8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 2, 2011

HOSPITALITY PROPERTIES TRUST

(Exact Name of Registrant as Specified in Its Charter)

Maryland

(State or Other Jurisdiction of Incorporation)

1-11527	04-3262075
(Commission File Number)	(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Newton, Massachusetts	02458-1634
(Address of Principal Executive Offices)	(Zip Code)

617-964-8389

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

xSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

In this Current Report, the terms “we”, “us” and “our” refer to Hospitality Properties Trust and its subsidiaries, unless otherwise noted.

Item 1.01.  Entry into a Material Definitive Agreement.

On November 2, 2011, we entered into a purchase agreement, or the Purchase Agreement, with Sonesta Acquisition Corp. (then named Property Acquisition Corp.), or SAC, and its wholly owned subsidiary, PAC Merger Corp., or Merger Sub and, together with SAC, the Sellers, to purchase from SAC the entities, or the Hotel Entities, that own the Royal Sonesta Hotel Boston, in Cambridge, Massachusetts, or the Cambridge Hotel, and lease the Royal Sonesta Hotel New Orleans, in New Orleans, Louisiana, or the New Orleans Hotel.  The approximately $150.5 million aggregate purchase price is payable in cash and will be reduced by the outstanding principal and accrued interest, if any, owed at the time of the closing under a variable rate mortgage loan due in 2015 secured by the Cambridge Hotel, or the Cambridge Loan.  We expect to prepay the Cambridge Loan, which we understand has a currently outstanding principal balance of approximately $31.2 million, and unwind a related interest rate hedge agreement, at or shortly after the closing.  We currently expect this transaction to close during the first quarter of 2012.

The Cambridge Hotel and the New Orleans Hotel are currently owned or leased and operated by subsidiaries of Sonesta International Hotels Corporation, or Sonesta.  The Purchase Agreement is a component part of a transaction that involves the acquisition by merger, or the Merger, of all of Sonesta’s shares by SAC pursuant to an agreement and plan of merger, or the Merger Agreement, which was entered into between SAC, Merger Sub and Sonesta on November 2, 2011.  Subject to the terms and conditions of the Merger Agreement, among other things, Merger Sub will be merged into and with Sonesta, and each outstanding share of Sonesta’s common stock will be converted into the right to receive $31.00 in cash, without interest and less any applicable withholding taxes.  The Purchase Agreement provides, among other things, that we will advance the purchase price for the Hotel Entities to the Sellers for the purpose of the Sellers consummating the Merger under the Merger Agreement.

Our obligation to advance the purchase price under the Purchase Agreement is subject to certain conditions, including that either (i) the conditions to the Merger under the Merger Agreement have been satisfied or waived or (ii) a final non-appealable court order is issued awarding specific performance to Sonesta compelling the Sellers to consummate the Merger.  The terms of the Purchase Agreement require that, at the effective time of the Merger, SAC will be capitalized with $25 million, at least half of which will be represented by cash consideration for shares of SAC common stock.  Under an equity commitment letter, SAC’s stockholders have also agreed that if the Merger does not close, under certain circumstances, they will provide funding of up to $8.5 million to satisfy any final non-appealable court order awarding damages to Sonesta for SAC’s or Merger Sub’s material breach of the Merger Agreement.  Sonesta is an express third-party beneficiary under the Purchase Agreement and the equity commitment letter, and they provide that Sonesta is entitled to enforce them as if it were SAC.

The Merger Agreement provides that the Merger is subject to, among other conditions, adoption and approval of the Merger by Sonesta’s stockholders and the accuracy of and compliance with customary representations, warranties, covenants and other agreements of the parties contained in the Merger Agreement (to the standard specified in the Merger Agreement).  We understand that Sonesta’s board of directors has recommended that Sonesta’s stockholders adopt the Merger Agreement and, concurrently with the execution of the Merger Agreement, certain stockholders of Sonesta, beneficially owning approximately 55% of the outstanding Sonesta common stock on the date of the Merger Agreement, entered into a voting agreement with the Sellers which provides, among other things, that each such person will vote all of such person’s Sonesta common stock in favor of the Merger and against any opposing proposal.  The Merger Agreement also provides for certain customary termination rights for both Sonesta and SAC and further provides that, upon termination under specified circumstances, Sonesta will be obligated to pay to SAC a termination fee.

In the Purchase Agreement, SAC has agreed, following the consummation of the Merger, to initiate a restructuring of Sonesta, which is expected to result in Sonesta owning only equity interests of the Hotel Entities and the Hotel Entities owning only the real estate comprising the Cambridge Hotel and the leasehold for the New Orleans Hotel and related furniture, fixtures and equipment and certain other assets and in SAC or its subsidiaries (other than Sonesta and its subsidiary Hotel Entities) owning the other assets of Sonesta, including its management businesses and brands and assuming all liabilities of Sonesta, other than the liabilities associated with the Cambridge Loan, income taxes, taxes related to retained assets and certain payables and other liabilities.  The Purchase Agreement

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provides that, after giving effect to that restructuring, SAC will transfer to us all of the then issued and outstanding capital stock of Sonesta (which will then own the Hotel Entities, which in turn own or lease the Cambridge Hotel and the New Orleans Hotel), free and clear of any liens, encumbrances or other restrictions (other than the Cambridge Loan and certain other matters).

The Purchase Agreement also provides that SAC or an affiliate of SAC will enter into a long term hotel management agreement, or a Management Agreement, with us for each of the Cambridge Hotel and the New Orleans Hotel and that we expect that SAC will retain the existing management business of Sonesta.  We also expect that SAC and its Sonesta management team will be available to operate other of our hotels, including certain hotels we now own and we are considering rebranding and hotels we may selectively acquire in the future.  The principal terms of the Management Agreements approved by our Independent Trustees are as follows:

·Minimum Return. If gross revenues of a hotel, after payment of specified operating expenses and fees payable to the manager (other than the incentive fee described below, if applicable) are sufficient to do so, we are to be paid a fixed minimum return equal to 8% of our invested capital, as defined in the Management Agreements.

·Additional Returns. We are to be paid an additional amount based upon the hotel’s operating profit, as defined in the Management Agreements, after payment of the manager’s incentive fee, if applicable.

·Manager Fees.  After payment of specified hotel operating expenses from the hotel’s gross revenues, the manager is entitled to receive a base fee equal to 3% of gross revenues.  Additionally, the manager is entitled to a reservation fee equal to 1.5% of gross room revenues, as defined in the Management Agreements, a system fee for centralized services of 1.5% of gross revenues, a procurement and construction supervision fee in connection with renovations equal to 3% of third party costs, and an incentive fee equal to 20% of the hotel’s operating profit after reimbursement to us and to the manager of certain advances.  We expect that the reservation fee, system fee, procurement and construction supervision fee and incentive fee will be applicable to the Cambridge Hotel and to hotels that may in the future be managed for us by SAC or its affiliates, but they will not be applicable to the New Orleans Hotel unless and until the lease of that hotel is modified.  Also, we expect that the 3% base management fee will be applicable to full service hotels, such as the Cambridge Hotel and the New Orleans Hotel, and that a 5% base management fee would be applicable to limited service hotels that may in the future be managed for us by SAC or its affiliates.

·Term. Each Management Agreement will have an initial term of 25 years, and will be extended automatically for up to two successive 15 year renewal terms unless the manager elects not to renew a Management Agreement, provided that unless and until the lease for the New Orleans Hotel is modified, the term of the Management Agreement for the New Orleans Hotel will terminate at the expiration of the lease for the New Orleans Hotel which is expected to be in 2024.  We have the right to terminate the Management Agreements after three years without cause upon payment of a termination fee.  We also have the right to terminate the Management Agreements without a termination fee if our minimum return is less than 6% of our invested capital during any three of four consecutive years.  Both we and the manager have the right to terminate the Management Agreements upon a change of control, as defined in the Management Agreements, of the other party, and under certain other circumstances which, in the case of termination by the manager, may require the payment of a termination fee.

·Property Maintenance.  Routine property maintenance, which is expensed, will be an operating expense of the hotels and repairs and periodic renovations, which are capitalized, will be funded by us, except in the case of the New Orleans Hotel where capital expenditures are borne in large part by the lessor.

·Pooling Agreement.  Under the terms of a pooling agreement, or the Pooling Agreement, we agree that certain hotels managed for us by the manager may be combined for purposes of calculating gross revenues, payment of hotel operating expenses and payment of fees and distributions.  Any non-renewal of a management agreement, and certain terminations, will affect all management agreements in any pool.  The Pooling Agreement also provides for the sale or other disposition of a limited number of hotels in a pool which become non-economic, as defined in the Pooling Agreement.  We expect that the Cambridge Hotel and the New Orleans Hotel will not be pooled with each other so long as the management agreements

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affecting those hotels have different fee structures.  However, if SAC or an affiliate enters into management agreements with us for the management of other hotels, those hotels may be pooled with one of these two hotels or combined into separate pools, as we and the manager may agree at the time.

The foregoing descriptions of the Purchase Agreement, the Merger Agreement, the Management Agreements and the Pooling Agreement and the transactions contemplated by these agreements are not complete and are subject to and qualified in their entirety by reference to the Purchase Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report, the Merger Agreement, a copy of which is attached as Exhibit A to the Purchase Agreement, and the forms of Management Agreement and Pooling Agreement, copies of which are filed as Exhibits 10.2 and 10.3, respectively, to this Current Report, each of which is incorporated herein by reference.

Information Regarding Certain Relationships and Related Transactions

The stockholders of SAC are Barry Portnoy and Adam Portnoy, who are our Managing Trustees.  Barry Portnoy is Chairman and majority owner of our manager, Reit Management & Research LLC, or RMR, and Adam Portnoy, who is Barry Portnoy’s son, is an owner, President, Chief Executive Officer and a director of RMR.  We have numerous continuing relationships with RMR, Barry Portnoy and Adam Portnoy, including the ones discussed in this Current Report.  Among other relationships: our executive officers are officers of RMR; our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR provides management services; Barry Portnoy serves as a managing director or managing trustee of those companies (including our largest tenant, TravelCenters of America LLC, or TA); Adam Portnoy serves as a managing trustee of a majority of those companies; and RMR provides both business and property management services to us under a business management agreement and a property management agreement and provides management services to other companies, including TA.

We and the other six shareholders of Affiliates Insurance Company, or AIC, each currently own approximately 14.29% of the outstanding equity of AIC.  The other shareholders of AIC are RMR and five other companies, including TA, to which RMR provides management services.  All of our Trustees, all of the trustees and directors of the other publicly held AIC shareholders and nearly all of the directors of RMR currently serve on the board of directors of AIC.  RMR provides management and administrative services to AIC.  In 2010, AIC designed a combination property insurance program for us and other AIC shareholders in which AIC participated as a reinsurer. This program was modified and extended in June 2011 for a one year term.

