maintained by Operator relating to the
Hotel (which data shall be delivered on computer disc in a format that is accessible and readable by Owner’s then current
computer systems), insurance policies, bonds and other documents, agreements, leases, licenses, records and plans (including, without
limitation, the as-built or record set plans) relating to the operation of the Hotel, provided that Operator may retain possession
of copies of any of the foregoing;

 

(c)          Operator
shall keep confidential all information concerning the Hotel obtained by Operator or in Operator’s possession, and not use
any of the same for its own account, for the account of others or in any other manner that would directly or indirectly compete
with the Hotel;

 

    	41

    	 

    

 

(d)          Operator
shall remit to Owner the balance (if any) of the Operating Account and the Reserve, after computation and disbursement to Operator
of all accrued and unpaid Management Fees and reimbursable Operator’s Expenses;

 

(e)          As
expeditiously as reasonably possible, prepare and deliver to Owner the financial reports required under this Agreement with respect
to the final Accounting Period and Fiscal Year and remit to Owner the amount (if any) shown as owing to Owner in the final financial
statements on account of previously overpaid Management Fee, reimbursableOperator’s Costs or other payments due under this
Agreement; and

 

(f)         Operator
shall do all acts and execute and deliver all documentsreasonably requested by Owner in connection with the transfer, all without
consideration therefor, and otherwise reasonably cooperate with Owner and any successor operator to insure or facilitate orderly
continuation of the business of the Hotel;

 

(g)          The
rights and liabilities of the parties having accrued prior to Termination shall continue;

 

(h)          Operator
will turn over possession of the Hotel in a clean, safe and secure manner;

 

(i)           With
respect to certain employee benefit matters, each party shall have its respective obligations under Section 22.2 (b) and
(c) which shall survive the Termination; and

 

(j)           The
provisions of this Article 17 shall survive Termination.

 

17.2        Bookings
Beyond Expiration of Term. Operator shall diligently discharge all its obligations under this Agreement during the whole of
the Term, and in particular shall continue to advertise and promote the Hotel and actively seek and accept bookings notwithstanding
that they are to occur after the expiration of the Term. Owner shall be responsible on its own account for all costs, charges and
commissions payable for bookings made by Operator in the ordinary course of business of the Hotel which are for dates after the
expiration of the Term. Operator shall at all times fully co-operate with and explain all aspects of the business and operation
of the Hotel to Owner or any persons authorized by Owner to allow Owner or such persons to successfully and efficiently conduct
the business after the expiration of the Term.

 

ARTICLE
18  EVENTS OF DEFAULT

 

18.1        Operator
Defaults. Each of the following shall constitute an Event of Default by Operator:

 

(a)          The
failure of Operator to pay any sum of money to Owner provided for herein when the same is payable or perform any of its obligations
under Section 4.5, Section 4.8, or Articles 7,9, 10 (except Section 10.2), 12 or 13, if such failure is not
cured within ten (10) days after written notice specifying such failure is given by Owner to Operator;

 

    	42

    	 

    

 

(b)          Operator
shall fail to keep, observe or perform any other material covenant, agreement, term or provision of this Agreement to be kept,
observed or performed by Operator (with the exception of any such failure constituting an Event of Default under any other subsection
of this Section 18.1), and such failure shall continue for a period of thirty (30) days after notice thereof by Owner to
the Operator, provided that if such failure is incapable of cure within such thirty (30) day period and if Operator shall promptly,
diligently and continuously pursue the cure thereof, then Operator shall have a period of sixty (60) days after notice thereof
by Owner to Operator within which to effectuate the cure. If at the end of such sixty (60) day period the cure has not been effectuated
notwithstanding Operator’s diligent and continuous attempts to cure, then at the request of Operator made at least ten (10)
days before expiration of the 60 day cure period, Owner shall extend the cure for up to an additional thirty (30) days, if in Owner’s
reasonable opinion, the default is capable of cure within such additional period as Owner may permit and the extension will not
have a materially negative effect on the financial performance of the Hotel;

 

(c)          An
assignment by Operator in violation of the provisions of Article 21 hereof;

 

(d)          If
Operator shall fail to maintain and operate the Hotel in accordance with the standards required under Section 2.1 and such
failure shall not be due to a refusal on the part of Owner to approve the AFP submitted by Operator under Section 4.5, or
Owner’s failure to provide funds requested pursuant to Section 9.1 and shall continue for a period of thirty (30)
days after written notice by Owner to Operator specifying the matters or conditions which constitute the basis for such Event of
Default, provided that if such failure is incapable of cure within such thirty (30) day period and if Operator shall promptly,
diligently and continuously pursue the cure thereof, then Operator shall have a period of sixty (60) days after notice thereof
by Owner to Operator within which to effectuate the cure. If at the end of such sixty (60) day period the cure has not been effectuated
notwithstanding Operator’s diligent and continuous attempts to cure, then at the request of Operator made at least ten (10)
days before expiration of the 60 day cure period, Owner shall extend the cure for up to an additional thirty (30) days, if in Owner’s
reasonable opinion, the default is capable of cure within such additional period as Owner may permit and the extension will not
have a materially negative effect on the financial performance of the Hotel;

 

