Document:

Exhibit 4.1

 

 

 

EQUITY TRANSFER CONTRACT

 

WITH

 

CUNHUI LIN, YANQING LIU

 

CONCERNING

 

FUZHOU HEKANGYUAN TRADING CO., LTD.

 

     

    

    

 

	TABLE OF CONTENT
	 	 	 
	CHAPTER 01 DEFINITION AND INTERPRETATION	 	1
	 	 	 
	Article 01 Definition	 	1
	 	 	 
	CHAPTER 02 EQUITY TRANSFER	 	2
	 	 	 
	Article 02 Transfer of Equity	 	2
	Article 03 Equity Transfer Price and Trading
    Condition	 	2
	Article 04 Tax Payable Under Equity Transfer	 	3
	 	 	 
	CHAPTER 03 REPRESENTATIONS AND WARRANTIES OF THE PARTIES	 	4
	 	 	 
	Article 05 Representations and Warranties of
    the Parties	 	4
	 	 	 
	CHAPTER 04 DISCLOSURE, REPRESENTATION AND WARRANTIES OF THE SELLER	 	4
	 	 	 
	Article 06 Disclosure, Representation and Warranties
    of the Seller	 	4
	Article 07 General Representations and Warranties
    of the Seller	 	5
	Article 08 Ownership	 	7
	Article 09 Special Statements and Guarantees
    of the Seller	 	8
	 	 	 
	CHAPTER 05 DISCLOSURE, STATEMENTS AND WARRANTIES OF THE BUYER	 	10
	 	 	 
	Article 10 Disclosures, Statements and Warranties
    of the Buyer	 	10
	 	 	 
	CHAPTER 06 CONFIDENTIALITY	 	10
	 	 	 
	Article 11 Confidentiality	 	10
	 	 	 
	CHAPTER 07 BREACH OF CONTRACT	 	11
	 	 	 
	Article 12 Liabilities for Violation of Statement
    or Warranties	 	11
	Article 13 Lliabilities for Breach of Contract	 	12
	 	 	 
	CHAPTER 08 FORCE MAJEURE	 	12
	 	 	 
	Article 14 Force Majeure	 	12
	 	 	 
	CHAPTER 09 SETTLEMENT OF DISPUTES	 	13
	 	 	 
	Article 15 Arbitration	 	13
	Article 16 Validity of Arbitral Award	 	13
	Article 17 Continuation of Rights and Obligations	 	13
	 	 	 
	CHAPTER 10 APPLICABLE LAW	 	13
	 	 	 
	Article 18 Applicable Law	 	13
	 	 	 
	CHAPTER 11 OTHERS	 	14
	 	 	 
	Article 19 Waiver	 	14
	Article 20 Transfer	 	14
	Article 21 Modification	 	14
	Article 22 Separability	 	14
	Article 23 Validity of the Contents and Annexes	 	14
	Article 24 Notices	 	15
	Article 25 Entire Agreement	 	16

 

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EQUITY TRANSFER CONTRACT

 

This equity transfer contract (hereinafter referred to as the “contract”)
is signed by the following parties in Fuzhou, China on March 4, 2022.

 

Party A, Happiness Development Group Limited (Nasdaq: HAPP),
and its subsidiary Fujian Happiness Biotech Co., Limited (hereinafter referred to as the “Buyer”), whose address is 11 Dongjiao
East Road, Shuangxi Town, Shunchang County, Nanping City;

 

Party B:

Cunhui Lin, ID No.: 350121198502190726

Yanqing Liu, ID No.: 360781199906255122

 

Party C, Fuzhou Hekangyuan Trading Co., Ltd., with registered
office at 1103 IFC, No.1 Wanglong 2nd Rd.,Taijiang District, Fuzhou City, Fujian Province,

 

The above Party B is referred to as the “Seller”, and the
Seller and the Buyer are collectively referred to as the “parties” and individually referred to as the “party”
in the following.

 

Given:

 

		(1)	Party B owns 100% of the equity of Fuzhou Hekangyuan Trading Co., Ltd. (hereinafter referred to as “Hekangyuan”),
and Party B can fully exercise all its rights as a shareholder;

 

		(2)	Party B is willing to transfer to the Buyer all of Hekangyuan’s equity (hereinafter referred to as
“equity transfer”) held by it in accordance with the conditions and terms stipulated in this contract;

 

		(3)	The Buyer is willing to retain all of the equity of Hekangyuan held by the Seller in accordance with the conditions and terms stipulated
in this contract.

 

Therefore, based on the principle
of equality and mutual benefit, the parties to this contract have negotiated amicably and agreed to reach the following agreements in
accordance with the “Company Law of the People’s Republic of China”, “Interim Provisions on Domestic Investment
of Foreign-Invested Enterprises” and other relevant Chinese laws and regulations.

 

     

    

    

 

CHAPTER 01 Definition and Interpretation

 

Article 01 Definition

 

Unless otherwise indicated or the context requires otherwise,
references in this contract to:

 

“Hekangyuan” refers
to Fuzhou Hekangyuan Trading Co., Ltd., a limited liability company incorporated under the laws of China, with a registered capital of
RMB 10 million, registration number 350105100188299, and registered address at 1103 IFC, No.1 Wanglong 2nd Rd.,Taijiang District,
Fuzhou City, Fujian Province.

 

“China” or the “PRC”
refers to the People’s Republic of China, excluding, for the purposes of this contract only, Hong Kong, Macau and Taiwan.

 

“Claim” refers to
all claims, actions, judgment liability, damage compensation, fees and expenses (including attorney’s fees, litigation fees and
expenses).

 

“Signing Date” refers to the date of signing
of this contract.

 

“Hinder” refers to
mortgage, transfer, lien, charge, pledge, retention of title, right to purchase, security interest, option, right of first refusal and
other restrictions and conditions, including:

 

		(a)	Any right or power granted or reserved in relation to or affecting the transfer of equity; or

 

		(b)	The rights or powers arising from the transfer of equity in a trust transfer, lien, pledge, power of attorney or other form; or

 

		(c)	Guarantee the repayment of a debt or any other pecuniary obligation or the performance of any other obligation in the form of a guarantee.

 

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“Substantial adverse changes”
refers to (1) Hekangyuan is investigated (the investigation may subject Hekangyuan to administrative penalties) or punished by the government;
(2) Hekangyuan is involved in any litigation, arbitration or any other judicial proceedings; (3) any changes that has or is reasonably
believed to have a substantial adverse impact on Hekangyuan’s finance, business, assets, liabilities, operating results or Hekangyuan’s
future prospects.

 

“RMB” refers to the legal currency of China.

 

“Third party” refers to any natural person,
legal person, other organization or entity other than the parties to the contract.

 

“Working day” refers to the day when banks
are open for business.

 

CHAPTER 02 Equity Transfer

 

Article 02 Transfer of Equity

 

According to the conditions
agreed in this contract, the Seller agrees to transfer to the Buyer, and the Buyer agrees to retain from the Seller 100% of Hekangyuan’s
equity and all rights and obligations under the transfer of the equity, including but not limited Hekangyuan or the right to issue shares
(if any), without any claims or hindrances.

 

Article 03 Equity Transfer Price and Trading Condition

 

After negotiation between
the Seller and the Buyer, it is finally confirmed that the Hekangyuan transaction is valued at USD 12 million. The Buyer should pay USD
8 million (or equivalent in RMB) in cash and the remaining part would be paid with the restricted shares of Party A’s NASDAQ-listed
company HAPP (hereinafter referred to as the “HAPP stock consideration”). The shares will be issued to the Seller and/or its
designated person, that is, the “Recipient” (a single party is referred to as “each Recipient”). The stock price
is calculated at US$0.40 per share. A total of 10 million shares will be issued and the specific number of shares issued to each Recipient
shall be designated by the Seller.

 

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The Buyer will pay the HAPP stock consideration
to the Seller within ten working days after the signing of the equity transfer contract. Both parties agreed to the following goals of
Hekangyuan’s net income and net profit as follows:

 

1: Hekangyuan’s annual
financial report for the 2022 fiscal year is audited and in compliance with US GAAP, with a net sales income of no less than 23 million
USD (“Expected Net Sales Revenue for the 2022 Fiscal Year”), and a net profit of no less than 1.2 million USD (“Expected
Net Profit for the 2022 Fiscal Year”).

 

2: Hekangyuan’s annual
financial report for the 2023 fiscal year is audited and in compliance with US GAAP, with a net sales income of no less than 30 million
USD (“Expected Net Sales Income for the 2023 fiscal year”), and a net profit of no less than 1.6 million USD (“Expected
Net Profit for the 2023 Fiscal Year”).