The purchase price under the Purchase Agreement and the entry into the Management Agreements for the Cambridge Hotel and the New Orleans Hotel were approved by our Independent Trustees, and we and SAC were represented by separate counsel.  A nationally recognized valuation consultant provided certain valuation services to our Independent Trustees regarding the valuation of the Cambridge Hotel and the New Orleans Hotel and regarding the terms of the Management Agreements with SAC or an affiliate of SAC.

For more information about these and other relationships among us, our Trustees, our executive officers, TA, RMR, AIC, other companies to which RMR provides management services, and others affiliated with or related to them and about the risks which may arise as a result of those and other related person transactions and relationships, please see our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions” and “Warning Concerning Forward Looking Statements”, our Annual Report on Form 10-K for the year ended December 31, 2010, or our 2010 Annual Report, including the sections captioned “Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions” and “Warning Concerning Forward Looking Statements”, the information regarding our Trustees and executive officers and the section captioned “Related Person Transactions and Company Review of Such Transactions” in our Proxy Statement for our 2011 Annual Meeting of Shareholders dated February 22, 2011, or our Annual Meeting Proxy Statement, and our other filings with the U.S. Securities and Exchange Commission, or the SEC.  In addition, please see the “Risk Factors” section of our 2010 Annual Report for a description of risks which may arise from these transactions and relationships.  Our filings with the SEC, including our Quarterly Report, our 2010 Annual Report and our Annual Meeting Proxy Statement, are available on the SEC’s website at www.sec.gov.  In addition, copies of certain of our agreements with these parties are also publicly available as exhibits to our public filings with the

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SEC and accessible at the SEC’s website, including our business management agreement and property management agreement with RMR and our leases and amendments to those leases with TA.

WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS CURRENT REPORT CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS.  ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS.  THESE FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR VARIOUS REASONS, SOME OF WHICH ARE BEYOND OUR CONTROL.  FOR EXAMPLE:

·THIS CURRENT REPORT STATES THAT THE PURCHASE AGREEMENT IS EXPECTED TO RESULT IN OUR ACQUISITION OF ENTITIES WHICH OWN THE CAMBRIDGE HOTEL AND LEASE THE NEW ORLEANS HOTEL.  THESE ACQUISITIONS ARE PART OF A COMPLEX TRANSACTION INVOLVING, AMONG OTHER THINGS, A MERGER BETWEEN SONESTA AND SAC’S SUBSIDIARY.  A HIGHER BID MAY BE RECEIVED BY SONESTA, WHICH COULD RESULT IN THE TERMINATION OF THE MERGER AGREEMENT, OR CERTAIN CONDITIONS TO THE MERGER MAY NOT BE SATISFIED, WHICH COULD ALSO RESULT IN THE TERMINATION OF THE MERGER AGREEMENT.  IF THE MERGER DOES NOT OCCUR, WE WILL NOT ACQUIRE THESE HOTELS.  WE HAVE LIMITED OR NO CONTROL OVER WHETHER SONESTA RECEIVES A HIGHER BID OR WHETHER THE PROPOSED MERGER OCCURS.

·THIS CURRENT REPORT STATES THAT WE EXPECT SAC AND ITS SONESTA MANAGEMENT TEAM WILL BE AVAILABLE TO OPERATE OTHER OF OUR HOTELS, INCLUDING CERTAIN HOTELS WE NOW OWN AND THAT WE ARE CONSIDERING REBRANDING AND HOTELS WE MAY SELECTIVELY ACQUIRE IN THE FUTURE.  THERE ARE NUMEROUS CONTINGENCIES ASSOCIATED WITH ANY EXPANSION OF OUR INVESTMENTS IN HOTELS BRANDED AND OPERATED AS SONESTA HOTELS.  WE ARE CURRENTLY ENGAGED IN DISCUSSIONS WITH THIRD PARTIES ABOUT SELLING OR REBRANDING CERTAIN HOTELS WE OWN, AND THOSE DISCUSSIONS MAY LEAD TO SUCCESSFUL TRANSACTIONS, THAT MAY PRECLUDE THE BRANDING AND MANAGEMENT OF THOSE HOTELS BY SAC AND ITS SONESTA MANAGEMENT TEAM; AND WE MAY BE UNABLE TO LOCATE ADDITIONAL HOTELS TO PURCHASE ON ACCEPTABLE TERMS.  MANY OF THE CONTINGENCIES ASSOCIATED WITH OUR ACQUIRING OR REBRANDING HOTELS INVOLVE DECISIONS BY THIRD PARTIES WHICH ARE BEYOND OUR CONTROL.  ALSO, WE HAVE ENTERED INTO LONG TERM BRANDING AND MANAGEMENT CONTRACTS FOR MOST OF THE HOTELS WE NOW OWN.  ACCORDINGLY, WE CANNOT PROVIDE ANY ASSURANCE THAT WE WILL PURCHASE ANY ADDITIONAL HOTELS OR THAT WE WILL OTHERWISE EXPAND THE NUMBER OF OUR HOTELS WHICH ARE MANAGED OR BRANDED AS SONESTA HOTELS.

·THIS CURRENT REPORT STATES THAT OUR INDEPENDENT TRUSTEES APPROVED THE PURCHASE PRICE UNDER THE PURCHASE AGREEMENT AND OUR ENTERING INTO MANAGEMENT AGREEMENTS WITH SAC OR ITS AFFILIATES FOR THE CAMBRIDGE HOTEL AND THE NEW ORLEANS HOTEL, THAT WE AND SAC WERE REPRESENTED BY SEPARATE COUNSEL AND THAT A NATIONALLY RECOGNIZED VALUATION CONSULTANT PROVIDED CERTAIN VALUATION SERVICES TO OUR INDEPENDENT TRUSTEES.  THE IMPLICATION OF THESE STATEMENTS MAY BE THAT THE PURCHASE PRICE AND MANAGEMENT AGREEMENT TERMS ARE AS FAVORABLE TO US AS WE COULD OBTAIN FOR SIMILAR ARRANGEMENTS FROM UNRELATED THIRD PARTIES.  HOWEVER, DESPITE THESE PROCEDURAL SAFEGUARDS, WE COULD STILL BE SUBJECTED TO CLAIMS CHALLENGING OUR ENTRY INTO THESE TRANSACTIONS BECAUSE OF THE MULTIPLE RELATIONSHIPS AMONG US AND RMR AND THEIR RELATED PERSONS AND ENTITIES; AND DEFENDING SUCH CLAIMS COULD BE

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EXPENSIVE AND DISTRACTING TO MANAGEMENT EVEN IF SUCH CLAIMS ARE WITHOUT MERIT.

THE INFORMATION CONTAINED ELSEWHERE IN THIS CURRENT REPORT OR IN OUR 2010 ANNUAL REPORT, INCLUDING UNDER THE CAPTION “RISK FACTORS” THEREIN, AND IN OUR FILINGS WITH THE SEC, OR INCORPORATED HEREIN OR THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE AT THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

IMPORTANT ADDITIONAL INFORMATION

IN CONNECTION WITH THE PROPOSED MERGER, WE EXPECT THAT SONESTA WILL FILE RELEVANT MATERIALS WITH THE SEC, INCLUDING A PROXY STATEMENT.  INVESTORS AND SECURITY HOLDERS OF SONESTA ARE URGED TO READ THESE DOCUMENTS (WHEN THEY BECOME AVAILABLE) AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SONESTA, THE PROPOSED TRANSACTIONS AND THE PARTIES TO THE PROPOSED TRANSACTIONS.  INVESTORS AND SECURITY HOLDERS MAY OBTAIN THESE DOCUMENTS (AND ANY OTHER DOCUMENTS FILED BY SONESTA, SAC OR US WITH THE SEC) FREE OF CHARGE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.  IN ADDITION, THE DOCUMENTS FILED WITH THE SEC BY SONESTA MAY BE OBTAINED FREE OF CHARGE BY DIRECTING SUCH REQUEST TO: BOY VAN RIEL, VICE PRESIDENT AND TREASURER OF SONESTA AT (617) 421-5444, OR BY ACCESSING SONESTA’S INVESTOR INFORMATION WEBSITE AT HTTP://WWW.SONESTA.COM/CORPORATE/INDEX.CFM?FA=CORPORATE.INVESTORINFORMATION.  INVESTORS AND SECURITYHOLDERS ARE URGED TO READ THE SONESTA PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED MERGER.

SONESTA, SAC AND US AND EACH OF THEIR AND OUR RESPECTIVE DIRECTORS, TRUSTEES AND EXECUTIVE OFFICERS MAY BE DEEMED TO BE PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM SONESTA’S STOCKHOLDERS IN RESPECT OF THE PROPOSED MERGER.  STOCKHOLDERS MAY OBTAIN INFORMATION REGARDING PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM SONESTA’S STOCKHOLDERS IN RESPECT OF THE PROPOSED MERGER, AND THEIR RESPECTIVE INTERESTS WITH RESPECT TO THE PROPOSED MERGER, BY READING THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS REGARDING THE PROPOSED TRANSACTIONS, WHEN THEY ARE FILED WITH THE SEC.

Item 8.01  Other Events.

On November 3, 2011, we issued a press release announcing, among other things, the execution of the Purchase Agreement.  A copy of the press release is attached to this Current Report as Exhibit 99.1.

Item 9.01.  Financial Statements and Exhibits.

(d)Exhibits

10.1Purchase Agreement, dated November 2, 2011, among Property Acquisition Corp. (a/k/a Sonesta Acquisition Corp.), PAC Merger Corp., and Hospitality Properties Trust.

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10.2Form of Management Agreement between Sonesta Acquisition Corp. or an affiliate and a subsidiary of Hospitality Properties Trust.

10.3Form of Pooling Agreement among the parties to Management Agreements.

99.1Press release issued on November 3, 2011 by Hospitality Properties Trust.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HOSPITALITY PROPERTIES TRUST
	By:	/s/ Mark L. Kleifges
	Name:	Mark L. Kleifges
	Title:	Treasurer and Chief Financial Officer
Dated: November 8, 2011

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EX-10.1

Exhibit 10.1

EXECUTION COPY

PURCHASE AGREEMENT

Dated as of November 2, 2011

among

PROPERTY ACQUISITION CORP.