(e)          If
Operator shall apply for or consent to the appointment of a receiver, trustee or liquidator of Operator or of all of a substantial
part of its assets, admit in writing its inability to pay its debts as they come due, make a general assignment for the benefit
of creditors, take advantage of any insolvency law, or file an answer admitting the material allegations of a petition filed against
Operator in any bankruptcy, reorganization or insolvency proceeding, or if an order, judgment or decree shall be entered by any
court of competition jurisdiction, on the application of a creditor, adjudicating Operator bankrupt or insolvent or approving a
petition seeking reorganization of Operator or appointing a receiver, trustee or liquidator of Operator or all or a substantial
part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of one hundred twenty
(120) consecutive days;

 

    	43

    	 

    

 

(f)          The
filing of a voluntary petition in bankruptcy or insolvency or a petition for liquidation or reorganization under any bankruptcy
law by Operator, or Operator shall consent to, acquiesce in, or fail timely to controvert, an involuntary petition in bankruptcy,
insolvency or an involuntary petition for liquidation or reorganization filed against it;

 

(g)          The
filing against Operator of a petition seeking adjudication of Operator as insolvent or seeking liquidation or reorganization or
appointment of a receiver, trustee or liquidator of all or a substantial part of Operator’s assets, if such petition is not
dismissed within ninety (90) days;

 

(h)          The
failure of Operator to deliver to Owner on or before three (3) business days after the date when due any financial report or statement
required to be delivered to Owner under Section 10.2, provided that only with respect to the first two (2) such failures
in a Fiscal Year, Operator has not cured the failure within three (3) business days after Owner has delivered notice of the failure
to Operator;

 

(i)          The
failure of Operator to perform on or before three (3) business daysafter delivery of notice from Owner any of Operator’s
obligations under Article 17;

 

(j)         The
failure of Operator to execute and deliver any instrument requested by Owner to effectuate or evidence the subordination of Operator’s
rights hereunder to anyMortgage in accordance with Section 30.1 or estoppel certificate under Section 31.7 within
the time period provided in the applicable section;

 

(k)        Any
willful misconduct, criminal misconduct, fraud or misappropriationof funds by Operator; or

 

(l)         Any
other matter stated elsewhere in this Agreement to be an Event ofDefault by Operator.

 

18.2        Owner
Defaults. Each of the following shall constitute an Event of Default by Owner:

 

(a)          The
failure of Owner to pay or furnish to Operator any money Owner is required to pay or furnish to Operator in accordance with the
terms hereof on the date the same is payable, if such failure is not cured within thirty (30) days after written notice specifying
such failure is given by Operator to Owner.

 

(b)          Owner
shall fail to keep, observe or perform any other material covenant, agreement, term or provision of this Agreement to be kept,
observed or performed by Owner (with the exception of any such failure constituting an Event of Default under subsection (a),
(c), (d), or (e) of this Section 18.2), and such failure shall continue for a period of forty-five (45) days
after notice thereof by Operator to Owner, provided that if such failure is incapable of cure within such forty-five (45) day period
and if Owner shall promptly, diligently and continuously pursue the cure thereof, then Owner shall have a period of ninety (90)
days after notice thereof by Operator to Owner within which to effectuate the cure. If, at the end of such ninety (90) day period
the cure has not been effectuated notwithstanding Owner’s diligent and continuous attempts to cure, then at the request of
Owner, Operator shall extend the cure period for up to an additional ninety (90) days, if in Operator’s reasonable opinion,
the default is capable of cure within such additional period as Owner may permit and the extension will not have a materially negative
effect on the financial performance of the Hotel.

 

    	44

    	 

    

 

(c)          If
Owner shall apply for or consent to the appointment of a receiver, trustee or liquidator of Owner of all or a substantial part
of its assets, or admit in writing its inability to pay its debts as they come due, make a general assignment for the benefit of
creditors, take advantage of any insolvency law, or file an answer admitting the material allegations of a petition filed against
Owner in any bankruptcy, reorganization or insolvency proceeding, or if an order, judgment or decree shall be entered by any court
of competent jurisdiction, on the application of a creditor, adjudicating Owner a bankrupt or insolvent or approving a petition
seeking reorganization of Owner or appointing a receiver, trustee or liquidator of Owner or of all or a substantial part of its
assets, and such order, judgment or decree shall continue unstayed and in effect for any period of one hundred (120) consecutive
days.

 

(d)          The
filing of a voluntary petition in bankruptcy or insolvency or a petition for liquidation or reorganization under any bankruptcy
law by Owner, or Owner shall consent to, acquiesce in, or fail timely to controvert, an involuntary petition in bankruptcy, insolvency
or an involuntary petition for liquidation or reorganization filed against it.

 

(e)          The
filing against Owner of a petition seeking adjudication of Owner as insolvent or seeking liquidation or reorganization or appointment
of a receiver, trustee or liquidator of all or a substantial part of Owner’s assets, if such petition is not dismissed within
ninety (90) days.

 

ARTICLE
19  TERMINATION UPON EVENT OF DEFAULT; OTHER REMEDIES

 

Upon the occurrence of an Event of Default,
the non-defaulting party may: (i) terminate this Agreement by delivering notice of termination to the defaulting party; and (ii)
pursue any and all other remedies available to the non-defaulting party at law or in equity.