 

3: Hekangyuan’s annual
financial report for the 2024 fiscal year is audited and in compliance with US GAAP, with a net sales income of no less than 36 million
USD (“Expected Net Sales Income for the 2024 fiscal year”), and a net profit of no less than 2 million USD (“Expected
Net Profit for the 2024 Fiscal Year”).

 

The parties further agree that if the total net
profit of Hekangyuan in the next three fiscal years is less than 4.5 million USD, the Buyer has the right to request the Seller to repurchase
all the equity interests of Hekangyuan that was acquired by the Buyer for an aggregate price of 12 million USD in cash.

 

Article 04 Tax Payable Under Equity Transfer

 

Any taxes and fees
arising from the performance of the terms of this contract shall be borne by the relevant taxpayers and payers in accordance with the
relevant laws and regulations of China.

 

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CHAPTER 03 Representations and Warranties of the Parties

 

Article 05 Representations and Warranties of the Parties

 

		5.1	The Seller and the Buyer hereby confirm that this contract shall
become a legally binding document on all parties from the date of signing.

 

		5.2	When signing this contract, the Seller and the Buyer declare that the documents provided to the other
party or its advisory consultant (including but not limited to lawyers, appraisers, financial consultants, etc.) before the signing date
of this contract are still valid In case of any inconsistency with this contract, this contract shall prevail.

 

		5.3	The Seller and the Buyer agree that any contracts or documents related to equity transfer signed before
this contract will automatically become invalid after this contract takes effect.

 

		5.4	All parties to this contract will make joint efforts and cooperate with each other to complete all procedures
related to this equity transfer, including but not limited to registration, filing, etc. The expenses incurred shall be borne by Hekangyuan.

 

CHAPTER 04 Disclosure, Representation and Warranties of
the Seller

 

Article 06 Disclosure, Representation and Warranties of the Seller

 

The Seller hereby represents and warrants to the Buyer:

 

		6.1	All materials and facts related to Hekangyuan held or known by the Seller that have a substantial and
adverse impact on the Seller’s ability to fully perform its obligations under this contract, or if disclosed to the Buyer, would
make a material impact on the Buyer’s willingness to sign and perform its obligations under the contract, have been disclosed to
the Buyer. Moreover, the information provided by the Seller to the Buyer does not contain any falseor misleading statement.

 

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		6.2	There is no lawsuit, arbitration or other legal or administrative procedures or government investigation
brought against the Seller, which is ongoing and will seriously affect its signing of this contract or performance of its obligations
under this contract.

 

		6.3	With regard to the documents and information provided by the Seller to the Buyer and
or its advisory consultant (including but not limited to lawyers, appraisers, financial consultants, etc.) before the signing date, the
Seller hereby jointly undertakes:

 

 6.3.1 Copies of all originals are true and complete and such originals are true and complete;

 

 6.3.2 All originals provided to the Seller and/or its advisory consultant are true and complete;

 

 6.3.3 The signatures (seals) on all originals or copies provided to the Seller and or its advisory consultant are true; and

 

 6.3.4 The Seller has drawn the attention of the Buyer and/or its advisory consultant to all major matters concerning the transaction under this contract.

 

Article 07 General Representations and Warranties of the Seller

 

		7.1	Party B has the full authority to sign this contract and perform all its obligations under this contract.
Party B’s signing of this contract and performance of its obligations under this contract will not conflict with any laws, regulations,
provisions, authorization or approval of any government agency or department, or any contract or agreement which Party B is a party to
or is bound by, nor will lead to violation of the above provisions, or constitute non performance or failure to perform the above provisions.

 

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		7.2	Each Recipient hereby makes the following representations, warranties
and commitments:

 

 (a) Rights. The Recipient has the full authority to sign and perform the transaction and any terms of this agreement. This agreement has been duly signed and delivered to the Recipient. The terms of this agreement are legally binding on the Recipient, except in the following circumstances: 1) Subject to bankruptcy, liquidation, reorganization, freezing and other laws that generally affect the implementation of creditors’ rights; 2) Subject to the law of equity limitations on remedies.

 

 (b) Experience. The Recipient has certain experience and knowledge in the economic and commercial fields, and can evaluate the value and risk of the investment. The Recipient promises that they will take economic risks for their investment behavior. The Recipient believes that they have obtained all the information they deem necessary to decide whether to buy the stock. The Recipient further stated that the Recipient had the opportunity to ask HAPP about the terms of the HAPP stock issuance and HAPP’s business, assets, and financial conditions, and received a reply to the above questions from HAPP.

 

 (c) Purchase entirely for one’s own benefit. The Recipient acknowledged that the company relies on the Recipient’s representations to the company to reach an agreement with the Recipient. By signing this agreement, the Recipient hereby confirms that the Recipient purchased the shares solely for the benefit of their own investment, not as the nominee holder or agent of others. There is no purpose of resale or distribution of any part of the shares, and there is also no intention to sell or distribute or share any part of the shares with others at present. By signing this agreement, the Recipient further states that the Recipient has not entered into any contract with any individual for the purchase, sale, transfer and sharing of any shares.

 

 (d) Accredited investors. The Recipient is an “accredited investor” as defined in Rule 501 (a) of Regulation D of the Securities Act of 1933.

 

 (e) Restricted securities. The Recipient understands that the securities it purchases are “restricted securities” as defined by the U.S Securities Act because the securities are not obtained through HAPP public offering. The Recipient understands that under this act and corresponding regulations, if the restricted securities are unregistered, it can only be resold under certain conditions. According to the U.S. Securities Act, the shares must be held indefinitely before they are effectively registered or exempted from registration requirements. In this regard, the Recipient undertakes that it is familiar with Rule 144 of the U.S. Securities Act and understands its restrictions on resale.

 

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 (f) Legend. The restrictive legend on the stock certificate can be removed only when: a) Sold in accordance with the provisions of the Rule 144 of the U.S. Securities Act (or its subsequent relevant provisions) or through effective registration; or b) the lawyer issues an opinion and reasonably believes that the restrictive legend on the stock certificate can be removed.

 

“These securities were not registered
in accordance with the Securities Act of 1933 Amendment. They cannot be sold, publicly sold, pledged, mortgaged, or transferred in any
other way, except in the following conditions: a) Exemption from registration under Rule 144 (if applicable); b) In accordance with all
applicable securities acts and regulations in the United States”.

 

The Recipient also understands that such
stock certificates may be subject to any state securities regulations or other government departments’ restrictions on the issuance
of securities.

 

Article 08 Ownership

 

		8.1	The Seller is the legal owner of the transferred equity and has
all the authorization and rights to transfer the equity to the Buyer.

 

		8.2	The Seller promises and guarantees that as of the payment date, there is no claim or hindrance in any form (including but not limited
to any form of option, acquisition right, mortgage, pledge, guarantee, lien or other forms of third-party interests) under the transferred
equity.

 

		8.3	There is no lawsuit, arbitration or other legal or administrative procedure or government investigation against the Seller, that is
ongoing and will seriously affect the signing or performance of the obligations of this contract.

 

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Article 09 Special Statements and Guarantees
of the Seller and Hekangyuan

 

The Seller and Hekangyuan hereby separately and jointly claims and
guarantees to the Buyer that:

 

		9.1	Hekangyuan is a duly organized and reputable enterprise under the Chinese laws and regulations.

 

		9.2	Hekangyuan legally and effectively owns all the land, plant, machinery and equipment and other assets
it occupies. For any land and real estate with defective rights, Hekangyuan promise to take all measures to ensure that Hekangyuan can
legally own the use right of all land and the ownership of all real estate. Hekangyuan’s commitment is not limited by time and will
continue to be effective after the delivery of this contract. If Hekangyuan or the Buyer suffers any loss or is punished by any government
department due to any of the above problems after the equity transfer, the Seller shall bear joint and several liabilities and shall compensate
the Buyer in full.

 

		9.3	Hekangyuan has never been and is not subject to any other investigation, litigation, dispute, claim or
other procedures (whether existing, pending or threatened), nor has it been punished. The Seller and Hekangyuan also foresee that any
administrative agency in China will not impose any punishment on Hekangyuan due to the problems existing in Hekangyuan before the equity
transfer, except that Hekangyuan has disclosed to the Buyer before the delivery. Before signing this contract, the Seller and Hekangyuan
has fully disclosed all the information of Hekangyuan to the Buyer.

 

		9.4	Hekangyuan has obtained all necessary approvals, permits, consents, has completed the necessary registration
and filing for production and operation, and has conducted business operations and entered into legally binding contracts and documents
in accordance with the business scope of its business license. If the Buyer and/or Hekangyuan suffer any punishment, damage, loss, etc.
due to the lack of any business approval, license, consent and registration before the equity transfer, the Seller shall bear joint and
several liabilities and shall then compensate the Buyer in full.