(a/k/a SONESTA ACQUISITION CORP.),

PAC MERGER CORP.

as Sellers

and

HOSPITALITY PROPERTIES TRUST,

as Purchaser

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	1
1.01 Defined Terms		1
1.02 Other Interpretive Provisions		4
ARTICLE II	PURCHASE AND SALE	5
ARTICLE III	CONDITIONS PRECEDENT TO ADVANCE	5
ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF SELLERS	6
4.01 Existence, Qualification and Power; Subsidiaries		6
4.02 Authorization; No Contravention		6
4.03 Governmental Authorization; Other Consents		6
4.04 Binding Effect		6
4.05 Litigation		6
4.06 Compliance with Laws		7
ARTICLE IV-A		7
REPRESENTATIONS AND WARRANTIES OF PURCHASER		7
ARTICLE V	AFFIRMATIVE COVENANTS	7
5.01 Merger Documents		7
5.02 Other Information		7
5.03 Notices		8
5.04 Payment of Obligations		8
5.05 Preservation of Existence, Etc.		8
5.06 Compliance with Laws		8
5.07 Inspection Rights		8
5.08 Use of Proceeds		9
5.09 Restructuring		9
ARTICLE VI	NEGATIVE COVENANTS	10
6.01 Fundamental Changes		10
6.02 Indebtedness		10
6.03 Conduct of Business		10
ARTICLE VII	EVENTS OF DEFAULT AND REMEDIES	10
7.01 Events of Default		10
7.02 Remedies Upon Event of Default		11
ARTICLE VIII	MISCELLANEOUS	12
8.01 Amendments, Etc.		12
8.02 Notices; Effectiveness; Electronic Communication		12
8.03 No Waiver; Cumulative Remedies		12
8.04 Expenses; Indemnity; Damage Waiver		13
8.05 Revival		14
8.06 Successors and Assigns; Third Party Beneficiaries		14

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TABLE OF CONTENTS

	Page
8.07 Counterparts; Integration; Effectiveness	14
8.08 Survival of Representations and Warranties	14
8.09 Severability	14
8.10 Governing Law	15
8.11 Arbitration	15
8.12 Remedies	16
8.13 Statement Concerning Limited Liability	17

Exhibits

Exhibit AMerger Agreement

ii

PURCHASE AGREEMENT

This PURCHASE AGREEMENT, dated as of November 2, 2011, among PROPERTY ACQUISITION CORP. (a/k/a SONESTA ACQUISITION CORP), a Maryland corporation (“Parent”), PAC MERGER CORP., a New York corporation and a wholly-owned subsidiary of Parent (“Merger Sub” and with Parent, “Sellers”) and HOSPITALITY PROPERTIES TRUST, a Maryland real estate investment trust (“Purchaser”).

RECITALS:

Sellers intend to enter into an Agreement and Plan of Merger by and among Sellers and Sonesta International Hotels Corporation, a New York corporation (“Target”), in the form of Exhibit A attached (the “Merger Agreement”),  pursuant to which Merger Sub will, subject to the terms and conditions set forth therein, be merged with and into Target (the “Merger”).

Immediately following consummation of the Merger, Sellers intend to restructure Target as set forth in Section 5.09, transfer certain assets and liabilities of Target to Parent (or a subsidiary), and upon completion of the restructuring, Purchaser desires to purchase and Sellers desire to sell, all of the issued and outstanding capital stock of Target.

To facilitate its purchase of the issued and outstanding capital stock of Target, Purchaser has agreed, on the terms and conditions of this Agreement, to advance Sellers the purchase price therefor, which Sellers will use for the purpose of consummating the transactions contemplated by the Merger Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agree as follows:

ARTICLE I
DEFINITIONS

1.01Defined Terms.

Capitalized terms used herein without definition are used with the meanings given in the Merger Agreement.  As used in this Agreement, the following terms have the meanings set forth below:

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Agreement” means this Purchase Agreement.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close, or are in fact closed in, the Commonwealth of Massachusetts.

“Cambridge Loan” means the Term Loan Agreement dated as of February 12, 2010, by and among the Trustees of Charterhouse of Cambridge Trust, Sonesta of Massachusetts, Inc., as borrower, and RBS Citizens, National Association, as lender.

“Closing Date” means the Business Day on which the Restructuring is consummated.

“Contractual Obligation” means, as to any Person, any provision of any agreement, instrument or other undertaking (including any security issued by such Person) to which such Person is a party or by which it or any of its property is bound.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

“Covenant Compliance Period” means the period from the date of this Agreement until (a) the date the Merger Agreement is validly terminated by its terms (or if earlier, the date that Target notifies Sellers that it is no longer willing to execute the Merger Agreement) if the Purchase Price has not been advanced, otherwise (b) the Closing Date.

“Debtor Relief Law” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“Documents” means this Agreement and all other instruments and agreement executed in connection therewith.

“Effective Date” means the date the conditions in Article III are satisfied.

“Event of Default” has the meaning specified in Section 7.01.

“Final Order” means a final, non-appealable order of a court of competent jurisdiction.

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

“Governmental Authority” means the government of the United States, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Hotels” means the “Royal Sonesta Hotel Boston” and the “Royal Sonesta Hotel New Orleans”.

“Indebtedness” of any Person means, without duplication (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (iv) all obligations of such Person under any conditional sale or other title retention agreement(s) relating to property acquired by such Person, (v) all capital lease obligations of such Person, (vi) all obligations, contingent or otherwise, of such Person in respect of letters of credit, acceptances or similar extensions of

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credit, (vii) all guarantees of such Person of the type of Indebtedness described in clauses (i) through (vi) above, (viii) all Indebtedness of a third party secured by any Lien on property owned by such Person, whether or not such Indebtedness has been assumed by such Person and (ix) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any common stock of such Person.  The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer, except to the extent that the terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnitee” has the meaning specified in Section 8.04(b).

“Laws” means, collectively, all federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes, executive orders and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever.

“Merger” has the meaning specified in the Recitals.

“Merger Agreement” has the meaning specified in the Recitals.

“Merger Documents” means the Merger Agreement, the Voting Agreements, any letter of transmittal used in connection with the Merger, any agreement with the Paying Agent, and any other agreement, instrument or document setting forth terms and conditions relating to the Merger or any other transaction contemplated by the Merger Documents.

“Merger Sub” has the meaning specified in the introductory paragraph hereto.

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws; (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“Parent” has the meaning specified in the introductory paragraph hereto.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Purchase Price” has the meaning specified in Article II.

“Purchaser” has the meaning specified in the introductory paragraph hereto.

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“Responsible Officer” means any of the chief executive officer, president, chief financial officer, each executive vice president and senior vice president and the treasurer of Parent.  Any document signed by a Responsible Officer shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of Sellers and such Responsible Officer shall be conclusively presumed to have acted on behalf of Sellers.

“Restructuring” means the transactions contemplated by Section 5.09.

“Sellers” has the meaning specified in the introductory paragraph hereto; however, from and after the consummation of the Merger, the term “Sellers” shall mean and include Target.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity the accounts of which are consolidated with the accounts of such Person in such Person’s consolidated financial statements prepared in accordance with GAAP.

“Target” has the meaning specified in the introductory paragraph hereto.

“Target Stock” has the meaning specified in Article II.

“Target Subsidiaries” means Charterhouse of Cambridge Trust, a Massachusetts business trust and Royal Sonesta, Inc., a Louisiana corporation.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Voting Agreements” means the Voting Agreements, dated as of the date hereof, by and among Sellers and certain stockholders of Target, pursuant to which such stockholders have agreed to vote in favor of the adoption of the Merger Agreement and approval of the Merger.

1.02Other Interpretive Provisions.

With reference to this Agreement and each other Document, unless otherwise specified herein or in such other Document:

(a)The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Document, shall be construed to refer to such Document in its entirety and not to any particular provision thereof, (iv) unless otherwise specified, all references in a Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Document in which such references appear, (v) any reference to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such Law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to

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time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

Section headings herein and in the other Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Document.

ARTICLE II
PURCHASE AND SALE

(a)Subject to the terms and conditions set forth herein, in consideration of the sale, assignment and transfer to Purchaser of all of the issued and outstanding capital stock of Target (“Target Stock”), Purchaser agrees to pay Parent One Hundred and Fifty Million, Five Hundred Thousand Dollars ($150,500,000) less an amount equal to the outstanding principal, accrued interest and all other amounts then due and payable under the Cambridge Loan on the Effective Date (the “Purchase Price”).

(b)To facilitate the sale and purchase of the Target Stock, Purchaser agrees to advance the Purchase Price to Sellers on the Effective Date for the purpose of Sellers consummating the transactions contemplated by the Merger Agreement.  Purchaser will advance the Purchase Price upon (i) Sellers’ written notice given to Purchaser that the Effective Date has occurred, or (ii) delivery to Purchaser by any Person of a copy of the Certificate of Merger certified by the Department of State of the State of New York as having been duly filed pursuant to the New York Business Corporation Law, or (iii) delivery to Purchaser by any Person of a Final Order awarding specific performance to Target compelling Sellers to consummate the Merger.  The Purchase Price shall be deposited directly with the Paying Agent.

(c)On the Closing Date, Sellers shall sell, assign and transfer to Purchaser the Target Stock, free and clear of all Liens, encumbrances or restrictions (other than the Cambridge Loan and those arising under applicable securities laws or otherwise consented to by Purchaser).

ARTICLE III
CONDITIONS PRECEDENT TO ADVANCE

The following are conditions precedent to Purchaser advancing the Purchase Price to Sellers:

(a)Purchaser shall have received counterparts of this Agreement executed by Sellers;

(b)each Seller and Target shall have entered into the Merger Agreement and Purchaser shall have received a counterpart executed by Sellers and Target;

(c)the prior due and valid authorization, execution and delivery of valid and binding Voting Agreements in favor of Sellers by stockholders of Target who own not less than a majority of the total number of outstanding shares of the Class A common stock of Target, par value $0.80 per share, of such shares on a fully diluted basis (which shall mean, as of any time, the number of such shares outstanding, together with all such shares (if any) which Target would be required to issue pursuant to any then outstanding warrants, options, benefit plans or obligations or securities convertible or exchangeable into such shares or otherwise); and

(d)either of the following shall have occurred:

(i)the conditions to Sellers’ obligations to effect the Merger set forth in Article VII of the Merger Agreement shall have been satisfied or waived by Sellers; or

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(ii)a Final Order is issued awarding specific performance to Target compelling Sellers to consummate the Merger.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers represent and warrant, jointly and severally, to Purchaser:

4.01Existence, Qualification and Power; Subsidiaries.

(a)Each Seller (i) is validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, and (ii) has all requisite corporate power and authority to execute, deliver and perform its obligations under the Documents.

(b)Prior to the consummation of the Merger, neither Seller nor any Subsidiary of a Seller has conducted any business or incurred any obligations or liabilities to any Person other than in connection herewith and the transactions contemplated by the Merger Documents.

4.02Authorization; No Contravention.

The execution, delivery and performance by each Seller of the Documents has been duly authorized by all necessary corporate action, and does not and will not (a) contravene the terms of either Seller’s Organization Documents; (b) to the knowledge of Sellers, conflict with or result in any breach or contravention of, or require any payment to be made under (i) any Contractual Obligation to which a Seller is party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which a Seller is subject; or (c) to the knowledge of Sellers, violate any Law.

4.03Governmental Authorization; Other Consents.

No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by Sellers of this Agreement or any other Document except as have been obtained or would not reasonably be expected to result in an Event of Default.

4.04Binding Effect.

This Agreement has been, and each other Document, when executed and delivered, will have been, duly executed and delivered by Sellers.  This Agreement constitutes, and each other Document when so executed and delivered will constitute, a legal, valid and binding obligation of Sellers, enforceable against Sellers in accordance with their terms.