 

ARTICLE
20  NOTICES

 

All notices, elections, acceptances, demands,
consents and reports (collectively “notice”) provided for in this Agreement shall be in writing and shall be given
to the other party at the address set forth below or at such other address as any of the parties hereto may hereafter specify
in writing.

 

	To Owner:	Justice Investors
	 	750 Kearny Street, Room 502
	 	San Francisco, California 94108
	 	Attn: Mr. Geoffrey Palermo
	 	Fax: 415-984-0783
	 	 
	and	Jeffer, Mangels, Butler &Marmaro LLP
	 	1900 Avenue of the Stars, 7th Floor
	 	Los Angeles, CA 90067
	 	Attn: James R. Butler, Jr.
	 	Fax: 310-712-8526

 

    	45

    	 

    

  

	To Operator:	Prism Hospitality, L.P.
	 	13760 Noel Road, Suite 610
	 	Dallas, TX 75240
	 	Attn: Mr. Stephen L. Van
	 	Fax: 214-987-9301
	 	 
	With a copy to:	Hughes Luce LLP
	 	1717 Main Street, Suite 2800
	 	Dallas, TX 75201
	 	Attn: Zammurad (Bob) Feroze, Esq.
	 	Fax: 214-939-5849

 

Such notice or other communication may be given by Federal Express
or other nationally recognized overnight carrier or by electronic facsimile in which case notice shall be deemed given upon confirmed
delivery. Notice may be mailed by United States registered or certified mail, return receipt requested, postage prepaid, deposited
in a United States post office or a depository for the receipt of mail regularly maintained by the post office. If mailed, then
such notice or other communication shall be deemed to have been received by the addressee on the fifth (5th) day following
the date of such mailing. Such notices, demands, consents and reports may also be delivered by hand, in which case it shall be
deemed received upon delivery. Notices shall not be effective unless delivered by one of the means described above.

 

ARTICLE
21  ASSIGNMENT

 

21.1        Assignment
by Operator. Operator may not assign its interest under this Agreement or any of its rights hereunder or assign or delegate
its duties hereunder to any entity or person without the prior consent of Owner, which consent Owner may withhold in its sole and
absolute discretion. Any assignment by Operator without Owner’s prior consent shall be null and void. Each of the following
shall be deemed to be an assignment of this Agreement by Operator requiring Owner’s consent, as above provided: (a) the direct
or indirect transfer of ten percent (10%) or more of the voting stock, general partnership interests or other equity interests
in Operator, whether in a single transaction or series of transactions, (b) any material change in the individuals having operating
responsibility for Operator, and (c) any other change in control of Operator; provided, however, that in the case of (a) or (b),
if after the transfer or change, Steven Van will continue to own at least fifty five percent (55%) of the economic and voting interests
in Operator and be the general partner, managing member or hold an equivalent position with complete control of Operator, the transfer
described in (a) or change described in (b), as applicable, shall not be deemed to be an assignment of this Agreement by Operator.
Any permitted assignment shall not relieve the assigning party of its liabilities and obligations under this Agreement. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns.

 

    	46

    	 

    

 

21.2      Assignment
by Owner. Owner shall have the right to assign or grant a security interest in this Agreement to a Mortgagee as security for
its loan to Owner. Also, Owner shall have the right to sell, convey or otherwise transfer the Hotel or its interest in thisAgreement
in its entirety, and unless this Agreement shall be terminated upon any such sale, conveyance or transfer, the new owner of the
Hotel or the assignee of Owner’s rights under this Agreement, as the case may be, shall (unless the context otherwise requires)
be considered to be the “Owner” for all purposes under this Agreement. Upon any permitted assignment of this Agreement
and assumption by the assignee in writing delivered to Operator of Owner’s future obligations under this Agreement, Owner
shall be relieved of any liabilities and obligations arising under this Agreement from and after the date of the assignment.

 

ARTICLE
22  INDEMNITY

 

22.1        By
Operator. To the extent that Owner shall not be fully covered by insurance and to the maximum extent permitted by law, Operator
will indemnify, hold harmless and protect Owner, its partners and Affiliates, and their respective partners, members, shareholders,
officers, directors, employees, managers, contractors and agents, including but not limited to Evon Corporation, Portsmouth Square,
Inc., and Chelsea Development Company (all of the persons indemnified under this Section 22.1 are referred to collectively
as the “Owner Indemnified Parties”) from and against any and all claims, liabilities, losses, damages, costs and expenses
including attorneys fees, court costs and litigation expenses (collectively, “Liabilities”) caused by, arising out
of, or incurred in connection with (a) acts or omissions of (i) Operator, and (ii) agents or any other person for which Operator
is legally responsible, constituting willful misconduct, violation of any Legal Requirements or breach of this Agreement, or (b)
gross negligence of any corporate office personnel of Operator.

 

22.2       By
Owner

 

(a)          To
the extent that Operator shall not be fully covered by insurance, and except as provided in subparagraphs (b) and (c) below, Owner
shall indemnify, hold harmless and protect Operator and its directors, officers, employees and agents from and against any and
all Liabilities arising out of, or incurred in connection with the management and operation of the Hotel, except those that Operator
is required to indemnify against under Section 22.1. Notwithstanding anything to the contrary contained in this Agreement,
the following subparagraphs (b) and (c) shall cover liability arising out of the Employee Retirement Income Security Act of 1974
(“ERISA”) and the Multiemployer Pension Plan Amendments Acts of 1980 (“MEPPA”), respectively, as from time
to time amended.