 

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		9.5	The production, operation and business of Hekangyuan fully comply with all relevant laws and regulations
of China. If Hekangyuan suffers any damage or loss due to any administrative punishment for any matter before the signing of this contract,
the Seller shall fully compensate the Buyer and Hekangyuan for all damage and loss so that the Buyer and Hekangyuan will not suffer any
damage.

 

		9.6	All liabilities of Hekangyuan have been disclosed as of the signing date of this contract. The Seller
shall be jointly and severally liable to the Buyer and Hekangyuan for undisclosed liabilities and unpaid interest due and payable, so
that the Buyer will not be damaged.

 

		9.7	From the signing date of this contract to the payment date, all financial expenses
of Hekangyuan can only be carried out with the joint signature and consent of the financial personnel dispatched by the Buyer and the
financial personnel of the Seller and Hekangyuan.

 

		9.8	Hekangyuan has not provided guarantee (including but not limited to mortgages, pledges, guarantees, etc.)
for any other company, enterprise, economic entity or any natural person. If Hekangyuan suffers any damage or loss due to such undisclosed
guarantee, the Seller shall bear joint and several liabilities and shall compensate the Buyer in full.

 

		9.9	Before signing this contract, the Seller and HEkangyuan have fully disclosed all information of all debts
undertaken by Hekangyuan. As of the closing date, such information is still complete, reliable, accurate and true.

 

		9.10	The production process and technology adopted by Hekangyuan as
of the delivery date and the intellectual property rights owned by Hekangyuan, including but not limited to trademarks and proprietary
technologies, fully comply with relevant Chinese laws, regulations, standards and specifications, and that there is no illegal act of
infringing other people’s patents, proprietary technologies and other intellectual property rights. If Hekangyuan suffers any punishment,
damage or loss due to such illegal acts, the Seller shall be jointly and severally liable and shall compensate the Buyer in full.

 

		9.11	If the Seller and Hekangyuan violate any of the above statements
and guarantees, or if the Seller fails to complete all preconditions specified in Annex I of this contract, the Buyer has the right to
require the Seller to bear joint and several liabilities and compensate the Buyer for direct and indirect losses, so as to protect the
Buyer from any losses.

 

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CHAPTER 05 Disclosure, Statements and Warranties
of the Buyer

 

Article 10 Disclosures, Statements and Warranties of the Buyer

 

The Buyer hereby claims and guarantees to the Seller that:

 

		10.1	The Fujian Happiness Biotech Co., Limited is an enterprise duly
organized and in good standing under the laws of China.

 

		10.2	The signing of this contract and the performance of its obligations
under this contract by the transferee will not conflict with the articles of association or internal rules of the transferee, any laws,
regulations, provisions, authorization or approval of any government agency, provisions of any contract or agreement to which the transferee
is a party or is bound.

 

		10.3	The Buyer has no ongoing litigation, arbitration, other legal
or administrative procedures or government investigations that seriously affect its ability to sign the contract or perform its obligations
under the contract.

 

CHAPTER 06 Confidentiality

 

Article 11 Confidentiality

 

		11.1	For the confidential and proprietary information that one party
has disclosed or may disclose to the other party about their respective business or financial status and other confidential matters,
unless otherwise specified in other confidentiality agreements, all parties in the contract who accept all the above confidential information
agree that:

 

		11.1.1	Confidential information shall be kept confidential;

 

		11.1.2	Except for the employees of one party under the contract who need to know the above confidential information to perform their duties,
neither party shall disclose the information to any third party or entity.

 

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		11.2	The provisions of article 11.1 above shall not apply to the
following confidential information where:

 

		11.2.1	Before the disclosing party discloses to the receiving party, the receiving party has been able to obtain the information from the
written records and the written records can prove that it is known to the receiving party;

 

		11.2.2	Materials are not publicly known due to the recipient’s
breach of the contract;

 

		11.2.3	Information obtained by the receiving party from a third party
does not undertake any confidentiality obligation for confidential information.

 

CHAPTER 07 Breach of Contract

 

Article 12 Liabilities for Violation of Statement or Warranties

 

		12.1	If any error or omission is found in the statement or guarantee
of either party to the contract, which has or may have a significant or material impact on the signing of the contract by either party,
or any statement or guarantee is found to be misleading or untrue in any way, the other party has the right to claim from the defaulting
party for the error or omission and to make full compensation for any loss, damage, cost or expense (including attorney’s fees
and litigation and arbitration fees) caused by misleading, untrue statements or warranties.

 

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		12.2	The interpretation of each statement and warranty listed in
the contract shall be independent.

 

		12.3	For the avoidance of doubt, the Seller hereby unconditionally
and irrevocably agrees and confirms that it will be liable for any breach of its representations or warranties.

 

Article 13 Liabilities for Breach of Contract

 

		13.1	In case of any breach of contract by one party, the breaching
party shall bear the liability for breach of contract to the other party in accordance with the provisions of the contract and Chinese
laws and regulations. If both parties breach the contract, one party shall bear the loss or damage or any other liability caused by their
breach to the other party.

 

CHAPTER 08 Force Majeure

 

Article 14 Force Majeure

 

		14.1	“Force majeure” refers to special events such as
earthquake, typhoon, flood, fire, war and political unrest, and other events considered as “force majeure” in relevant Chinese
laws and regulations.

 

		14.2	If a force majeure event occurs, the obligations of the party
affected by the event will be suspended during the event and related terms will be automatically extended. The extended period is the
same as the suspension period, and the party will not bear the liability for breach of contract listed in the contract.

 

		14.3	The party claiming force majeure shall immediately notify the
other parties in writing and provide sufficient evidence of the occurrence and existence of the force majeure issued by the notary office
within seven (7) days thereafter. The party claiming force majeure shall use its best efforts to eliminate the adverse effects of force
majeure

 

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CHAPTER 09 Settlement of Disputes

 

Article 15 Arbitration

 

		15.1	Any disputes arising from this contract between the parties
shall first be settled through friendly negotiation. If a dispute cannot be settled in this way within sixty (60) days after the commencement
of friendly negotiation, either party may submit the dispute to China International Economic and Trade Arbitration Commission in Beijing
for arbitration in accordance with its arbitration rules in force at that time.

 

Article 16 Validity of Arbitral Award

 

The arbitration award is final and shall be binding on all parties
under this contract. The parties agree to be bound by and act in accordance with the award.

 

Article 17 Continuation of Rights and Obligations

 

During the arbitration after the dispute occurs,
each party shall continue to exercise its other rights and perform its other obligations under the contract except for the matters in
dispute.

 

CHAPTER 10 Applicable Law

 

Article 18 Applicable Law

 

The formation, validity, interpretation and execution
of this contract shall be governed and bound by the laws of the People’s Republic of China. All disputes arising under this contract
shall be decided in accordance with the Chinese law. If there is no provision in Chinese law on any issue related to this contract, reference
shall be made to the general international business practices.

 

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CHAPTER 11 Others

 

Article 19 Waiver

 

The failure or delay of either party to exercise a right under the
contract shall not be regarded as a waiver of such right; Any single or partial exercise of a right does not exclude the re-exercise of
the right in the future.

 

Article 20 Transfer

 

Unless otherwise specified in the contract, without the prior written
consent of the other parties, either party shall not transfer any of its rights and obligations under the contract in whole or in part.

 

Article 21 Modification

 

	21.1	This contract is signed for the benefit of all parties to this
contract and their respective legal successors and assigns, on whom this contract is legally binding.

 

	21.2	This contract shall not be orally modified. The modification
of this contract shall take effect only after the parties under this contract sign a written document with their consent.

 

Article 22 Separability

 

The invalidity of any provision of this contract shall not affect the
validity of any other provision of this contract.

 

Article 23 Validity of the Contents and Annexes

 

	23.1	This contract shall come into force on the day when both parties
sign. The signed original Chinese contract shall be made in six (6) copies. Each party shall hold one (1) original and send one (1) original
copy to the competent administrative department for Industry and commerce. The remaining shall be held by Hekangyuan and the Buyer.

 

	23.2	The annexes to this contract are an integral part of the contract
and have the same effect as the contract.

 

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Article 24 Notices

 

	24.1	Unless otherwise specified in the contract, any notice or written
communication sent by one party to the other party under the contract shall be written in Chinese, sent in the form of letter, express
service or fax. Notices or communications delivered by courier service shall be confirmed 7 working days after delivery to the courier
service company. The effective date of the notice or written communication issued in accordance with the provisions of the contract shall
be the date of receipt. If it is sent by fax, the 3rd working day after sending shall be regarded as the receiving date, but it shall
be proved by the fax confirmation report.