4.05Litigation.

There are no actions, suits, proceedings, claims, investigations or disputes pending or, to the knowledge of Sellers, threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, by or against a Seller or any of its properties or revenues or, to the knowledge of Sellers, against Target or against any of its properties or revenues that, either individually or in the aggregate would reasonably be expected to result in an Event of Default, excluding any matters disclosed on the Schedules to the Merger Agreement.

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4.06Compliance with Laws.

Each Seller and each of its Subsidiaries is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to result in an Event of Default.

ARTICLE IV-A

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Sellers that Purchaser has, and the Effective Time will have, available lines of credit or other sources of available funds sufficient to enable Purchaser to fund the Purchase Price.

ARTICLE V
AFFIRMATIVE COVENANTS

During the Covenant Compliance Period,

5.01Merger Documents.

Sellers shall use commercially reasonable efforts to cause the Merger to be consummated on the terms and conditions of the Merger Agreement.  Without limiting the foregoing:

(a)Sellers will not amend or waive any term or condition of any Merger Document which would, in the reasonable judgment of the Purchaser, adversely affect the ability of Sellers to sell, assign and transfer to Purchaser the Target Stock as contemplated by Article II.

(b)To the extent any determination is required to be made by a Seller under a Merger Document, which would affect the ability of Sellers to sell, assign and transfer to Purchaser the Target Stock as contemplated by Article II, including whether any item is “material” or would have a “Company Material Adverse Effect” or whether any item has been delivered in conformity with the requirements of a Merger Document, Sellers will make such determination only as consented to by Purchaser.

5.02Other Information.

(a)Sellers will deliver to Purchaser, promptly upon request, in form and detail satisfactory to Purchaser, any information regarding the business, financial or corporate affairs of Sellers, Target (to the extent then in the possession of Seller or otherwise required to be made available to a Seller under the terms of the Merger Documents) or compliance with the terms of the Documents, as Purchaser may from time to time reasonably request.

(b)Sellers will deliver to Purchaser, promptly upon receipt thereof, any notices given by Target under the Merger Documents, any requests for waiver or amendment of any Merger Document, and any other notices or correspondence (including letters of transmittal) received by Sellers in connection with the transactions contemplated by the Merger Document from any Governmental Authority and or any other Person.

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5.03Notices.

Sellers will promptly notify Purchaser of:

(a)the occurrence of any Default of which Sellers obtain actual knowledge; and

(b)any matter of which Sellers obtain actual knowledge and that has resulted or could reasonably be expected to result in a material adverse effect on the ability of Sellers to perform their obligations under any Document.

Each notice pursuant to this Section 5.03 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action Sellers have taken and propose to take with respect thereto.

5.04Payment of Obligations.

Sellers and each of their Subsidiaries will pay and discharge as the same shall become due and payable, all their obligations and liabilities, including (a) all Tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by a Seller or a Subsidiary; and (b) all other liabilities, as and when due and payable.

5.05Preservation of Existence, Etc.

Except for the Merger, each Seller and each Subsidiary of a Seller will preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization; and, except to the extent contemplated by the Restructuring or failure to do so could not reasonably be expected to result in an Event of Default, take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business.

5.06Compliance with Laws.

Each Seller and each Subsidiary of a Seller will comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to result in an Event of Default.

5.07Inspection Rights.

Each Seller and each Subsidiary of a Seller will permit representatives and independent contractors of Purchaser to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of Sellers and at such reasonable times during normal business hours upon reasonable advance notice to Sellers; provided, however, that when an Event of Default exists, Purchaser (or any of its representatives or independent contractors) may do any of the foregoing at the expense of Sellers at any time during normal business hours and without advance notice.

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5.08Use of Proceeds.

Sellers will use the Purchase Price solely for the purpose of consummating the transactions contemplated by the Merger Agreement.

5.09Restructuring.

Immediately following the consummation of the Merger and satisfaction in full of Sellers’ obligations to pay the Merger Consideration and on the Closing Date of the Merger, Parent will, on terms and conditions satisfactory to Sellers and Purchaser:

(a)cause any Indebtedness of Target or the Target Subsidiaries held by Parent or another Subsidiary of Parent to be contributed to the capital of Target;

(b)cause Target to transfer to Parent (or another Subsidiary of Parent) (i) all liabilities of Target and of the Target Subsidiaries (other than the Cambridge Loan, income taxes, taxes related to the retained assets and certain payables and other liabilities, including certain personal property leases and contracts),  (ii) all assets of Target (other than the equity interests of the Target Subsidiaries, which shall be retained by Target) and (iii) all assets of the Target Subsidiaries (other than the fee and leasehold interest in real estate representing the interest of the Target Subsidiaries in the Hotels and the related furniture, fixtures and equipment, inventories, working capital and certain other assets which shall be retained by the Target Subsidiaries), or as may otherwise be agreed upon by Parent and Purchaser, in exchange for a portion of the capital stock of Target then owned by Parent;

(c)take such action as is necessary to ensure that as of the Closing Date, the equity interests of Target and the Target Subsidiaries are free and clear of all Liens, encumbrances and restrictions (other than those arising under the Cambridge Loan, applicable securities laws or otherwise consented to by Purchaser);

(d)take such action as is necessary to ensure that neither Target nor either of the Target Subsidiaries has any employees;

(e)cause the management Subsidiary of Parent to enter into a Management Agreement with a Subsidiary of Purchaser for the management of Royal Sonesta Hotel Boston and to enter into a Sub-Management with a Subsidiary of Purchaser for the management of Royal Sonesta Hotel New Orleans, in each case, on terms acceptable to Purchaser; and

(f)take all action necessary to cause Parent to own the Target Stock free and clear of any Liens, encumbrances or other restrictions (other than the Cambridge Loan and those arising under applicable securities laws or otherwise consented to by Purchaser) and Target to own all of the equity interests of the Target Subsidiaries free and clear of any Liens, encumbrances or other restrictions (other than the Cambridge Loan and those arising under applicable securities laws or otherwise consented to by Purchaser).

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ARTICLE VI
NEGATIVE COVENANTS

During the Covenant Compliance Period:

6.01Fundamental Changes.

Except for the Merger, neither Seller will merge, dissolve, liquidate, consolidate with or into another Person or permit the sale or other disposition of, or Lien on, any of their equity interests or any equity interests of any of the Target Subsidiaries after consummation of the Merger other than to effect the Restructuring and to fulfill its obligations under this Agreement.

6.02Indebtedness.

Sellers will not, and will not permit any of their Subsidiaries to, create, incur, assume, or suffer to exist any Indebtedness, except the Indebtedness of Target assumed as a result of the Merger.

6.03Conduct of Business.

No Seller or Subsidiary of a Seller shall conduct any business or incur any liabilities other than in connection with the consummation of the transactions contemplated by this Agreement or the Merger Documents.

ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES

7.01Events of Default.

The occurrence of any of the following at any time, at Purchaser’s option, shall constitute an Event of Default:

(a)Failure to Timely Restructure.  Sellers fail to timely effect the Restructuring; or

(b)Failure to Transfer or Refund.  After the Restructuring, Sellers fail (i) to sell, assign and transfer to Purchaser the Target Stock as contemplated by Article II or (ii) if the Closing under the Merger Agreement shall fail to occur, to refund the Purchase Price; or

(c)Specific Covenants.  Sellers or any Subsidiary fail to perform or observe any term, covenant or agreement applicable to it and contained in Section 5.05 or Section 5.08; or

(d)Other Defaults.  Sellers or any Subsidiary fail to perform or observe any other covenant or agreement applicable to it (not specified in subsection (a) or (b) above) contained in any Document on its part to be performed or observed and failure continues for ten (10) days after notice thereof from Purchaser; or

(e)Change in Control.  All of the equity interest of Parent shall cease to be owned by Messrs. Barry M. Portnoy and Adam D. Portnoy or Parent shall cease to own 100% of the equity interest of any of its Subsidiaries (other than Merger Sub as a result of the consummation of the Merger, or the sale, assignment and transfer to Purchaser of the Target Stock contemplated by Article II; or

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(f)Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of a Seller in any Document, or in any document delivered in connection herewith shall be incorrect in any material respect when made or deemed made, or would not be correct in all material respects on any date during the Covenant Compliance Period if made on and as of such date, and such breach is not cured within ten (10) Business Days after written notice thereof from Purchaser; or

(g)Insolvency Proceedings, Etc.  A Seller institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Seller and the appointment continues undischarged or unstayed for sixty (60) days; or any proceeding under any Debtor Relief Law relating to a Seller or to all or any material part of its property is instituted without the consent of such Seller and continues undismissed or unstayed for sixty (60) days, or an order for relief is entered in any such proceeding; or

(h)Inability to Pay Debts; Attachment.  (i) A Seller becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of a Seller and is not released, vacated or fully bonded within thirty (30) days after its issue or levy; or

(i)Litigation; Enforceability.  A Seller shall disavow, revoke or terminate (or attempt to terminate) any Document or shall otherwise challenge or contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or enforceability of this Agreement or any other Document, or this Agreement, or any other Document shall cease to be in full force and effect (except as a result of the express terms thereof).

7.02Remedies Upon Event of Default.

If Purchaser determines that an Event of Default has occurred and is continuing, Purchaser may, upon notice to Sellers, take any or all of the following actions:

(a)terminate this Agreement;

(b)seek specific performance from Sellers with respect each and every one of their covenants set forth in the Documents; and

(c)exercise all rights and remedies available to it under the Documents or at law or in equity;

provided that upon the occurrence of an Event of Default pursuant to Section 7.01(g) the obligation to advance the Purchase Price shall automatically terminate and if the Purchase Price has been advanced, Sellers shall be obligated to refund the Purchase Price without further act of Purchaser; provided, further, that, notwithstanding anything in this Agreement to the contrary, Purchaser may not take any actions provided for in subsections (a), (b) or (c) above unless (x) the Merger has been consummated and Sellers’ obligations to pay the Merger Consideration have been satisfied in full or (y) the Merger Agreement has been validly terminated.

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ARTICLE VIII
MISCELLANEOUS

8.01Amendments, Etc.

No amendment or waiver of any provision of this Agreement or any other Document, and no consent to any departure by Sellers therefrom, shall be effective unless in writing signed by Purchaser and Sellers, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  Notwithstanding the foregoing, Purchaser and Sellers may not amend or waive any provision of this Agreement or any other Document that would reasonably be expected to adversely impact the ability of Sellers to satisfy the obligation under the Merger Agreement to timely pay the Merger Consideration.

8.02Notices; Effectiveness; Electronic Communication.

(a)Notices Generally.  All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service or sent by telecopier as follows:

(i)if to a Seller, to:

c/o Property Acquisition Corp.
(a/k/a/ Sonesta Acquisition Corp.)