 

(b)        Employee
Benefits: Employees, if any, of the Hotel who are not represented by a collective bargaining representative shall participate
in the incentive programs and in the profit sharing and/or other employee retirement, disability, health, welfare or other benefit
plan or plans now or hereafter made available by Operator to similarly situated employees of other Operator operated hotels, in
accordance with their respective terms. Operator shall have the right to charge the Hotel with its allocable share of the cost
of any such plan or plans and any contributions to be made thereunder provided that such charges and contributions shall be determined
by Operator in good faith on a uniform basis with respect to charges and contributions imposed for the same or similar plans at
other Operator operated hotels, which basis shall be consistent with the customary methods used by similar managementcompanies
in the hospitality industry. Operator’s rights under this Subsection (b) shall be subject to the condition that Operator
shall not put into effect any amendment to any existing plan, or adopt any additional plan, which is not imposed upon all other
Operator operated hotels.

 

    	47

    	 

    

 

Upon termination of this Agreement, the sale
of the Hotel or other similar event, Operator shall cooperate with Owner with respect to disposition of such plan or plans (or
plan assets) in a mutually satisfactory manner, all in compliance with then applicable regulatory requirements, with the objective
of making the total contributions and expenses charged to Owner with respect to such plan or plans equal to the actual costs of
providing benefits to employees at the Hotel during the Term hereof.

 

Operator does not now sponsor or maintain
a defined benefit pension plan for any of its employees, and Operator shall not adopt any type of defined benefit pension plan
for employees at the Hotel without Owner’s prior written consent, which may be withheld in its sole and absolute discretion.

 

(c)        Multiemployer
Plans: Operator and Owner agree that with respect to anywithdrawal liability arising under any “multiemployer plan”
(as defined in Section 3(37) of ERISA), the obligations of the parties shall be determined as follows:

 

(i)          Any
multiemployer plan withdrawal liability arising with respect to employees at the Hotel shall be the responsibility of Owner, and
Owner shall either pay the amount of such withdrawal liability directly to such plan or reimburse Operator for withdrawal liability
payments made to such plan by Operator with respect to employees at the Hotel. Owner shall not have any liability or responsibility
for withdrawal liability arising after the sale or other disposition of the Hotel or after the termination of this Agreement, whether
by lapse of time or otherwise, except to the extent that such liability arises in connection with and is a direct result of such
sale, disposition, termination or other similar event. To the extent permitted under then applicable laws and regulations, Operator
shall cooperate with Owner in structuring transactions and transferring actual or contingent withdrawal liability to a successor
in ownership or purchaser of the Hotel in accordance with “relief” provisions of ERISA, such as ERISA Section 4204
or then applicable statutory or regulatory provisions of a similar nature.

 

(ii)        For
purpose of this subparagraph (c), the term “withdrawal liability” shall mean the actual amount assessed by and payable
to a multiemployer pension fund upon a complete or partial withdrawal of the Hotel or Hotel employees from such fund. Operator
shall cooperate with Owner in challenging a plan’s assessment of such liability, provided that all costs of litigation, arbitration
or other procedures shall be paid by Owner (including any bonds that must be posted). If Operator has employees at other locations
whoparticipate in the same multiemployer plan as employees at the Hotel, Owner shall be charged with and be responsible for multiemployer
plan withdrawal liability arising solely with respect to the participation of Hotel employees in such plan. Operator shall indemnify,
hold harmless and protect each of the Owner Indemnified Parties from and against any and all claims, liabilities,losses, damages,
costs and expenses, including but not limited to attorney’s fees, court costs and litigation expenses, caused by, arising
out of, or incurred in connection with, Operator’s and its employees participating in multiemployer plans (“Withdrawal
Liability”) to the extent thatWithdrawal Liabilities arise from or relate to the participation in multiemployer plans of
Operator employees who are not employees of the Hotel.

 

    	48

    	 

    

 

22.3        Survival.
This Article 22 shall survive Termination.

 

ARTICLE
23  NO REPRESENTATIONS AS TO INCOME OR FINANCIAL SUCCESS

OF HOTEL

 

In entering into this Agreement, Operator
and Owner acknowledge that neither Owner nor Operator has made any representation to the other regarding projected earnings, the
possibility of future success or any other similar matter respecting the Hotel, and that Operator and Owner understand that no
guarantee is made to the other as to any specific amount of income to be received by Operator or Owner or as to the future financial
success of the Hotel. Without limiting the generality of the foregoing, Operator acknowledges that while various plans for expansion,
renovation and improvement of the Hotel have been discussed, Owner has not provided any assurances to Operator than any such plans
will be undertaken, and Operator will not have any rights or remedies against Owner under this Agreement or otherwise if Owner
does not undertake any such expansion, renovation or improvement of the Hotel.