 

	24.2	All notices and communications shall be sent to the following
addresses until one address is updated by sending a written notice to the other party by the changing party:

 

Party A’s mailing address: 

Telephone: 

Fax number: 

Recipient:

 

Party B’s mailing address: 

Telephone: 

Fax number: 

Recipient:

 

Party C’s mailing address: 

Telephone: 

Fax number: 

Recipient:

 

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Article 25 Entire Agreement

 

This contract contributes to the entire agreement on the transactions
agreed in this contract between the parties and shall replace all previous discussions, negotiations and agreements between the parties
on the transactions under this contract.

 

(No
Content Below)

 

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In witness whereof, the duly authorized representative of Party A and
Party B sign this contract on the date stated at the beginning of the document.

 

Party A: Happiness Development Group Limited  and

Fujian Happiness Biotech Co., Limited

 

 

Seal and Authorized
Signature: /s/ Xuezhu Wang_

 

Party
B:Cunhui Lin, Yanqing Liu 

 

Seal
and Authorized Signature: /s/ Cunhui Lin

Seal
and Authorized Signature: /s/ Yanqing Liu

 

Party
C: Fuzhou Hekangyuan Trading Co., Ltd.

 

Seal and Authorized
Signature: /s/ Cunhui LinCiti CEO Conference March 2022 Exhibit 10.1

  

  

  To be the preeminent lodging REIT, focused on consistently delivering superior, risk-adjusted returns for stockholders through active asset management and a thoughtful external growth strategy, while maintaining a strong and flexible balance sheet Mission Investment Strategy Guiding Principles Aggressive Asset Management Prudent Capital Allocation Maintain Low Leverage & Flexible Balance Sheet Upper-Upscale & Luxury Full-Service Premiere Urban and Resort Destinations Affiliation with Dominant Global Brands Park Hotels & Resorts

  

  

  Park: A Compelling Investment Story UNDERVALUED Iconic portfolio trading at wide discount(1): 33% discount to Consensus estimate of NAV 55% discount to replacement cost ($306k vs $656k/room)(2) Trading at just 10.7x 2019 Pro-Forma Adjusted EBITDA(3) 45% below prior peak (9/7/18: $34.01/share) LESS SUPPLY RISK Desirable locations in high barrier to entry markets 1.4% new supply growth across markets(5) Nearly 55% of EBITDA(6) is located in markets with below national average of 1.3% supply growth per annum FINANCIAL FLEXIBILITY Balance Sheet Positioned for Growth $1.6B of liquidity Covenant relief extended $250M of stock buybacks(7) Expanded investment pipeline $750M of NOLs banked to offset future gains Expiration of Built-In Gains (BIG) tax penalty MANAGEMENT TEAM WITH PROVEN TRACK RECORD Based on Park’s 5-day avg closing stock price of $18.62 from 2/24/22 to 3/2/22 The replacement cost estimates are based on Park’s internal analysis and construction market pricing as of August 2020. Estimated land values are based on market data and recent comparable sales where applicable. This estimate is not intended to be an estimate for the fair market value of the portfolio Pro-forma Adjusted EBITDA is based on reconciliation provided on Slide 31 Based on Park’s Pro-forma 2019 Rooms revenue Supply Growth data from CBRE’s Q3 2021 Hotel Horizons forecasts for Upper Priced hotels; represents average of 2022 and 2023 supply forecasts Calculated based on Park’s 2019 Hotel Adjusted EBITDA and pro rata share of EBITDA  from unconsolidated JVs, on a Pro-forma basis for Park’s current portfolio $300M in stock repurchases approved by Park’s Board of Directors on 2/25/22; subject to current restrictions and limitations of $250M set forth in Park’s credit and term loan facilities Subsequently sold seven hotels ORGANIC GROWTH Significant Embedded Upside Potential Re-imagined operating model to potentially yield $75M to $100M of cost savings, or 300bps+ of margin upside(4) Pent-up business / international demand ROI pipeline to potentially generate $20M to $25M+ of incremental EBITDA Chesapeake synergies: $5M to $10M of embedded EBITDA Re-shaped the portfolio by selling or disposing of 31 hotels for over $1.7B, including 14 international assets Increased RevPAR, margins and group mix through aggressive asset management efforts Acquired 18-hotel(8) Chesapeake portfolio for $2.5B while maintaining target net leverage range of 3x to 5x

  

  

  6 Park at a Glance Company Overview Currently the second largest publicly traded lodging REIT, Park owns a portfolio of 54 premium-branded hotels and resorts with nearly 32,000 rooms primarily located in prime city center and resort locations. Top markets include Hawaii, San Francisco, Orlando, New Orleans, Boston, NYC, Chicago, Key West and Miami Portfolio Quality (Core Assets)(1) Balance Sheet & Liquidity(4) Net Debt was $4.2B $1.6B of liquidity with nearly $690M of cash & cash equivalents plus $901M undrawn revolver 99% fixed rate debt Only 2% of debt maturing within next 18 months Operational Update 53 of 54 hotels open as of March 1, 2022 Q4 Consolidated RevPAR (62% of ‘19 levels); December (78% of ’19 levels) driven by ADR at 108% In 2H ‘21, nearly 80% of all open consolidated hotels generated positive Hotel Adjusted EBITDA and at the corporate level generated Adjusted FFO of $15M Brand Diversity(6) Room Revenue Segmentation(5) Represents 27 assets classified as “Core” by Park as of 3/1/22 Compared to average of full-service lodging REIT peers with market cap over $1 billion -  HST, PEB, SHO, DRH, RHP and XHR; based on 2019 financials from public disclosure; peers may calculate these metrics differently Hyatt Regency Boston JW Marriott San Francisco Hilton Chicago Casa Marina, Waldorf Astoria New York Hilton Midtown Hilton New Orleans Riverside Parc 55 San Francisco Royal Palm South Beach Hilton Checkers LA The Reach, Curio Collection Hyatt Regency Mission Bay Hilton Denver City Center ’19 Pro-forma RevPAR: $202 ($18 higher than peers(2)) ’19 Pro-forma EBITDA/Key: $35,300(3) (13% above peers(2)) of ’19 Pro-forma Hotel Adjusted EBITDA ’19 Pro-forma Hotel Adjusted EBITDA Margin: 30.5% 88% Based on actual room count at that time As of 12/31/21 Based on Park’s Pro-forma 2019 Rooms revenue Based on 2019 Pro-forma portfolio rooms

  

  

  Iconic Portfolio: Urban and Resort Destinations New York Hilton Midtown Royal Palm South Beach Miami Casa Marina, a Waldorf Astoria Resort Waldorf Astoria Orlando Hilton San Francisco Union Square Hilton Hawaiian Village Waikiki Beach Resort Hilton Denver City Center JW Marriott SF Union Square Hilton Chicago Hilton New Orleans Riverside Hilton Waikoloa Village W Chicago – City Center

  

  

  Operational Update: Q4 2021/ FY 2021 43 out of 52 hotels that were open during Q4 ‘21 generated positive EBITDA Strength in ADR as Leisure markets continue to recover;  Q4 ADR for the Open Consolidated Portfolio at 97% of ‘19 peak; December at 108% of ‘19 peak Q4 ‘21 Pro-forma Hotel Adjusted EBITDA of $85M improving by $2M or 2.4% sequentially over Q3 despite seasonal leisure softness and Delta/Omicron variant news Performance driven by leisure: Hawaii, Orlando, Key West, New Orleans, Miami, and Santa Barbara Fundamentals continue to improve: Leisure driving performance with improvements seen across all segments Reflects Park’s consolidated hotels open for the entirety of the quarter Presented on a Pro-forma basis for the current portfolio Caribe Hilton

  

  

  Leisure Markets Continue to Dominate Leisure Markets Strong finish in 2H ‘21 with Resort(1) occupancy down only 18 percentage points from ‘19 levels, despite impacts from the Delta variant in Aug/Sep and the onset of Omicron variant in Nov/Dec Park’s Resort markets continue to drive rate ahead of ‘19 levels as price insensitivity increases; overall, for the 2H ‘21, Resort ADR exceeded ‘19 levels by over 16% Performance during 2H was led by Hawaii, Florida Markets (Key West, Orlando, Miami), and Santa Barbara Disruption from Omicron is largely contained to Q1 ‘22.  Bookings for Q2 and beyond are positive for Park’s major markets like Hawaii and Florida.  Leisure travel momentum is expected to strengthen heading into Q2 ‘22 across Park’s Resort markets, in addition to urban markets like New York, Boston and Chicago. Leisure is leading Park’s recovery, but opportunities exist in all three segments Resort Hotels – Occupancy Resort Hotels – ADR and RevPAR vs 2019 Park’s Resort hotels include: Hilton Hawaiian Village Waikiki Beach Resort; Signia by Hilton Orlando Bonnet Creek; Waldorf Astoria Orlando; Casa Marina, A Waldorf Astoria Resort; Hilton Waikoloa Village; Hilton Orlando Lake Buena Vista; Hilton Santa Barbara Beachfront Resort; The Reach Key West, Curio Collection by Hilton; DoubleTree Durango; Royal Palm South Beach Miami, a Tribute Portfolio Resort; and Hyatt Regency Mission Bay Spa and Marina