Two Newton Place, Suite 300

225 Washington Street

Newton, Massachusetts 02458

Attn:

Telecopy No.:

(ii)if to Purchaser, to:

Hospitality Properties Trust
Two Newton Place
255 Washington Street, Suite 300
Newton, Massachusetts 02458
Attn:  Mark L. Kleifges
Telecopy No.:  617-964-8389

Notices sent by hand or overnight courier service, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient).

(b)Change of Address, Etc.  Sellers and Purchaser may change its address or telecopier address by notice to the others as provided in this Section 8.02.

8.03No Waiver; Cumulative Remedies.

No failure by Purchaser to exercise, and no delay by Purchaser in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges

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herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

8.04Expenses; Indemnity; Damage Waiver.

(a)Costs and Expenses.  Each of Sellers and Purchaser shall pay their respective costs and expenses in connection with the diligence, preparation, negotiation, execution, delivery and administration of this Agreement and the other Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated).

(b)Indemnification by Sellers.  Sellers shall jointly and severally indemnify Purchaser and its Affiliates and their respective officers, directors, agents and employees (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, penalties, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Seller or any of their Subsidiaries arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or (ii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by a Seller or a Subsidiary, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, penalties, liabilities or related expenses (A) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or which arose from action taken or omitted after the Closing Date or the repayment of the Purchase Price or (B) result from a claim brought by Sellers against an Indemnitee for breach in bad faith or a material breach of such Indemnitee’s obligations hereunder or under any other Document, if Sellers have obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  Notwithstanding the foregoing, each Indemnitee shall be obligated to refund and return any and all amounts paid by Sellers under this paragraph to such Indemnitee to the extent such Indemnitee is not entitled to payment of such amounts in accordance with the terms hereof.

(c)Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable Law, Sellers shall not assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby.

(d)Payments.  All amounts due under this Section 8.04 shall be payable not later than twenty (20) days after demand therefor.

(e)Capitalization.  Sellers represent and covenant that on the Effective Date, Parent will be capitalized with Twenty-Five Million Dollars ($25,000,000), at least half of which will be represented by cash consideration paid for shares of common stock of Parent.

(f)Survival.  The agreements in this Section 8.04 shall survive the termination of this Agreement and the sale, assignment and transfer to Purchaser of the Target Stock or the repayment of the Purchase Price.

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8.05Revival.

To the extent that the sale, assignment and transfer to Purchaser of the Target Stock, or repayment of the Purchase Price, is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Purchaser in its commercially reasonable discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then the obligation of Sellers, or part thereof, originally intended to be satisfied shall be revived and continued in full force and effect as if such transfer or repayment had not been made.

8.06Successors and Assigns; Third Party Beneficiaries.

The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that Sellers may not assign or otherwise transfer any of their rights or obligations hereunder without the prior written consent of Purchaser.  Except as set forth in the following sentence, nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, and to the extent expressly contemplated hereby, Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.  Purchaser and Sellers acknowledge that Target has relied on the obligations of Purchaser under this Agreement, and that Target is an express third party beneficiary hereof and is entitled to enforce this Agreement as if a Seller.

8.07Counterparts; Integration; Effectiveness.

This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  The Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic image scan transmission (e.g., “pdf” via e-mail) shall be effective as delivery of a manually executed counterpart of this Agreement.

8.08Survival of Representations and Warranties.

All representations and warranties made hereunder and in any other Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by Purchaser, regardless of any investigation made by Purchaser or on its behalf and notwithstanding that Purchaser may have had notice or knowledge of any Default.  Such representations and warranties shall terminate following the consummation of the transactions contemplated hereby on the Closing Date.

8.09Severability.

If any provision of the Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of the Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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8.10Governing Law.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.

8.11Arbitration.

(a)Disputes.  Any disputes, claims or controversies between or among the parties hereto (i) arising out of or relating to this Agreement or the transactions contemplated hereby, or (ii) brought by or on behalf of any shareholder of Purchaser or a Seller (which, for purposes of this Section 8.11, shall mean any shareholder of record or any beneficial owner of shares in either Purchaser or a Seller, or any former shareholder of record or beneficial owner of shares of Purchaser or a Seller) either on his, her or its owner behalf, on behalf of either Purchaser or a Seller or on behalf of any series of class of shares of either Purchaser or a Seller against Purchaser or a Seller or any trustee, director officer, manager (including Reit Management & Research LLC or its successor), agent or employee of Purchaser or a Seller, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration agreement (all of which are referred to as “Disputes”) or relating in any way to such a Dispute or Disputes, shall on the demand of any party to such Dispute be resolved through binding and final Arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as modified herein.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.

(b)Selection of Arbitrators.  There shall be three arbitrators.  If there are only two parties to the Dispute, each party shall select one arbitrator within 15 days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of such parties.  If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within 15 days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA.  If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within 15 days thereafter, one of the three arbitrators it had proposed as the second arbitrator.  The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within 15 days of the appointment of the second arbitrator.  If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

(c)Location of Arbitration.  The place of Arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

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(d)Scope of Discovery.  There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.

(e)Arbitration Award.  In rendering an award or decision (the “Arbitration Award”), the arbitrators shall be required to follow the laws of the State of New York.  Any arbitration proceedings or Arbitration Award rendered hereunder and the validity, effect and interpretation of this Section 8.11 shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  The Arbitration Award shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of law on which it is based.

(f)Costs.  Except to the extent expressly provided by this Section 8.11 or as otherwise agreed between the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees).  Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

(g)Final Judgment.  The Arbitration Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between such parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon the Arbitration Award may be entered in any court having jurisdiction.  To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this Section 8.11 to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

(h)Payment.  Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  The party against which the Arbitration Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Arbitration Award or such other date as the Arbitration Award may provide.

(i)Beneficiaries.  This Section 8.11 is intended to benefit and be enforceable by the shareholders, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

8.12Remedies.  The parties hereto acknowledge and agree that the failure of any party to perform its agreements and covenants hereunder will cause irreparable and immediate harm to Target and its stockholders, for which damages, even if available will not be an adequate remedy.  It is accordingly agreed that the parties hereto (a) will waive, in any action for specific performance, the defense of adequacy of a remedy at Law and (b) shall be entitled, in addition to any other remedy to which they may be entitled at Law or in equity, to compel specific performance of this Agreement. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

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8.13Statement Concerning Limited Liability.

THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING HOSPITALITY PROPERTIES TRUST, DATED AUGUST 21, 1995, AS AMENDED AND SUPPLEMENTED, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HOSPITALITY PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HOSPITALITY PROPERTIES TRUST. ALL PERSONS DEALING WITH HOSPITALITY PROPERTIES TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF HOSPITALITY PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

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Each of the parties hereto has caused a counterpart of this Agreement to be duly executed as of the date first above written.

HOSPITALITY PROPERTIES TRUST
By:	/s/ John G. Murray
Name:	John G. Murray
Title:	President
PROPERTY ACQUISTION CORP.
(a/k/a SONESTA ACQUISITION CORP.)
as Seller
By:	/s/ Jennifer B. Clark
Name:	Jennifer B. Clark
Title:	Secretary
PAC MERGER CORP.
as Seller
By:	/s/ Jennifer B. Clark
Name:	Jennifer B. Clark
Title:	Secretary

Signature Page to Purchase Agreement

EXHIBIT A

THE MERGER AGREEMENT

FORM OF

AGREEMENT AND PLAN OF MERGER

by and among

PROPERTY ACQUISITION CORP.

(a/k/a SONESTA ACQUISITION CORP.),

PAC MERGER CORP.

and

SONESTA INTERNATIONAL HOTELS CORPORATION

Dated

November 2, 2011

TABLE OF CONTENTS

		Page
Index of Defined Terms		Index – i
ARTICLE I
THE MERGER
Section 1.1	The Merger	2
Section 1.2	Effective Time	2
Section 1.3	Closing	3
Section 1.4	Directors and Officers of the Surviving Corporation	3
Section 1.5	Subsequent Actions	3
Section 1.6	Stockholders’ Meeting	3
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1	Conversion of Capital Stock	5
Section 2.2	Paying Agent; Surrender of Shares	6
Section 2.3	Withholding	7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1	Organization	8
Section 3.2	Subsidiaries and Affiliates	10
Section 3.3	Capitalization	11
Section 3.4	Authorization; Validity of Agreement; Company Action	11
Section 3.5	Board Approvals	12
Section 3.6	Required Vote	12
Section 3.7	Consents and Approvals; No Violations	12
Section 3.8	Company SEC Documents and Financial Statements	13
Section 3.9	Code of Ethics	16
Section 3.10	Absence of Certain Changes	16
Section 3.11	No Undisclosed Liabilities	16
Section 3.12	Litigation; Orders	16
Section 3.13	Employee Benefit Plans; ERISA	17
Section 3.14	Taxes	19
Section 3.15	Material Contracts	24
Section 3.16	Real and Personal Property	27

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Section 3.17	Intellectual Property	29
Section 3.18	Material Artwork	31
Section 3.19	Labor Matters	32
Section 3.20	Compliance with Laws	34
Section 3.21	Environmental Matters	35
Section 3.22	Insurance	37
Section 3.23	Certain Business Practices	37
Section 3.24	Opinion of Financial Advisor	38
Section 3.25	Brokers	38
Section 3.26	State Takeover Statutes	38
Section 3.27	Related Party Transactions	39
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE MERGER SUB
Section 4.1	Organization	39
Section 4.2	Authorization; Validity of Agreement; Necessary Action	39
Section 4.3	Consents and Approvals; No Violations	39
Section 4.4	Brokers	40
Section 4.5	Available Funds	40
Section 4.6	Interim Operations of Parent and Merger Sub	41
ARTICLE V
INTERIM OPERATING COVENANTS
Section 5.1	Interim Operations of the Company	41
Section 5.2	No Solicitation	44
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1	Notification of Certain Matters	48
Section 6.2	Access; Confidentiality	48
Section 6.3	Publicity	49
Section 6.4	Proxy Statement	49
Section 6.5	Insurance and Indemnification	49
Section 6.6	Further Action; Reasonable Best Efforts	50
Section 6.7	State Takeover Laws	51
Section 6.8	Stockholder Litigation	51
Section 6.9	Financial Information	51
Section 6.10	Company SEC Documents	51
Section 6.11	Compensation Arrangements; 401(k); Section 16	52
Section 6.12	Funding	53

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Section 6.13	Use of Sonesta Name	54
Section 6.14	Tax Matters	54
ARTICLE VII
CONDITIONS
Section 7.1	Conditions to Each Party’s Obligations to Effect the Merger	54
Section 7.2	Conditions to the Obligations of Parent and Merger Sub to Effect the Merger	55
Section 7.3	Conditions to the Obligation of the Company to Effect the Merger	56
ARTICLE VIII
TERMINATION
Section 8.1	Termination	57
Section 8.2	Notice of Termination; Effect of Termination	58
ARTICLE IX
MISCELLANEOUS
Section 9.1	Amendment and Modification	61
Section 9.2	Non-survival; Investigation	61
Section 9.3	Expenses	61
Section 9.4	Certain Definitions	61
Section 9.5	Notices	64
Section 9.6	Interpretation	65
Section 9.7	Jurisdiction	66
Section 9.8	Service of Process	66
Section 9.9	Remedies	66
Section 9.10	Counterparts	67
Section 9.11	Entire Agreement; No Third-Party Beneficiaries	67
Section 9.12	Severability	67
Section 9.13	Governing Law	68
Section 9.14	Waiver of Jury Trial	68
Section 9.15	Assignment	68
Section 9.16	Performance of Merger Sub	68
Section 9.17	Remedies Cumulative	68