 

ARTICLE
24  REPRESENTATIONS OF OPERATOR

 

In order to induce Owner to enter into this
Agreement, Operator does hereby make the following representations and warranties:

 

(a)          the
execution of this Agreement is permitted by the operative agreement of Operator and this Agreement has been duly authorized, executed
and delivered and constitutes the legal, valid and binding obligation of Operator enforceable in accordance with the terms hereof;

 

(b)          to
the best knowledge of Operator, there is no claim, litigation, proceeding or governmental investigation pending, or, as far as
is known to Operator, threatened, against or relating to Operator, the properties or business of Operator or the transactions contemplated
by this Agreement which does, or may reasonably be expected to, materially and adversely affect the ability of Operator to enter
into this Agreement or to carry out its obligations hereunder, and to the best knowledge of Operator, there is no basis for any
such claim, litigation, proceedings or governmental investigation, except as has been fully disclosed in writing to Owner; and

 

(c)          neither
the consummation of the transactions contemplated by this Agreement on the part of Operator or be performed, nor the fulfillment
of the terms, conditions and provisions of this Agreement, conflicts with or will result in the breach of any of the terms, conditions
or provisions of, or constitute a default under, any agreement, indenture, instrument or undertaking to which Operator is a party
or by which it is bound.

 

ARTICLE
25  REPRESENTATIONS OF OWNER

 

In order to induce Operator to enter into
this Agreement, Owner does hereby make the following representations and warranties:

 

(a)          that
Owner is the owner of the Hotel and Property;

 

    	49

    	 

    

 

(b)          the
execution of this Agreement is permitted by the operative agreement of Owner and this Agreement has been duly authorized, executed
and delivered and constitutes the legal, valid and binding obligation of Owner enforceable in accordance with the terms hereof;

 

(c)          there
is no claim, litigation, proceeding or governmental investigation pending, or as far as is known to Owner, threatened, against
or relating to Owner, the properties or business of Owner or the transactions contemplated by this Agreement which does, or may
reasonably be expected to, materially and adversely affect the ability of Owner to enter into this Agreement or to carry out its
obligations hereunder, and there is no basis for any such claim, litigation, proceedings or governmental investigation, except
as has been fully disclosed in writing to Operator; and

 

(d)          neither
the consummation of the transactions contemplated by this Agreement on the part of Owner to be performed nor the fulfillment of
the terms, conditions and provisions of this Agreement, conflicts with or will result in the breach of any of the terms, conditions
or provisions of, or constitute a default under, any agreement, indenture, instrument or undertaking to which Owner is a party
or by which it is bound.

 

ARTICLE
26  ARBITRATION

 

26.1         Disputes
to be Resolved by Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach,
termination, enforcement, interpretation or validity thereof; or the relationship of the parties, including the determination of
the scope or applicability of this Agreement to arbitrate, shall be determined by arbitration in San Francisco, California, before
a sole arbitrator, in accordance with the laws of the State of California for agreements made in and to be performed in that State.
Except as hereinafter provided to the contrary, the arbitration shall be administered by the Judicial Arbitration and Mediation
Service (JAMS) pursuant to its Comprehensive Arbitration Rules and Procedures. Judgment on the arbitrator’s award may be
entered in any court having jurisdiction. The arbitrator shall, in the award, allocate all of the costs of the arbitration (and
the mediation, if applicable), including the fees of the arbitrator and the reasonable attorneys’ fees of the prevailing
party, against the party who did not prevail. The arbitrator shall have, unless the parties mutually agree otherwise, substantial
experience in matters related to the hospitality industry.

 

26.2         Procedural
Matters. The arbitrator shall schedule a pre-hearing conference to resolve procedural matters, arrange for the exchange of
information, obtain stipulations, and narrow the issues. The parties will submit proposed discovery schedules to the arbitrator
at thepre-hearing conference. The scope and duration of discovery will be within the sole discretion of the arbitrator. The arbitrator
shall have the discretion to order a pre-hearing exchange of information by the parties, including, without limitation, production
of requested documents, exchange of summaries of testimony of proposed witnesses, and examination by deposition of parties and
third-party witnesses. This discretion shall be exercised in favor of discovery reasonable under the circumstances. Either party
may be represented in the arbitration by counsel or other authorized representative. In rendering a decision, the arbitrator shall
determine the rights and obligations of the parties according to the substantive and procedural laws of California and the terms
and provisions of this Agreement, and the arbitrator shall have no power to render a decision contrary to the terms of this Agreement
or contrary to the statutory and decisional law of California. The arbitrator’s decision shall be based on the evidence introduced
at the hearing, including all logical and reasonable inferences therefrom. The decision must be based on, and accompanied by, a
written statement of decision explaining, in reasonable detail, the factual and legal basis for the decision as to each of the
principal controverted issues. The validity and enforceability of the arbitrator’s decision is to be determined exclusively
by the California courts pursuant to the provisions of this Agreement.

 

    	50

    	 

    

 

ARTICLE
27 TERMINATION OF THE FRANCHISE AGREEMENT

 

Owner reserves and shall have sole discretion,
at any time to terminate the Franchise Agreement. While Owner may consult with Operator regarding any new franchise or license
for the Hotel, the decision of whether to enter into a new franchise or license, the selection of the new franchisor and brand
and the terms of the new Franchise Agreement shall be solely those of Owner. Owner will notify Operator promptly following the
selection of a new franchisor and brand for the Hotel, and except as hereinafter provided, Operator may elect to terminate this
Agreement, effective on the date of the actual change in the franchise if a new franchise is being entered into for the Hotel or
ninety (90) days after termination of the existing Franchise Agreement if Owner has notified Operator that it will not enter into
a new Franchise Agreement for the Hotel. Operator shall not be entitled to a termination fee or other compensation as a result
of termination of this Agreement pursuant to this Article 27.