  

  

  Business Transient and Group Trends: Omicron Business Transient Park witnessed a material uptick in mid-week (Tue/Wed) production at its Business Transient oriented hotels in Q4 Business air travel approached 60% of pre-pandemic levels in Q4 ‘21 and is expected to be strong through the spring and summer with increased demand for business travel Omicron concerns further delay office re-openings into 2022 but will provide significant opportunity for pent-up business travel demand in Q2 ’22 and beyond Business transient and group recovery delayed, but still expected to strengthen in 2022 2021 Monthly Business Transient Demand 2022 Group Pace vs. 2019 Group As of December, Park’s portfolio group pace for ‘22 accounted for 62% of ‘19 pace as of December ‘18, with rates already at ‘19 levels Major urban markets where ‘22 room nights group pace is greater than 75% of ‘19 bookings include: New Orleans (78%), Florida (77%) and Washington D.C. (76%) Top regions where ‘22 rates are exceeding ‘19 levels include: S. California (115%), Florida (110%), New Orleans (106%), Hawaii (103%), Chicago (101%) ‘23 group pace is nearly 75% of pre-pandemic levels 100%

  

  

  2022 Priorities: Getting Back to Business Acquisitions: Selectively Pursue Accretive Acquisitions that Enhance Portfolio Capital Allocation: Sell Non-Core Hotels; Buyback Stock at an NAV Discount ROI Projects: Activate the Real Estate by Reinvesting in the Portfolio Balance Sheet:  Refinance Debt Maturities; Enhance Liquidity/Credit Profile Human Capital: Return to Office; Ensure Safety/Welfare of Employees; Strong ESG Focus Operational: Achieve Operational Excellence through Re-Imagined Operating Model Park remains laser-focused on the following priorities for 2022 as it navigates through the pandemic and the expected eventual lodging industry recovery

  

  

  Value Creation: Hotel Adjusted EBITDA Bridge Significant upside opportunity within Park’s portfolio to drive earnings in excess of 2019 Estimated Internal Growth Drivers $892M $75M - $100M $823M Operational Excellence Chesapeake Synergies In Process ROI Projects 2019 Adjusted EBITDA(1) Less: 2019 EBITDA for eight assets sold/disposed of 2020- 2021(1) Less: 2019 EBITDA for Waikoloa room giveback + excess insurance proceeds(2) (3) Pro-Forma 2019 Adjusted EBITDA Labor optimization Reimagine hotel operating model Re-purpose unprofitable F&B ops Revenue mgmt Group up F&B revenues Parking Destination fees Bonnet Creek Casa Marina Hilton San Jose $100M to $135M upside potential $20M - $25M ($54M) ($21M) +$6M Add: annual operating loss from laundry facilities which were closed in 2021 $5M - $10M Reported 2019 Pro-forma Adjusted EBITDA of $838 million excludes $54 million of 2019 EBITDA related to eight assets sold/disposed of in 2020-2021.  For a reconciliation of reported 2019 Pro-forma Adjusted EBITDA, see slide 31 At the end of 2019, Park transferred 466 rooms at the Hilton Waikoloa Village to Hilton Grand Vacations; based on applying the percentage of rooms transferred to total rooms in 2019 to full year 2019 Hotel Adjusted EBITDA, this represents the loss of $15M in Hotel Adjusted EBITDA In 2019, Park received $6M on business interruption proceeds related to loss of income in prior years for the Hilton Caribe following the damage caused by Hurricane Maria in 2017 Note: Actual future Adj. EBITDA may differ materially from this hypothetical presentation. Please see the forward-looking statements disclaimer on Slide 34 of this presentation for a discussion of the risks that could cause actual results to differ materially from any potential or estimated results.

  

  

  Total Estimated Internal Growth Potential: Value Creation: Embedded Growth Opportunities Maintain savings and operating model changes from the permanent elimination of 1,200 jobs across existing portfolio Eliminated positions consisted largely of mid-level managers and administrative hourly employees Complexed management positions with neighboring hotels when possible Partner with brands to re-assess brand standards to drive additional profitability Adjust operations to address changing consumer preferences: i.e., contactless check-in/room service Leverage technology to drive revenues, reduce cost, and improve guest satisfaction Eliminate or re-purpose unprofitable F&B operations (e.g., buffets) and outlets; accelerate Grab & Go and leasing opportunities $75M to $100M Revenue Management: Grouping Up (150bps of upside) F&B Revenues: Menu engineering/pricing, added group catering contribution Destination Fees: Marginally increase rates, while improving capture rate Other Revenue: parking, retail leases $5M to $10M Bonnet Creek Complex: Ballroom expansion ($110M investment) DoubleTree San Jose: Conversion to Hilton ($40M+ investment) Waldorf Casa Marina: Conversion to Curio ($45M+ investment) $20M to $25M EBITDA Upside Operational Excellence Chesapeake Synergies In-Process ROI Projects Value Creation Opportunity $100M to $135M

  

  

  Price/Key is calculated as follows: Gross Asset Value / # of Keys Implied Cap Rate is calculated as follows: 2019 NOI / Gross Asset Value Park’s Estimated Gross Asset Value (at Mid-Point):  $11.2 Billion, or $396,000/Key Park Hotels: Gross Asset Value and Valuation Metrics $379 $396 $415 5.7% 6.0% 6.3% Implied Price/Key for Portfolio (‘000s)(1) Implied Cap Rate for Portfolio(2) $11.2B $10.7B $11.7B Estimated Gross Asset Value ($B) Resort Urban Airport Suburban

  

  

  Hotel NOI 2019A is calculated as follows: Hotel Adj EBITDA less a 6% Capex reserve of Total Hotel Revenues Implied Cap Rate is calculated as follows: 2019 NOI / Gross Asset Value. For more information, see Slide 30 Price/Key is calculated as follows: Gross Asset Value / # of Keys See Slide 30 for important information on the assumptions and methodology of this calculation Park: NAV Model (Note: $ in ‘000s except for per share amounts) Note: NAV and the calculation of NAV is unaudited Other Assets include total assets of $9,743 detailed on the 12/31/21 balance sheet, less: property and equipment, net ($8,511), investments in affiliates ($15) and intangibles, net ($44) Other Liabilities include total liabilities of $5,340 detailed on the 12/31/21 balance sheet, less the pro-rata share of the non-controlling interest of our consolidated JV Debt ($105M) Based on Park’s 5-day avg closing price of $18.62 from 2/24/22 to 3/2/22 NAV Model Park Portfolio: 86% of Value Concentrated in Resort/Urban Markets Note: refer to Park’s Net Asset Value Methodology and Disclaimer on Slide 30 and Park’s Forward Looking Statements Disclaimer on Slide 34 for important information on the assumptions and methodology of this calculation

  

  

  55% Discount to Replacement Cost 26% of Replacement Cost Park Hotels: Replacement Cost Rooms Meeting Space (sq. ft.) Replacement Cost ($/key) Core Assets(3) 20,754 1.7M $16.0B ($771k/Key) Total Portfolio(4) 28,948 2.3M $19.0B ($656/Key) Hilton San Francisco Union Square Casa Marina, A Waldorf Astoria Resort Hilton Waikoloa Village Hilton New York Midtown Park currently trades(1) at a 55% discount to replacement cost(2) Based on Park’s 5-day avg closing price of $18.62 from 2/24/22 to 3/2/22 The replacement cost estimates are based on Park’s internal analysis and construction market pricing as of August 2020. Estimated land values are based on market data and recent comparable sales where applicable. This estimate is not intended to be an estimate for the fair market value of the portfolio Represents 27 assets classified as “Core” by Park as of 3/1/22 Includes Park’s pro-rata share of unconsolidated joint ventures as of 3/1/22 (1)

  

  