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Index of Defined Terms

Defined Term	Page
Acquisition Agreement	47
Acquisition Proposal	61
Adverse Recommendation Change	45
Affiliates	65
Agreement	1
Anti-Bribery Laws	38
Benefit Plans	17
Book Entry Shares	6
Business Day	62
CERCLA	35
CERCLIS	35
Certificate of Merger	2
Certificates	5
Change	8
Charterhouse of Cambridge	24
Cleanup	36
Closing	3
Closing Date	3
COBRA	18
Code	62
Common Stock	11
Company	1
Company Board Recommendation	12
Company Disclosure Schedule	8
Company Financial Advisor	38
Company IP	62
Company Licensed IP	62
Company Material Adverse Effect	8
Company Owned IP	62
Company Permits	34
Company SEC Documents	13
Company Stockholder Approval	12
Company Stockholders	1
Company Stockholders’ Meeting	3
Confidentiality Agreement	45
Continuing Employee	52
Contract	13
Damages Cap	60
Effective Time	2
Employee Retention Plan	53
Employment Agreements	17

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Encumbrances	62
Environmental Claim	36
Environmental Laws	36
Equity Commitment Agreement	62
Equity Financing	40
ERISA	17
ERISA Affiliate	17
Exchange Act	13
Financial Statements	13
Foreign Benefit Plan	19
Funding	40
Funding Agreements	62
GAAP	9
Governmental Entity	13
Hazardous Substances	37
HPT	63
HPT Purchase Agreement	63
HPT Related Persons	60
Intellectual Property	62
Investors	63
IP Contracts	63
knowledge	63
Law	63
Leased Real Property	28
Litigation	16
Massachusetts Courts	66
Material Artworks	31
Material Contracts	27
Merger	1
Merger Consideration	5
Merger Sub	1
Merger Sub Common Stock	5
Multiemployer Pension Plans	17
Nasdaq	13
NPL	35
NYBCL	2
Order	63
Outside Date	57
Owned Real Property	28
Parent	1
Paying Agent	6
Pension Plans	17
Permitted Encumbrances	27
Person	10
Proxy Statement	4
Purchase Funding	40

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Real Property	28
Real Property Lease	28
Reimbursable Expenses	59
Related Person	39
Reorganizations	63
Representatives	44
SEC	3
Securities Act	63
Self-Insurance Arrangements	37
Shares	1
Subsidiary	10
Superior Proposal	63
Surviving Corporation	2
Tax	64
Tax Return	64
Taxable	64
Taxes	64
Taxing Authority	64
Termination Fee	59
Title IV Plan	18
Transactions	11
Treasury Regulations	64
Voting Debt	11
WARN Act	33

iii

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this “Agreement”), dated as of November 2, 2011, by and among Property Acquisition Corp. (a/k/a Sonesta Acquisition Corp.), a Maryland corporation (“Parent”), PAC Merger Corp., a New York corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and Sonesta International Hotels Corporation, a New York corporation (originally incorporated as the Childs Company) (the “Company”).

WHEREAS, it is proposed that, on the terms and subject to the conditions set forth in this Agreement, Merger Sub shall merge with and into the Company (the “Merger”), pursuant to which each outstanding share of the Class A common stock, par value $0.80 per share, of the Company (the “Shares”) (except for Shares held in the treasury of the Company or owned by Parent, Merger Sub or any wholly owned Subsidiary of Parent or the Company) shall be converted into the right to receive the Merger Consideration; and

WHEREAS, the parties intend for the Merger to be treated as a qualified stock purchase, without a Code Section 338 election; and

WHEREAS, the Board of Directors of the Company (i) has adopted this Agreement, (ii) has determined that the Merger and the other transactions contemplated by this Agreement are advisable and in the best interests of the Company and its stockholders, and (iii) has resolved to recommend that the holders of the Shares (the “Company Stockholders”) adopt this Agreement and approve the Merger, upon the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, each of the Board of Directors of Parent and Merger Sub, and Parent as the sole stockholder of Merger Sub, has adopted this Agreement and approved the Merger on the terms and conditions set forth in this Agreement; and

WHEREAS, as an inducement to and condition to Parent’s willingness to enter into this Agreement, stockholders of the Company who hold at least a majority of the total number of Shares outstanding on a fully diluted basis are entering into a Voting Agreement with Parent and Merger Sub simultaneously with the execution of this Agreement, in substantially the form attached hereto as Exhibit A, whereby, among other things, such stockholders have agreed, upon the terms and subject to the conditions set forth therein, to vote the Shares held by such stockholders in favor of adoption of this Agreement and approval of the Merger;

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained in this Agreement, and subject to the conditions set forth herein, the parties hereto agree as follows:

ARTICLE I

THE MERGER

Section 1.1The Merger.

(a)Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, the Company and Merger Sub shall consummate the Merger, pursuant to which (i) Merger Sub shall be merged with and into the Company and the separate corporate existence of Merger Sub shall thereupon cease, (ii) the Company shall be the successor or surviving corporation in the Merger and shall continue to be governed by the Laws of the State of New York, and (iii) the separate corporate existence of the Company with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger.  The corporation surviving the Merger is sometimes hereinafter referred to as the “Surviving Corporation.”  The Merger shall have the effects set forth herein and in the applicable provisions of the New York Business Corporation Law (the “NYBCL”).

(b)At the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated in its entirety to read identically to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, and such amended and restated certificate of incorporation shall become the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of the NYBCL and such certificate of incorporation; provided, however, that at the Effective Time the certificate of incorporation of the Surviving Corporation shall be amended so that the name of the Surviving Corporation shall be “Sonesta International Hotels Corporation”.

(c)The bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation, except as to the name of the Surviving Corporation, which shall be “Sonesta International Hotels Corporation” until thereafter amended as provided by Law, the certificate of incorporation of the Surviving Corporation and such bylaws.

Section 1.2Effective Time.  Parent, Merger Sub and the Company shall cause a certificate of merger (the “Certificate of Merger”) to be executed and filed on the Closing Date with the Department of State of the State of New York as provided in the NYBCL.  The Merger shall become effective on the date and time on which the Certificate of Merger has been duly filed with the Department of State of the State of New York, or such later time as agreed upon by the parties, such time hereinafter referred to as the “Effective Time.”

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Section 1.3Closing.  The closing of the Merger (the “Closing”) will take place at 10:00 a.m., Eastern time, on a date to be specified by the parties (the “Closing Date”), subject to the following sentence, such date to be no later than the second Business Day after satisfaction or waiver of all of the conditions set forth in ARTICLE VII (excluding conditions that, by their terms, cannot be satisfied until the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, One Beacon Street, Boston, Massachusetts 02108, unless another date or place is agreed to in writing by the parties.  Notwithstanding anything herein to the contrary, the Closing Date shall not occur, and the Closing shall not take place before, January 3, 2012 without the prior written consent of Parent and if the Closing Date would be on a day that is less than two Business Days prior to the end of a calendar quarter, the Closing Date shall at Parent’s request be the first Business Day after the end of such quarter.

Section 1.4Directors and Officers of the Surviving Corporation.  The directors of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time, unless otherwise requested in writing by Parent, shall, from and after the Effective Time, be the officers of the Surviving Corporation, in each case until their respective successors shall have been duly elected, designated or qualified, or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws.

Section 1.5Subsequent Actions.  If at any time after the Effective Time the Surviving Corporation shall determine, in its sole discretion, that any actions are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of the Company or Merger Sub acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the officers and directors of the Surviving Corporation shall be authorized take all such actions as may be necessary or desirable to vest all right, title or interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

Section 1.6Stockholders’ Meeting.

(a)The Company shall, in accordance with applicable Law, the certificate of incorporation of the Company and the bylaws of the Company, duly call, give notice of, convene and hold a special meeting of the Company Stockholders (including any adjournment or postponement thereof, the “Company Stockholders’ Meeting”) as promptly as reasonably practicable after the U.S. Securities and Exchange Commission (the “SEC”) confirms that it has no comments or no further comments, as the case may be, to the Proxy Statement, for the purpose of obtaining the Company Stockholder Approval.  Any adjournments or postponements of the Company Stockholders’ Meeting or any recess of the Company Stockholders’ Meeting beyond the originally scheduled meeting date (as set forth in the Proxy Statement) shall require the prior written consent of Parent.  The Company shall use its reasonable best efforts to solicit from holders of Shares proxies in favor of adoption of this Agreement and approval of the Merger and to take all actions reasonably necessary or advisable

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to secure the approval of stockholders required by the NYBCL, the Company’s certificate of incorporation and bylaws and any other applicable Law to effect the Merger.

(b)In accordance with applicable Law, promptly after the date hereof, the Company shall prepare and file with the SEC a preliminary proxy statement relating to the Merger and this Agreement (together with any amendments and supplements thereto, the “Proxy Statement”).  Parent, Merger Sub and their counsel shall be given a reasonable opportunity to review and provide comments on the Proxy Statement before it is filed with the SEC and the Company shall consider in good faith any revisions suggested by Parent or Merger Sub.  The Company agrees to provide Parent, Merger Sub and their counsel (i) in writing with any comments or communications that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Proxy Statement promptly after the Company’s receipt of such comments, and any oral or written responses thereto and (ii) a reasonable opportunity to provide comments on the proposed response of the Company to those comments and to participate with the Company in any material discussions or meetings with the SEC.  The Company shall use its reasonable best efforts to (i) obtain and furnish the information required to be included by the SEC in the Proxy Statement, (ii) subject to the preceding sentence, respond promptly to any comments made by the SEC with respect to the Proxy Statement, (iii) cause the Proxy Statement to be mailed to its stockholders as soon as reasonably practicable, which Proxy Statement shall include all information required under applicable Law to be furnished to the Company Stockholders in connection with the Merger and the transactions contemplated by this Agreement, and shall include the Company Board Recommendation and the full text of the written opinion described in Section 3.24, and (iv) obtain the necessary approvals of this Agreement, the Merger and the transactions contemplated by this Agreement and the adoption of this Agreement by the Company Stockholders.

(c)If at any time prior to the Company Stockholders’ Meeting any information relating to Parent, Merger Sub or the Company, or any of their respective Subsidiaries, executive officers or directors, should become known to Parent or the Company which should be set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement would not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other parties hereto and the Company shall promptly file an amendment or supplement describing such information with the SEC and, to the extent required by applicable Law, disseminate such amendment or supplement to the Company Stockholders.