 

ARTICLE
28  NON-COMPETITION

 

28.1        Geographic
Limitation. Neither Operator nor any Affiliate, successor or assignee of Operator shall develop, syndicate, own, invest, lease,
operate, manage, franchise or license (or grant such rights to third parties), provide hotel related services or otherwiseparticipate
either directly, indirectly or by any means in any other hotel within the Geographic Zone of the Hotel as designated on Exhibit
D for a period beginning on the date of thisAgreement and ending four (4) months after the termination of this Agreement. Without
limiting the rights and remedies of the parties under any provision of this Agreement, Owner shall be entitled, in the case of
any breach (actual or threatened) of the covenants of this Section by Operator or any of its Affiliates, to injunctive relief and
to any other right or remedy available at law or in equity. Operator acknowledges that compliance by Operator and its Affiliates
with the restrictions imposed by this Section is necessary in connection with the fulfillment by Operatorof its duties as Owner’s
agent and that Owner would not have entered into this Agreement in the absence of such restrictions.

 

28.2        Exhibit
Halls, Convention Center. If Operator shall manage or operate any exhibit hall or convention center not located on the Property,
but located within the Geographic Zone during the Term, there shall be no commingling of funds and no expenses related to the exhibit
hall or convention center may be shared with or charged to the Hotel without the prior written approval of Owner, which may be
withheld in its sole and absolute discretion.

 

    	51

    	 

    

 

ARTICLE
29  EXCULPATION

 

29.1        Limitation
on Recourse. Notwithstanding any other provision of this Agreement to the contrary, the liability of Owner arising out of or
in connection with this Agreement and the transactions and obligations contemplated hereby shall at all times be limited to the
interest of Owner in the Hotel, and in any litigation or any other dispute, neither Operator nor any other party shall seek or
have recourse to any other asset of Owner or to Owner’spartners, members, associates, agents, executives or Affiliates. Without
limiting the foregoing, neither Owner nor any party associated with Owner shall have any liability in excess of Owner’s interest
in the Hotel for any act by Owner, including liability for the gross negligence, willful misconduct (either prior to or during
term of or after the expiration or earlier termination of this Agreement) or breach of this Agreement by Owner.

 

29.2      Limitations
on Funding Commitment. Notwithstanding any other provision of this Agreement to the contrary, but except as otherwise provided
in this Section 29.2, Owner shall not be obligated at any time to pay, or advance or make available any funds to pay, any
expenses of the Hotel, other than from the Gross Operating Revenues, and the failure to make any payment or fulfill any obligation
because of insufficient Gross Operating Revenues shall not be considered a breach or default of this Agreement by Owner. If, however,
Owner fails to make any payments for any Gross Operating Expenses incurred in accordance with this Agreement within thirty (30)
days after delivery of written demand for any such payment made by Operator to Owner based upon the lack of funds in the Operating
Account to pay such Gross Operating Expenses, and as a result of Owner’s failure to make the requested payment for Gross
Operating Expenses, Operator cannot pay Gross Operating Expenses as they become due and reasonably fulfill its obligations under
this Agreement with respect to the safe operation of the Hotel in accordance with the First-Class Hotel Standard, then while such
circumstances continue to exist, Operator may terminate this Agreement upon fifteen (15) days’ advance written notice to
Owner, and if such circumstances continue to exist for a period of ninety (90) days or more and Operator has not elected to terminate
this Agreement, then while such circumstances continue to exist, Owner may terminate this Agreement upon at least sixty-five (65)
days advance notice to Operator. Upon any such termination under this Section 29.2, but subject to the limitations on recourse
contained in Section 29.1, Owner agrees to pay into the Operating Account any amount necessary to pay Gross Operating Expenses
incurred prior to the date of termination for which funds are not available in the Operating Account, and Owner’s payment
obligation under this sentence shall survive the termination of this Agreement; provided, however, that such obligationof Owner
with respect to amounts necessary to pay salaries, benefits and payroll expenses of Hotel Employees incurred through the date of
termination (including any WARN Act liability) shall not be subject to the limitation contained in Section 29.1.