  Park’s Active Capital Recycling 12 Number of Assets Dollar Amount 2018 Dispositions (13) ($519M)(3) 2019 Dispositions (8) ($497M)(3) Acquisition +18 +$2,500M 2020 Dispositions (2) ($208M) 2021 Dispositions (5) ($477M) Total (Net)(4): (10) Assets +$800M Sold or disposed of 31(1) non-core hotels, including all international assets, since spin Fully exited Park’s international exposure (14 assets) by early 2020 Enhanced and diversified portfolio with acquisition of 18-hotel Chesapeake portfolio(2) Sold five hotels in 2021 for total proceeds of $477M, or 14.1x ‘19 EBITDA (including Capex), including the Le Meridien San Francisco ($221.5M) and the Adagio San Francisco ($82M) which collectively traded for over $572K/key 5-Year Track Record of Success Le Meridien San Francisco (sold in Q3 2021) Includes three properties on short-term ground leases that either expired or were terminated early by Park, and consequently turned over to the landlord Have since sold a total of seven hotels that were part of the Chesapeake portfolio Includes pro-rata share of proceeds from the sale of two unconsolidated joint venture hotels – one sold in 2018 and one sold in 2019 For the 5-year period (2017–2021); no dispositions or acquisitions in 2017 (not reflected in chart above)

  

  

  Rebrand/Reposition Expand Alt. Use Hilton Hawaiian Village Hilton Waikoloa Village Hilton New Orleans Riverside Signia by Hilton Orlando Bonnet Creek Waldorf Astoria Orlando New York Hilton Midtown Hilton Chicago W Chicago Lakeshore Waldorf Casa Marina Hilton Denver City Center DoubleTree San Jose DoubleTree Crystal City Hilton Santa Barbara Reach Resort, Curio Collection Embedded Opportunities to Potentially Enhance Value Completed Completed Over half of the hotels in Park’s Core portfolio possess potential value enhancement opportunities (       ) which further promote the portfolio’s inherent real estate value Rebrand / Reposition Position hotels to better cater to market demand Expand Activate underutilized real estate Alternative Uses Convert portions of hotels to other uses (e.g., timeshare) Completed Completed In Process In Process In Planning In Planning In Planning

  

  

  Value Enhancement Case Studies Hilton Waikoloa: HGV timeshare transfer Transferred 600-room Ocean Tower to HGV to reduce footprint in two phases (2017 and 2019) Resulting smaller resort is more efficient, providing ability to yield ADR and improve Hotel Adjusted EBITDA margin Q4 ‘21 vs. Q4 ’19:  ADR (+27%) and Hotel Adjusted EBITDA margin  (+500bps) Rebrand / Reposition Hilton Waikoloa Village The Reach Resort, Curio Collection by Hilton Hilton Santa Barbara: Re-branded to Hilton from DoubleTree Transient revenues increased 19% from ‘17 to ‘19 on strength of more upscale brand and transformational renovation.  2021 transient revenues exceeded 2019 by 33% Improved Hotel Adjusted EBITDA from $17M in ‘17 to $24M in ‘21, a 9.3% CAGR Strong drive-to leisure appeal: 3rd highest RevPAR ($360) in 2021 among Park’s portfolio The Reach Resort: Re-branded to Curio Collection by Hilton from Waldorf Astoria New affiliation allows resort to cater to lifestyle-focused travelers and serve as a complementary alternative to Casa Marina Strong results through COVID pandemic, with ‘21 as a record year for RevPAR ($387) and Hotel Adjusted EBITDA ($13M) Honored with the Stella Award for Best Renovation in the Southeast Alternative Use Hilton Santa Barbara Beachfront Resort Hilton Waikoloa Village

  

  

  ROI Case Studies: Signia + Waldorf Bonnet Creek Signia Expansion:  Q4 2023 Scope New build expansion featuring the addition of 90K sf of multi-functional meeting and event space Future Meeting Platform Future indoor:  approx. 181K sf Future outdoor:  approx. 65K sf Waldorf Expansion: Q4 2022 Exterior Renderings Development/Expansion: 18% ROI on $110M investment Scope New build expansion featuring the addition of 13K sf of multi-functional meeting and event space Future Meeting Platform Future indoor:  approx. 36K sf Future outdoor:  approx. 10K sf Signia Renderings Waldorf Renderings Waldorf Astoria Orlando Signia by Hilton Orlando Bonnet Creek

  

  

  Debt balances as of 12/31/21 Based on Park’s 5-day avg closing price of $18.62 from 2/24/22 to 3/2/22 Reflects consolidated debt only Does not include scheduled amortization principal payments Does not include the $174M Revolver commitment that matured in December 2021 or scheduled principal amortization payments Debt Metrics(3): 2Q20 vs. 4Q21 Park Total Capitalization(1)(2) (2) Since the beginning of the pandemic, Park has raised over $2.1B of corporate debt and sold $477M of assets in 2021 with proceeds used to pay-down near-term maturities, boost liquidity and enhance debt metrics (2) (2) (3) Strong and Flexible Balance Sheet Debt Maturity Schedule(4) (6) Debt Mix(3) (6) $ in millions $9.3B (7) $58M loan secured by the Hilton Denver City Center, which matures in August 2042, is callable by the lender beginning in August 2022 $725M SF CMBS loan anticipated to be addressed this year with either bonds or mortgage financing

  

  

  President, Chairman & CEO Thomas J. Baltimore, Jr. Executive Management Senior Management SVP & General Counsel Nancy Vu EVP, CFO & Treasurer Sean M. Dell’Orto EVP & CIO Tom Morey EVP, Design & Construction Carl Mayfield EVP, HR Jill Olander Experienced Management Team with Track Record of Success Key Accomplishments: 2017 - 2019 Key Accomplishments: 2020 - Present SVP, Strategy Ian Weissman SVP, Tax Scott Winer SVP & CAO Darren Robb SVP, FP&A Diem Larsen SVP, Investments Jonathan Fuisz SVP, Asset Management Joe Piantedosi Improved RevPAR by $8 to $186 Improved Hotel Adjusted EBITDA margin 25bps Increased Group mix by 247bps to 31% Sold or disposed of 23 hotels(1) for total proceeds of $1.0B Acquired Chesapeake Lodging Trust for $2.5B, improving the overall quality of the portfolio Ended 2019 with Pro-forma Net Debt to Adjusted EBITDA at 4.4x Returned over $2.3B of capital to shareholders Permanently reduced hotel-level staffing; $85M of annual savings Improved monthly cash burn rate to break-even (June 2021) and generated positive operating cash flow in Q4 from initial estimates of $85M at the onset of the pandemic Issued over $2.1B of corporate debt to repay $1.8B+ of near-term debt Sold or disposed of 8 hotels(2) for total proceeds of $685M ESG: Published fourth Corporate Responsibility Report with new TCFD report; established Diversity & Inclusion Steering Committee; named by Newsweek to  America’s Most Responsible Companies list 2020, 2021 and 2022 Includes two properties on short-term ground leases that either expired or were terminated early by Park, and consequently turned over to the landlord Includes a joint venture interest in a property under a ground lease that expired and was consequently turned over to the landlord

  

  

  Named by Newsweek to America’s Most Responsible Companies list 2020, 2021 and 2022 Alignment with SASB GRI Index Alignment with United Nations Sustainable Development Goals Signatory of AHLA’s 5-Star Promise Signatory of CEO Action for Diversity and InclusionTM Ranked as A GRESB 2021 Public Disclosure Score Strong Corporate Governance and ESG Focus Park’s 2021 Corporate Responsibility Report (4th annual) GRESB 7 pt. Increase for Park’s 2021 Real Estate Assessment score Alignment with globally adopted frameworks 3 Dedicated ESG Committees: Green Park Committee Diversity and Inclusion Steering Committee Park Cares Committee 4 Hotels Earned US EPA’s 2020 ENERGY STAR Certification

  

  

  Appendix: Definitions Hilton Chicago Hilton Waikoloa Village

  

  

  2019 Pro-forma Hotel Adjusted EBITDA/Key 2019 Pro-forma Hotel Adjusted EBITDA Margin 2019 Pro-forma RevPAR Core Portfolio is Best in Class 12 (1) 2019 Pro-forma Hotel Adjusted EBITDA Breakdown Core Assets(1) (88% of Pro-forma Hotel Adjusted EBITDA): RevPAR of $202 is $18 higher than peers(2) Margin of 30.5% is in line with peers(2) EBITDA/Key of $35,300 is 13% greater than peers(2) PK All Other(3) represents just ~12% of ‘19 Pro-forma Hotel Adjusted EBITDA Pro-forma Hotel Portfolio(4) generated RevPAR of $185 in ‘19, in line with hotel REIT peers(2) Pro-forma Hotel Portfolio (4): ‘19 Hotel Adjusted EBITDA margin (29.3%) 120bps lower than hotel REIT peers(2) Park Owns One of the Highest Quality Portfolios Represents 27 assets classified as “Core” by Park as of 3/1/22 Peers are full-service lodging REITs with market cap over $1 billion -  HST, PEB, SHO, DRH, RHP and XHR; based on 2019 financials from public disclosure; peers may calculate these metrics differently PK All Other portfolio includes Park’s 21 remaining hotels and excludes unconsolidated joint ventures Pro-forma Hotel Portfolio excludes Caribe Hilton due to impact from Hurricane Maria (1) (4) (4) (4)