(d)Subject to Section 5.2(e), the Company shall, through the Board of Directors of the Company, recommend to the Company Stockholders adoption of this Agreement, including the Merger and the transactions contemplated by this Agreement, and, except as expressly permitted by this Agreement, shall not withdraw, amend or modify in a manner adverse to Parent the Company Board Recommendation.  The Company shall ensure that the Company Stockholders’ Meeting is duly called, noticed, convened, held and conducted, and that

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all proxies solicited in connection with the Company Stockholders’ Meeting are solicited in compliance with applicable Law.  Parent agrees that it will vote, or cause to be voted, all of the shares of Company common stock then owned by it, Merger Sub or any of Parent’s other Subsidiaries in favor of the adoption of this Agreement and the approval of the Merger and the other Transactions.

(e)Without limiting the generality of the foregoing, (i) the Company agrees that its obligation to duly call, give notice of, convene and hold the Company Stockholders’ Meeting, as required by this Section 1.6, shall not be affected by the withdrawal, amendment or modification of the Company Board Recommendation, and (ii) the Company agrees that its obligations pursuant to this Section 1.6 shall not be affected by the commencement, public proposal, public disclosure or communication to the Company or any Subsidiary of the Company of any Superior Proposal (as defined in Section 9.4).

ARTICLE II

CONVERSION OF SECURITIES

Section 2.1Conversion of Capital Stock.  As of the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any securities of the Company, the following shall occur:

(a)Each of the 10 outstanding shares of common stock, par value $0.01 per share (“Merger Sub Common Stock”), in the capital of Merger Sub, all of which are entitled to vote on the Merger, shall be converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation.  Prior to the Effective Time, the number of outstanding shares of Merger Sub Common Stock in the capital of Merger Sub is subject to change if Merger Sub issues, and Parent purchases, additional shares of Merger Sub Common Stock.

(b)All Shares that are owned by the Company as treasury stock and any Shares owned by Parent, Merger Sub or any other wholly owned Subsidiary of Parent or the Company shall be cancelled and retired, and no consideration shall be delivered in exchange therefor.

(c)Each outstanding Share (other than Shares to be cancelled in accordance with Section 2.1(b)) shall be converted into the right to receive $31.00 per Share, payable to the holder thereof in cash, without interest and subject to any withholding of Taxes required by applicable Law in accordance with Section 2.3 (the “Merger Consideration”).  From and after the Effective Time, all such Shares shall no longer be outstanding and shall automatically be cancelled and retired, and each holder of record of a certificate (or certificates) that immediately prior to the Effective Time represented outstanding Shares (the “Certificates”) and each holder of Shares that immediately prior to the Effective Time were not represented by

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Certificates (“Book Entry Shares”) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such Certificate or transfer of such Book Entry Shares in accordance with Section 2.2, without interest thereon.

Section 2.2Paying Agent; Surrender of Shares.

(a)Prior to the Effective Time, Merger Sub shall designate an agent (the “Paying Agent”) for the holders of Shares in connection with the Merger and to receive the funds to which holders of Shares shall become entitled pursuant to Section 2.1(c).  At the Effective Time, Parent or Merger Sub shall deposit, or shall cause to be deposited on its behalf, with the Paying Agent cash in an amount sufficient to pay the aggregate Merger Consideration required to be paid pursuant to Section 2.1(c).  Such funds shall be invested by the Paying Agent as directed in writing by Parent or the Surviving Corporation, in its sole discretion, pending payment thereof by the Paying Agent to the holders of the Shares.  Earnings from such investments shall be the sole and exclusive property of Parent and the Surviving Corporation, and no part of such earnings shall accrue to the benefit of holders of Shares.

(b)Promptly after the Effective Time (but in any event within five Business Days), Parent shall cause the Paying Agent to mail to each holder of Certificates and each holder of Book Entry Shares, whose Shares were converted pursuant to Section 2.1 into the right to receive the Merger Consideration, (i) a letter of transmittal (which, in the case of Certificates, shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent) and (ii) instructions for effecting the surrender of the Certificates or Book Entry Shares in exchange for payment of the Merger Consideration.  Upon (i) surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed or (ii) receipt of an “agent’s message” by the Paying Agent (or such other evidence, if any, of transfer as Parent or the Paying Agent may reasonably request) in the case of a book-entry transfer of Book Entry Shares, and such other documents as may be required by Parent or the Paying Agent, the holder of such Certificate or Book Entry Shares shall be entitled to receive in exchange therefor the Merger Consideration to which such holder is entitled pursuant to Section 2.1 and the Certificate or Book Entry Shares so surrendered shall forthwith be cancelled.  If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate or the Book Entry Share is registered, it shall be a condition precedent of payment that (x) either the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer or such Book Entry Share shall be properly transferred, and (y) the Person requesting such payment shall have paid any transfer and other Taxes required to be paid by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate surrendered or Book Entry Share transferred or shall have established to the satisfaction of the Surviving Corporation that each such Tax either has been paid or is not required to be paid.  Until surrendered as contemplated by this Section 2.2, each Certificate or Book Entry Share shall be deemed after the Effective Time to represent only the right to receive, upon surrender, the Merger Consideration, without interest thereon.

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(c)All Merger Consideration issued and paid upon the surrender for exchange of Certificates or Book Entry Shares in accordance with the terms of this ARTICLE II shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to the Shares previously represented by such Certificates or to the Book Entry Shares.  At the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company.

(d)At any time following six months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) made available to the Paying Agent and not disbursed to holders of Certificates or Book Entry Shares, and thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to abandoned property, escheat or other similar Laws) only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates or Book Entry Shares, without any interest thereon.  Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Certificate or Book Entry Shares for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(e)If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond in such amount as Parent may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent shall issue in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration with respect thereto pursuant to this Agreement.

Section 2.3Withholding.  Each of the Paying Agent, Parent, Merger Sub and the Surviving Corporation shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement such amounts as are required to be deducted or withheld therefrom under the Code or any provision of state, local or non-U.S. Tax Law or under any other applicable Law.  To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to the Persons to whom such amounts would otherwise have been paid.  The Company represents that (i) the Shares are listed on Nasdaq, and (ii) since at least January 1, 2011 there have been at least two brokers and/or dealers making a market in the Shares as contemplated by Section 1.897-9T(d)(2) of the Treasury Regulations.  For the avoidance of doubt, if the representations in the preceding sentence remain true and correct as of the Effective Time and the certificate referred to in the next sentence is timely delivered, the disposition of Shares pursuant to this Agreement shall not be subject to withholding under Section 1445 of the Code.  Prior to the day preceding, but no earlier than one week before, the Effective Time, the Company shall deliver a certificate that identifies at least two brokers and/or dealers making a market in the Shares as contemplated by Section 1.897-9T(d)(2) of the Treasury Regulations through the Effective Time.  If (i) any representation or warranty in this Section 2.3 is not true and correct in all respects or (ii) the Company fails to deliver the certificate contemplated in this Section 2.3, each of the Paying Agent, Parent, Merger Sub and the Surviving Corporation shall be entitled to deduct and

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withhold any amounts required to be withheld under Section 1445 of the Code.  For the avoidance of doubt, in the event of any such breach, (i) the breach shall not release Parent or Merger Sub from their obligations to effect the Transactions, and (ii) there shall be no withholding under Section 1445 of the Code if the Company establishes alternative reasons (reasonably satisfactory to Parent) that such withholding is not required.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Company disclosure schedule delivered to Parent concurrently with the execution of this Agreement (the “Company Disclosure Schedule”), the Company represents and warrants to Parent and Merger Sub as set forth below.  Each exception set forth in the Company Disclosure Schedule is identified by reference to, or has been grouped under a heading referring to, a specific individual section or subsection of this Agreement and relates only to such section or subsection; provided, however, that a matter disclosed with respect to one representation or warranty shall also be deemed to be disclosed with respect to each other representation or warranty to which the matter disclosed reasonably relates, but only to the extent such relationship is reasonably apparent on the face of the disclosure contained in the Company Disclosure Schedule with respect to such matter.

Section 3.1Organization.

(a)The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of New York and has full corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted.

(b)The Company is duly qualified or licensed to do business as a foreign corporation and in good standing in each jurisdiction where such qualification or licensing is necessary, except where the failure to be so qualified or licensed or in good standing, individually or in the aggregate, has not had, and would not reasonably be expected to have, a Company Material Adverse Effect.  As used in this Agreement, “Company Material Adverse Effect” means any effect, change, development, event or circumstance, or modification, deterioration or worsening of any existing effect, change, development, event or circumstance (each, a “Change”), that considered individually or together with all other Changes, is or would reasonably be expected to be materially adverse to, or has had or would reasonably be expected to have a material adverse effect on, (x) the business, financial condition, assets, liabilities or results of operations of the Company and its Subsidiaries, taken as a whole, (y) the ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement, or (z) the ability of the Company or any of its Subsidiaries to continue to conduct the management business of the Company and its Subsidiaries in Egypt as currently conducted without penalty, sanction or damage to reputation; provided, however, that, except as otherwise expressly provided below, the following Changes shall not be deemed to be

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and shall not be a Company Material Adverse Effect and shall not be taken into account when determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur:

(i)any Change in economic conditions or the industries in which the Company operates (in each case other than Changes that affect the Company and its Subsidiaries, taken as a whole, in a disproportionate manner as compared to entities operating in the industries or regions in which the Company and its Subsidiaries operate);

(ii)any Change resulting from any outbreak or escalation of hostilities or acts of war, political turmoil, sabotage or terrorism in the United States or any other country or region in the world in which the Company and its Subsidiaries operate (in each case other than Changes that affect the Company and its Subsidiaries, taken as a whole, in a disproportionate manner as compared to entities operating in the industries or regions in which the Company and its Subsidiaries operate);

(iii)any Change to the extent resulting from general economic or political conditions or the conditions of the capital markets in general in the United States or any other country or region in the world in which the Company and its Subsidiaries operate (in each case other than Changes that affect the Company and its Subsidiaries, taken as a whole, in a disproportionate manner as compared to entities operating in the industries or regions in which the Company and its Subsidiaries operate);

(iv)any Change after the date hereof resulting from the announcement of the Merger or the other transactions contemplated by this Agreement (but any such Change shall not be excluded from this definition for purposes of determining whether any of the representations and warranties in Section 3.7 or Section 3.15 is true and correct);

(v)any Change after the date hereof resulting from changes in any Laws, or United States generally accepted accounting principles (“GAAP”) or the interpretations thereof (in each case other than Changes that affect the Company and its Subsidiaries, taken as a whole, in a disproportionate manner as compared to entities operating in the industries or regions in which the Company and its Subsidiaries operate);

(vi)in and of itself, any Change resulting directly and primarily from any failure of the Company or any of its Subsidiaries to take an action if (A) the taking of such action without the consent of Parent would breach this Agreement; and (B) Parent refused to consent to such action after the Company requested Parent’s consent to such action and provided disclosure to Parent of all relevant information (but the

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underlying facts giving rise to such request shall not, by this clause (vi), be excluded from this definition);

(vii)the failure, in and of itself, of the Company to meet any internal or published projections or forecasts (but the underlying facts and cause of such failure shall not, by this clause (vii), be excluded from this definition); and

(viii)in and of itself, a decline in the market price, or change in trading volume, of the Shares (but the underlying facts and cause of such decline or change shall not, by this clause (viii), be excluded from this definition).