 

    	52

    	 

    

  

ARTICLE
30  MORTGAGES

 

30.1       Right
to Mortgage. Owner shall have the right to mortgage or encumber its interest in the Hotel, including the personal property
located therein or used in the operation of the Hotel in any amount and on such other terms determined by Owner in its sole and
absolute discretion without the approval of Operator, and to amend, modify and refinance any such encumbrance in its sole and absolute
discretion and without Operator’s approval. Operator acknowledges that this Agreement is a contract for services which does
not create any interest of Operator in the Hotel or a lien or encumbrance on the Hotel of any kind and does not run with the land.
Nonetheless, Operator agrees upon the request of Owner or any existing or prospective Mortgagee of Owner or ground lessor to execute
and deliver within five (5) business days after receipt by Operator a subordination agreement with any such Mortgagee or ground
lessor confirming that Operator has no interest in the Hotel and that any such interest it may have is subordinate to the lien
of the Mortgage held by such Mortgagee or the interest of such ground lessor, as applicable. Additionally, if requested by any
such Mortgagee or ground lessor, Operator agrees to enter into an agreement with such Mortgagee or ground lessor on terms reasonably
required by such Mortgagee in which Operator agrees to perform its obligations under this Agreement for the benefit of any successor
owner or ground lessor, as the case may be, on the terms and conditions of this Agreement, if the Mortgage is foreclosed, title
is transferred in lieu of foreclosure, or the ground lease is terminated. Such agreement may alternatively be included in any subordination
agreement, but in any event, Operator agrees to execute and deliver such agreement within five (5) business days after receipt
of any such agreement for execution.

 

30.2        Notice
of Mortgage. If Owner, at its discretion, shall encumber its interest in the Hotel by a Mortgage or shall enter into a ground
lease, Owner may furnish Operator with the post office address where notices may be served upon the Mortgagee or ground lessor,
in which case:

 

(a)          Simultaneously
with the giving of any notice of default or termination to Owner, Operator will send a copy of such notice by registered or certified
mail to the Mortgagee or ground lessor, as the case may be; and

 

(b)          Operator
will not exercise its right of termination hereunder with respect to any default by Owner if, within any applicable cure period
for such default, the Mortgagee or ground lessor, as the case may be, gives Operator written notice of its intention to cure such
default and cures such default within the applicable cure period.

 

30.3       Modifications
Required by Mortgagee. Operator will not unreasonably refuse to consent to any requested modifications or amendments to
this Agreement if required by a proposed Mortgagee or ground lessor as a condition to making a mortgage loan to Owner on
its interests in Hotel or entering into a ground lease, as the case
may be, so long as such modification or amendment does not diminish the fees or reimbursements becoming due to Operator
hereunder, and does not otherwise materially and adversely affect Operator’s rights and interests under this
Agreement.

 

30.4       Mortgagee
Requirements. Operator acknowledges and agrees that Owner and Operator’s rights and obligations hereunder shall be subject
to the requirements of any Mortgagee or other lender regarding the Hotel, and to the extent that any Mortgagee or other lender
imposes restrictions on the Hotel or obligations upon Owner which are greater than those set forth in this Agreement, the terms
and conditions of the loan documents with such Mortgagee or other lender shall control, and, upon written notice from Owner as
to the requirements thereof, Operator agrees to comply with those obligations thereunder which are within the scope of Operator’s
duties under this Agreement and to execute an amendment to this Agreement reflecting any such additional obligations or duties
required thereby.

 

    	53

    	 

    

 

30.5       Mortgagee
Information Requests. If any Mortgagee of Owner or ground lessor shall request in writing copies of any and all financial or
other information which Operator, pursuant to the terms and provisions of this Agreement, is obligated to deliver to Owner, Operator
shall deliver same to the Mortgagee or ground lessor as often as the Mortgagee or ground lessor may reasonably request. Operator
shall allow, upon request of Owner, any person designated in writing by the Mortgagee or the ground lessor to examine, audit, inspect
and copy all Hotel records.

 

ARTICLE
31  MISCELLANEOUS

 

31.1       Disputes.
Whenever any issue or dispute under this Agreement is to be resolved by the Independent Public Accountant such issue or dispute
shall be resolved by application of generally accepted accounting principles consistently applied and the Uniform System of Accounts.

 

31.2       Further
Assurances. Owner and Operator shall execute and deliver all other appropriate supplement agreements and other instruments,
and take any other action necessary to make this Agreement fully and legally effective, binding and enforceable as between them
and as against third parties.

 

31.3       Waiver.
The waiver of any of the terms and conditions of this Agreement on any occasion or occasions shall not be deemed a waiver of such
terms and conditions on any future occasion.

 

31.4       Successors
and Assigns. Subject to and limited by Article 21, this Agreement shall be binding upon and inure to the benefit of
Owner, its successors and permitted assigns, and shall be binding upon and inure to the benefit of Operator, its successors and
permitted assigns.

 

31.5       Governing
Law. This Agreement shall be construed, both as to its validity and as to the performance of the parties, in accordance with
the laws of the State of California.

 

31.6       Amendments.
This Agreement may not be modified, amended, surrendered or changed, except by a written document signed by Owner and Operator
agreeing to be bound thereby.

 

31.7       Estoppel
Certificates. Owner and Operator agree, at any time and from time to time, as requested by the other party, upon not less than
ten (10) days’ prior written notice, to execute and deliver to the other a statement certifying that this Agreement is unmodified
and in full force and effect (or if there have been modifications, that the same are in full force and effect as modified and stating
the modifications), certifying the dates to which required payments have been paid, and stating whether or not, to the best knowledge
of the signer, the other party is in default in performance of any of its obligations under this Agreement, and if so, specifying
each such default of which the signer may have knowledge, it being intended that such statement delivered pursuant hereto may be
relied upon by others with whom the party requesting such certificate may be dealing.