  

  

  Park’s Geographic Exposure (by % 2019 Pro-forma Hotel Adjusted EBITDA) Legend Circle Size Based on Hotel Adjusted EBITDA Puerto Rico $100M+ $50M+ $25M+ $10M+ $5–10M <$5M $200M+ Diversification: Park Hotel Portfolio Note: Excludes Park’s pro rata share of Hotel Adjusted EBITDA for properties held by unconsolidated joint ventures

  

  

  Supply Growth data from CBRE’s Q3 2021 Hotel Horizons forecasts for Upper Priced hotels; represents average of 2022 and 2023 supply forecasts Calculated based on Park’s 2019 Hotel Adjusted EBITDA and pro rata share of EBITDA  from unconsolidated JVs, on a Pro-forma basis for Park’s current portfolio Park Portfolio: Well-Insulated from Supply Favorable Supply Picture for Park through 2023(1)(2) National Supply Growth Average: 1.3% Nearly 55% of Park’s EBITDA(2) is located in markets with below national average supply growth of 1.3% supply per annum including Hawaii (0.4% average per annum supply growth) and San Francisco (1.2%) Overall, Park anticipates just 1.4% average annual supply growth through 2023 across its portfolio versus the 2.4% per annum supply growth forecasted prior to the pandemic

  

  

  Amendment Overview and Covenant Relief Amendment Overview Hyatt Centric Fisherman’s Wharf Park successfully amended its credit and term loan facilities Covenant Waiver Extend Covenant Waiver by Two Quarters:  Covenant Waiver Period extended through and including June 30, 2022, with the test period beginning 9/30/22 except for a 1.0x fixed charge coverage test based on Q2 results Minimum Liquidity Covenant (Unrestricted Cash + Unfunded Revolver) of $200,000,000 through March 31, 2023, or if earlier, a 7.25x leverage ratio Stock Buybacks:  Up to $250M of share repurchases permitted if the revolver balance is zero (Pro-forma) and the minimum Liquidity Covenant is increased on a dollar-for-dollar basis Greater Flexibility on External Growth Initiatives:  Increased the amount of investments permitted – eliminating restrictions on asset sales and capital expenditures, while increasing general investment bucket to $1.0B, and expandable to $1.5B with a corresponding increase in minimum liquidity to $300M Prepay Secured Debt:  Now have the ability to prepay outstanding secured debt on some of our small secured mortgages Relaxed Mandatory Prepayments: No mandatory prepayments until revolver balance exceeds $600M

  

  

  Definitions EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin Earnings (loss) before interest expense, taxes and depreciation and amortization (“EBITDA”), presented herein, reflects net income (loss) excluding depreciation and amortization, interest income, interest expense, income taxes and interest expense, income tax and depreciation and amortization included in equity in earnings (losses) from investments in affiliates. Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude: Gains or losses on sales of assets for both consolidated and unconsolidated investments; Costs associated with hotel acquisitions or dispositions expensed during the period; Severance expense; Share-based compensation expense; Impairment losses and casualty gains or losses; and Other items that management believes are not representative of the Company’s current or future operating performance. Hotel Adjusted EBITDA measures hotel-level results before debt service, depreciation and corporate expenses of the Company’s consolidated hotels, which excludes hotels owned by unconsolidated affiliates, and is a key measure of the Company’s profitability. The Company presents Hotel Adjusted EBITDA to help the Company and its investors evaluate the ongoing operating performance of the Company’s consolidated hotels. Hotel Adjusted EBITDA margin is calculated as Hotel Adjusted EBITDA divided by total hotel revenue. EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin are not recognized terms under United States (“U.S.”) GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, the Company’s definitions of EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies. The Company believes that EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin provide useful information to investors about the Company and its financial condition and results of operations for the following reasons: (i) EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin are among the measures used by the Company’s management team to make day-to-day operating decisions and evaluate its operating performance between periods and between REITs by removing the effect of its capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from its operating results; and (ii) EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in the industry. EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss) or other methods of analyzing the Company’s operating performance and results as reported under U.S. GAAP.

  

  

  Definitions (Continued) Nareit FFO attributable to stockholders, Adjusted FFO attributable to stockholders, Nareit FFO per share – Diluted and Adjusted FFO per share – Diluted Nareit FFO attributable to stockholders and Nareit FFO per diluted share (defined as set forth below) are presented herein as non-GAAP measures of the Company’s performance. The Company calculates funds from (used in) operations (“FFO”) attributable to stockholders for a given operating period in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), as net income (loss) attributable to stockholders (calculated in accordance with U.S. GAAP), excluding depreciation and amortization, gains or losses on sales of assets, impairment, and the cumulative effect of changes in accounting principles, plus adjustments for unconsolidated joint ventures. Adjustments for unconsolidated joint ventures are calculated to reflect the Company’s pro rata share of the FFO of those entities on the same basis. As noted by Nareit in its December 2018 “Nareit Funds from Operations White Paper – 2018 Restatement,” since real estate values historically have risen or fallen with market conditions, many industry investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For these reasons, Nareit adopted the FFO metric in order to promote an industry-wide measure of REIT operating performance.  The Company believes Nareit FFO provides useful information to investors regarding its operating performance and can facilitate comparisons of operating performance between periods and between REITS.  The Company’s presentation may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current Nareit definition, or that interpret the current Nareit definition differently.  The Company calculates Nareit FFO per diluted share as Nareit FFO divided by the number of fully diluted shares outstanding during a given operating period Net Debt Net debt, presented herein, is a non-GAAP financial measure that the Company uses to evaluate its financial leverage. Net debt is calculated as (i) long-term debt, including current maturities and excluding unamortized deferred financing costs; and (ii) the Company’s share of investments in affiliate debt, excluding unamortized deferred financing costs; reduced by (a) cash and cash equivalents; and (b) restricted cash and cash equivalents. The Company believes Net debt provides useful information about its indebtedness to investors as it is frequently used by securities analysts, investors and other interested parties to compare the indebtedness of companies. Net debt should not be considered as a substitute to debt presented in accordance with U.S. GAAP. Net debt may not be comparable to a similarly titled measure of other companies. Net Debt to Pro-forma Adjusted EBITDA Ratio Net debt to Pro-forma Adjusted EBITDA ratio, presented herein, is a non-GAAP financial measure and is included as it is frequently used by securities analysts, investors and other interested parties to compare the financial condition of companies. Pro-forma Net debt to Pro-forma Adjusted EBITDA ratio should not be considered as an alternative to measures of financial condition derived in accordance with U.S. GAAP and it may not be comparable to a similarly titled measure of other companies. Core Core, presented herein, refers to Park’s portfolio of its highest quality, upper-upscale and luxury branded hotels located in top 25 Metropolitan Statistical Areas by population and premier resort destinations.

  

  

  Definitions (Continued) Pro-forma The Company presents certain data for its consolidated hotels on a pro-forma hotel basis as supplemental information for investors: Pro-forma Hotel Revenues, Pro-forma RevPAR, Pro-forma Total RevPAR, Pro-forma Occupancy, Pro-forma ADR, Pro-forma Hotel Adjusted EBITDA and Pro-forma Hotel Adjusted EBITDA Margin. The Company presents pro-forma hotel results to help the Company and its investors evaluate the ongoing operating performance of its hotels. The Company’s pro-forma metrics exclude results from property dispositions that have occurred through March 1, 2022 and include results from property acquisitions as though such acquisitions occurred on the earliest period presented. Where noted in certain instances, Pro-forma may also exclude Adjusted EBITDA associated with the 466 rooms at the Hilton Waikoloa Village transferred to Hilton Grand Vacations at the end of 2019, business interruption proceeds received out of period and from the operations of our laundry facilities, which permanently closed in 2020. Occupancy Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels. Room nights available to guests have not been adjusted for suspended or reduced operations at certain of Park’s hotels as a result of COVID-19. Occupancy measures the utilization of the Company’s hotels’ available capacity. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help management determine achievable Average Daily Rate (“ADR”) levels as demand for rooms increases or decreases. Average Daily Rate ADR represents rooms revenue divided by total number of room nights sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the hotel industry, and management uses ADR to assess pricing levels that the Company is able to generate by type of customer, as changes in rates have a more pronounced effect on overall revenues and incremental profitability than changes in occupancy, as described above. Revenue per Available Room Revenue per Available Room (“RevPAR”) represents rooms revenue divided by the total number of room nights available to guests for a given period. Room nights available to guests have not been adjusted for suspended or reduced operations at certain of Park’s hotels as a result of COVID-19. Management considers RevPAR to be a meaningful indicator of the Company’s performance as it provides a metric correlated to two primary and key factors of operations at a hotel or group of hotels: occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods.