 

    	54

    	 

    

 

31.8       Effect
of Approval of Plans and Specifications. Owner and Operator agree that in each instance in this Agreement or elsewhere wherein
Operator is required to give its approval of plans, specifications, budgets and/or financing, no such approval shall imply or be
deemed to constitute an opinion by Operator, nor impose upon Operator any responsibility for the design or construction of additions
to or improvements of the Hotel, including but not limited to structural integrity or life/safety requirements or adequacy of budgets
and/or financing. The scope of Operator’s review and approval of plans and specifications is limited solely to the adequacy
and relationship of spaces and aesthetics of the Hotel in order to comply in all material respects with the First Class Hotel Standard.

 

31.9       Consent
and Approval.

 

(a)          Except
as herein otherwise provided, whenever in this Agreement the consent or approval of Operator or Owner is required, such consent
or approval shall not be unreasonably withheld, conditioned or delayed. With respect to those matters where consent or approval
is not to be unreasonably withheld, conditioned or delayed, if Operator or Owner does not notify the other party in writing of
its disapproval or withholding of its consent within ten (10) days (or any different period set forth in this Agreement with respect
to any particular approval or consent) after it is requested by the other party in a notice making reference to the 10 day response
period and the effect of not responding, such other party shall be deemed to have approved or consented, as applicable. Except
for the deemed consent or approval of Operator or Owner, such consent or approval shall also be in writing only and shall be executed
only by an authorized officer or agent of the party granting such consent or approval.

 

(b)          In
those cases where consent or approval of Owner may be withheld by Owner in its sole discretion or sole and absolute discretion,
such consent or approval shall not be binding upon Owner unless it is in writing executed by a person authorized to bind Owner
in such matters, and Owner’s failure to respond within any applicable period specified for its response shall be deemed to
be Owner’s disapproval or withholding of consent, as applicable.

 

31.10     Partial
Invalidity. If any one or more of the phrases, sentences, clauses or paragraphs contained in this Agreement shall be declared
invalid by the final and unappealable order, decree or judgment of any court, this Agreement shall be construed as if such phrases,
sentences, clauses or paragraphs had not been inserted, unless such construction would substantially destroy the benefit of the
bargain of this Agreement to either of the parties hereto.

 

31.11     Entire
Agreement. This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof; superseding
all prior agreements or undertakings, oral or written.

 

31.12     Time
is of the Essence. Time is of the essence in this Agreement.

 

31.13     Interpretation.
No provision of this Agreement shall be construed against or interpreted to the disadvantage of any party hereto by any court or
other governmental or judicial authority by reason of such party having or being deemed to have structured or dictated such provision.

 

    	55

    	 

    

 

31.14     Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and need not be signed
by more than one of the parties hereto and all of which shall constitute one and the same agreement.

 

31.15     Interest.
If either party (the “defaulting party”) shall fail to pay, when due, to the other party (the “non-defaulting
party”) any sum payable to the latter hereunder, then unless the defaulting party shall make the payment to the other party
within ten (10) days after written demand therefor, the defaulting party shall, without notice to or demand upon it, be liable
to the non-defaulting party for the payment of such sum together with interest thereon at the rate of (i) “Prime” plus
2% per annum or (ii) the maximum rate of interest allowed by law, whichever shall be less, from the date when such sum shall become
due to the date of actual payment. For the purposes of this Agreement, “Prime” shall mean the rate per annum published
from time to time by the Wall Street Journal as the “prime rate.”

 

31.16     Modifications
Required by Franchisor. Operator will not unreasonably refuse to consent to any requested modifications or amendments to this
Agreement if required by a proposed Franchisor as a condition to granting a franchise or entering into a Franchise Agreement for
the Hotel, so long as such modification or amendment does not diminish the fees or reimbursements becoming due to Operator hereunder,
and does not otherwise materially and adversely affect Operator’s rights and interests under this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

 

    	56

    	 

    

 

IN WITNESS WHEREOF, the parties have executed
this Agreement the day and year first above written, in duplicate.

 

	 	OWNER:
	 	 
	 	JUSTICE INVESTORS, a California limited
	 	partnership
	 	 	 	 
	 	By: 	EVON CORPORATION, Managing General
	 	 	Partner
	 	 	 	 
	 	 	   By:	/s/ Geoffrey Palermo
	 	 	   Name: Geoffrey Palermo
	 	 	   Its: President
	 	 	 	 
	 	 	   By:	/s/ Charlie Evans
	 	 	   Name: Charlie Evans
	 	 	   Its:       Chairman of the Board
	 	 	 	 
	 	By: 	PORTSMOUTH SQUARE, INC., General
	 	 	Partner
	 	 	 	 
	 	 	   By: 	/c/ Michael G. Zybala
	 	 	   Name: Michael G. Zybala
	 	 	   Its:      V.P. & Secretary
	 	 	 	 
	 	OPERATOR:
	 	 
	 	PRISM HOSPITALITY, L.P., a Texas limited
	 	liability partnership
	 	 	 	 
	 	By: 	Prism Hospitality Management, LLC, its
	 	 	general partner
	 	 	 	 
	 	 	   By: 	/s/ John D. Baily
	 	 	   Name: John D. Baily
	 	 	   Its:       Manager

 

    	57

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00207-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00207-of-00352.parquet"}]]