  

  

  Net Asset Value Disclaimer and Methodology Notes: Estimated Net Asset Value   As described in more detail below, to calculate estimated net asset value (“NAV”) as of December 31, 2021, the Company used a 10-year discounted cash flow (“DCF”) model to determine estimated hotel property values to generate an estimated NAV where year one is based on current 12-month forward forecasted net operating income (“NOI”).  The DCF model assumes NOI growth as described in more detail below. However, the COVID-19 pandemic had a material, adverse effect on the hotel industry, and significantly slowed global economic activity and caused significant volatility in the financial markets. As such, there is currently significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. economy.  The current economic environment can and will be significantly adversely affected by many factors beyond our control.  The extent to which COVID-19 impacts our net asset values currently and into the future will depend on developments going forward, many of which are highly uncertain and cannot be predicted, and due to COVID-19 or other factors described below, our DCF model may not accurately project our NOI growth over the 10-year period.   In addition, the use of NAV as a measure is subject to certain inherent limitations.  The assessment of the estimated NAV of the Company, or any property or property type, is subjective in that it involves estimates and assumptions and can be calculated using various acceptable methods.  The Company’s methods of determining NAV may differ from the methods used by analysts or other companies.  Furthermore, the methodologies utilized by the Company in estimating NAV are based upon several estimates, assumptions, judgments or opinions that may or may not prove to be correct.  The Company’s estimated NAV does not represent (i) the amount at which the Company’s securities would trade on a national securities exchange, (ii) the amount that a security holder would obtain if he or she tried to sell his or her securities in the Company, (iii) the amount a security holder would receive if the Company liquidated all or a portion of its assets and distributed the proceeds after paying all of its expenses and liabilities or (iv) the book value of the Company’s real estate.   Net Asset Valuation Methodology   The Company calculated estimated NAV for its portfolio as follows:   Using current 12-month forward forecasted NOI, the Company determined the estimated asset value for all hotels in one of four specified property types:  Resort, Urban, Airport and Suburban, as well as the asset value of the Company’s pro rata share of hotels held in unconsolidated joint ventures as a group, to determine a gross asset value for the Company’s portfolio. The calculation varied, as explained below, based on whether the hotel was a fee simple owned hotel or a ground leased hotel. Estimated value for fee simple owned hotels is based on: Sum of (i) the present value of NOI over a 10-year period plus (ii) the present value of an estimated reversion value of the property assuming a / sale at the end of the 10-year period, less (iii) the present value of owner-funded capital expenditures Reversion value is based on estimated Year 11 NOI (forward-looking 12 months) divided by a terminal capitalization rate selected on an asset-by-asset basis based on comparable transactions, market conditions, and each hotel’s overall risk profile, as determined by management Estimated value for ground leased hotels is based on: Present value of NOI through the end of each hotel’s lease term No reversion value component For all valuations: Discount rates used in DCF analysis reflect management’s expectation of internal rates of return and are selected on an asset-by-asset basis NOI used in DCF analysis is calculated by deducting a hotel’s required FF&E reserve amounts from hotel EBITDA As referenced in #2 above, in addition to the contractual FF&E reserve adjustments, cash flow used in the DCF analysis deducts the Company's expected owner-funded capital expenditures (above and beyond each hotel's FF&E reserve) Estimated NOI growth forecasts over a 10-year period is based on third party market data, industry trends and management’s own view of a hotel’s individual performance Estimated values of hotels are aggregated to arrive at Gross Asset Value for Park’s hotels.  Other balance sheet assets are then added, while balance sheet liabilities, and Park’s pro rata share of unconsolidated joint venture debt are subtracted from Gross Asset Value, in each case as of December 31, 2021 to arrive at estimated NAV.   Implied Capitalization Rate Calculation: The “Mid” implied Capitalization Rate for each asset type presented on Slide 13 is presented for informational purposes and is calculated based on 2019 adjusted NOI, which is calculated as Actual EBITDA - (6%*Total Revenue) divided by the estimated Gross Asset Value calculated by management as described above.  Management believes the 6%, annual capex reserve is an appropriate level for its portfolio.  Low and High capitalization rates were calculated by adding or subtracting (0.25%) from the Mid capitalization rate. Resulting Low and High capitalization rates were used to derive Low and High Estimated Gross Asset Value.  

  

  

  Non-GAAP Financial Measures (1) Excludes results from property dispositions that occurred through March 1, 2022 and includes results from property acquisitions as though such acquisitions occurred on January 1, 2019. Hotel Revenues Pro-forma Hotel Adjusted EBITDA (1) Included in other gain (loss), net in the consolidated statement of operations. (2) Excludes results from property dispositions that occurred through March 1, 2022 and includes results from property acquisitions as though such acquisitions occurred on January 1, 2019. (3) Includes other revenues and other expenses, non-income taxes on TRS leases included in other property-level expenses and corporate general and administrative expenses in the condensed consolidated statement of operations.

  

  

  Non-GAAP Financial Measures (continued) Quarterly Pro-forma Hotel Adjusted EBITDA Net Debt to Pro-forma Adjusted EBITDA

  

  

  Non-GAAP Financial Measures (continued) Hotel Adjusted EBITDA Margin Adjusted Funds From Operations (AFFO) Excludes results from property dispositions that occurred through March 1, 2022 and includes results from property acquisitions as though such acquisitions occurred on January 1, 2019. Percentages are calculated based on unrounded numbers.

  

  

  About Park and Safe Harbor Disclosure About Park Hotels & Resorts Inc. Park Hotels & Resorts Inc. (NYSE: PK) is the second largest publicly traded lodging real estate investment trust with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park’s portfolio consists of 54 premium-branded hotels and resorts with approximately 32,000 rooms located in prime city center and resort locations. Visit www.pkhotelsandresorts.com for more information.  Forward Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements related to Park’s current expectations regarding the performance of its business, financial results, liquidity and capital resources, including the expected dates for reopening the Company’s hotels and dates that its hotels will break even or achieve a positive Hotel Adjusted EBITDA, the impact to the Company’s business and financial condition and that of its hotel management companies, measures being taken in response to COVID-19, the effects of competition and the effects of future legislation or regulations, the expected completion of anticipated dispositions, the declaration and payment of future dividends and other non-historical statements. Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “hopes” or the negative version of these words or other comparable words. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and which could materially affect its results of operations, financial condition, cash flows, performance or future achievements or events. Currently, one of the most significant factors continues to be the adverse effect of COVID-19, including resurgences, on the Company’s financial condition, results of operations, cash flows and performance, its hotel management companies and its hotels’ tenants, and the global economy and financial markets. COVID-19 has significantly affected the Company’s business, and the extent to which COVID-19 continues to affect the Company, its hotel managers, tenants and guests at the Company’s hotels will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its effect, the emergence of virus variants, the efficacy, availability and deployment of vaccinations and other treatments to combat COVID-19, including public adoption rates of COVID-19 vaccines, additional closures that may be mandated or advisable even after the reopening of certain of the Company’s hotels, whether due to an increased number of COVID-19 cases or otherwise, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, investors are cautioned to interpret many of the risks identified in the risk factors included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19. Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements and Park urges investors to carefully review the disclosures Park makes concerning risk and uncertainties in Item 1A: “Risk Factors” in Park’s Annual Report on Form 10-K for the year ended December 31, 2021, as such factors may be updated from time to time in Park’s filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Except as required by law, Park undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Supplemental Financial Information Park refers to certain non-generally accepted accounting principles (“GAAP”) financial measures in this presentation, including Funds from (used in) Operations (“FFO”) calculated in accordance with the guidelines of the National Association of Real Estate Investment Trusts (“Nareit”), Adjusted FFO, FFO per share, Adjusted FFO per share, Earnings (loss) before interest expense, taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA, Hotel Adjusted EBITDA, Hotel Adjusted EBITDA margin, Net debt and Net debt to Adjusted EBITDA ratio. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of its operating performance. Please see the schedules included in this presentation including the “Definitions” section for additional information and reconciliations of such non-GAAP financial measures.

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