Without limiting the generality of the foregoing and notwithstanding anything herein to the contrary, any damage or destruction caused by earthquake, hurricane, tornado, flood, landslide, fire, acts of war, terrorist activities or other casualty affecting 50% or more of the Company’s hotel in Cambridge, Massachusetts or the Company’s hotel in New Orleans, Louisiana shall be deemed to be a “Company Material Adverse Effect.”

(c)The Company has heretofore furnished to Parent complete and correct copies of the certificate of incorporation and bylaws of the Company and each of its Subsidiaries as presently in effect.

Section 3.2Subsidiaries and Affiliates. Section 3.2 of the Company Disclosure Schedule lists each Subsidiary of the Company.  Each Subsidiary of the Company is directly and wholly owned by the Company.  Each Subsidiary of the Company is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has all requisite corporate (or similar) power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted.  Each Subsidiary of the Company is duly qualified or licensed to do business as a foreign corporation and in good standing in each jurisdiction where the concept of “good standing” is applicable and in each jurisdiction where such qualification or licensing is necessary, except where the failure to be so qualified or licensed or in good standing, individually or in the aggregate has not had, and would not reasonably be expected to have, a Company Material Adverse Effect.  As used in this Agreement: the term “Subsidiary” means with respect to any party, any corporation, partnership, limited liability company or other organization or entity, whether incorporated or unincorporated, of which (i) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such organization is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries or (ii) such party or any other Subsidiary of such party is a general partner (excluding any such partnership where such party or any Subsidiary of such party does not have a majority of the voting interest in such partnership); and the term “Person” means a natural person, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Entity or other entity or organization.

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Section 3.3Capitalization.

(a)The authorized capital stock of the Company consists of (i) 10,000,000 shares of Class A common stock, par value $0.80 per share (the “Common Stock”), (ii) 200,000 shares of Class B common stock, par value $0.80 per share, and (iii) 395,535 shares of preferred stock, par value $25.00 per share.  As of the date of this Agreement, (i) 3,698,230 Shares are issued and outstanding, all of which are entitled to vote on the Merger, (ii) no shares of Class B common stock of the Company are issued and outstanding, (iii) no shares of preferred stock of the Company are issued and outstanding, and (iv) 2,403,946 Shares are issued and owned and held beneficially and of record in the treasury of the Company.  All of the outstanding shares of the Company’s Common Stock are duly authorized, validly issued, fully paid and non-assessable.  Except as set forth in Section 3.3(a) of the Company Disclosure Schedule, (i) there is no indebtedness having general voting rights (or convertible into securities having such rights) (“Voting Debt”) of the Company or any Subsidiary of the Company issued and outstanding, (ii) there are no existing options, warrants, calls, pre-emptive rights, subscriptions or other rights, restricted stock awards, restricted stock unit awards, agreements, arrangements, understandings or commitments of any kind relating to the issued or unissued capital stock of, or other equity interests in, the Company or any Subsidiary of the Company obligating the Company or any Subsidiary of the Company to issue, transfer, register or sell or cause to be issued, transferred, registered or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any Subsidiary of the Company or securities convertible into or exchangeable for such shares or equity interests or other securities, or obligating the Company or any Subsidiary of the Company to grant, extend or enter into any such option, warrant, call, subscription or other right, restricted stock award, restricted stock unit award, agreement, arrangement, understanding or commitment, and (iii) there are no outstanding agreements, arrangements, understandings or commitments of the Company or any Subsidiary of the Company to repurchase, redeem or otherwise acquire any Shares or the capital stock of the Company or any capital stock or other equity interests in any Person or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person.  There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights with respect to the Company or any Subsidiary of the Company.

(b)There are no stockholder agreements, voting trusts or other agreements or understandings to which the Company or any Subsidiary of the Company is a party, or to the Company’s knowledge, to which any stockholder of the Company is a party, relating to the voting or disposition of any shares of the capital stock of the Company or any Subsidiary of the Company, or granting to any person or group of persons the right to elect, or to designate or nominate for election, a director to the board of directors of the Company or any Subsidiary of the Company.

Section 3.4Authorization; Validity of Agreement; Company Action.  The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions provided for or contemplated by this Agreement, including the Merger (collectively, the “Transactions”).  The execution, delivery and performance by the Company of this Agreement, and the consummation

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by it of the Transactions, have been duly and validly authorized by the Board of Directors of the Company, and no other corporate proceeding on the part of the Company is necessary to authorize the execution, delivery and performance by the Company of this Agreement and the consummation by it of the Transactions other than, with respect to the Merger, the Company Stockholder Approval.  This Agreement has been duly and validly executed and delivered by the Company and, assuming due and valid authorization, execution and delivery of this Agreement by Parent and Merger Sub, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws relating to creditors’ rights generally and to general principles of equity.

Section 3.5Board Approvals.  The Board of Directors of the Company, at a meeting duly called and held, has unanimously (i) determined that each of this Agreement and the Merger are advisable and in the best interests of the stockholders of the Company, (ii) duly and validly adopted and declared advisable this Agreement and approved the Transactions and taken all other corporate action required to be taken by the Board of Directors of the Company to authorize the consummation of the Transactions, (iii) resolved to recommend that the stockholders of the Company adopt this Agreement and approve the Merger (the “Company Board Recommendation”), and (iv) directed that the adoption of this Agreement and approval of the Merger be submitted to the stockholders of the Company, and none of the aforesaid actions by the Board of Directors of the Company has been amended, rescinded or modified.  To the knowledge of the Company, all of the Company’s directors and officers intend to vote (or cause to be voted) all Shares beneficially owned by them in favor of the adoption of this Agreement and approval of the Merger.

Section 3.6Required Vote.  The affirmative vote of the holders of two-thirds of the outstanding Shares (the “Company Stockholder Approval”) is the only vote of the holders of any class or series of the Company’s capital stock necessary to adopt this Agreement and approve the Merger.

Section 3.7Consents and Approvals; No Violations.  None of the execution, delivery or performance of this Agreement by the Company, the consummation by the Company of the Transactions or the compliance by the Company with any of the provisions of this Agreement will:

(a)conflict with or result in any breach of any provision of the certificate of incorporation or bylaws of the Company or the certificate of incorporation, bylaws or other organizational documents of any Subsidiary of the Company; or

(b)except as individually or in the aggregate are not, and would not reasonably be expected to be, material to the Company or its Subsidiaries, taken as a whole, or would not reasonably be expected to have a material adverse affect on the ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement,

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(i)require any filing by the Company or any Subsidiary of the Company with, or permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency, whether local, state, federal or foreign (a “Governmental Entity”), except in the case of this clause (b)(i) for (1) compliance with any applicable requirements of the Securities Exchange Act of 1934, as amended (together with the rules and regulations thereunder, the “Exchange Act”)), (2) any filings as may be required under the NYBCL in connection with the Merger, (3) the filing with the SEC and the Nasdaq Stock Market (“Nasdaq”), as applicable, of the Proxy Statement, and (4) any filings under applicable antitrust or competition Laws;

(ii)result in a violation or breach of or the loss of any benefit under, or constitute (with or without due notice or lapse of time or both) a default under, or give rise to any right of termination, amendment, cancellation or acceleration under, or result in the creation of any Encumbrance on the assets and properties of the Company or any Subsidiary of the Company under, any note, bond, mortgage, lien, indenture, lease, license, contract, agreement, (each, a “Contract”) to which the Company or any Subsidiary of the Company is a party or by which the Company or any Subsidiary of the Company or any of their properties or assets may be bound; or

(iii)assuming that all consents, approvals, authorizations and other actions described in clause (b)(i) above have been obtained, conflict with or violate any Law applicable to the Company or any Subsidiary of the Company or any of its Subsidiaries or any of their respective properties or assets.

Section 3.8Company SEC Documents and Financial Statements.

(a)Since January 1, 2008, the Company has timely filed with the SEC all forms, reports, schedules, statements, exhibits and other documents required by it to be filed under the Exchange Act or the Securities Act (collectively, the “Company SEC Documents”).  No Subsidiary of the Company is subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act.  As of its filing date or, if amended prior to the date of this Agreement, as of the date of the last such amendment, each Company SEC Document complied as to form in all material respects with all applicable requirements of the Exchange Act and the Securities Act, as the case may be.  As of its filing date or, if amended prior to the date of this Agreement, as of the date of the last such amendment, each Company SEC Document filed pursuant to the Exchange Act did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  All of the audited financial statements and unaudited interim financial statements of the Company included in the Company SEC Documents (collectively, the “Financial Statements”) filed prior to the date of this Agreement (i) comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC with respect thereto, (ii) have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as

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expressly disclosed in the notes thereto), and (iii) fairly present in all material respects the consolidated financial position and the results of operations and cash flows of the Company and its Subsidiaries in accordance with GAAP (subject, in the case of unaudited interim financial statements, to normal and recurring year-end adjustments, in each case as permitted by GAAP and the applicable rules and regulations promulgated by the SEC) as of the times and for the periods referred to therein.  Other than as expressly disclosed in the Company SEC Documents filed prior to the date hereof, there has been no material change in the Company’s accounting methods or principles that would be required to be disclosed in the Company’s financial statements in accordance with GAAP.  The books of account and other financial records of the Company and each of its Subsidiaries are true and complete in all material respects.

(b)The Company has heretofore furnished to Parent complete and correct copies of all comment letters from the SEC staff since January 1, 2008 through the date of this Agreement with respect to any of the Company SEC Documents.  As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to any of the Company SEC Documents.

(c)The Company is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act and the applicable listing and governance rules and regulations of Nasdaq.

(d)The Company and its Subsidiaries maintain a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that is sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures sufficient to provide reasonable assurance (i) that the Company and its Subsidiaries maintain records that in reasonable detail accurately and fairly reflect the Company’s and its Subsidiaries’ transactions and dispositions of assets, (ii) that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, (iii) that receipts and expenditures are made only in accordance with authorizations of management and the Board of Directors of the Company, and (iv) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of the Company’s and its Subsidiaries’ assets that could have a material effect on the Company’s consolidated financial statements. The Company has evaluated the effectiveness of the Company’s and its Subsidiaries’ internal control over financial reporting and, to the extent required by applicable Law, presented in any applicable Company SEC Document that is a report on Form 10-K or Form 10-Q (or any amendment thereto) its conclusions about the effectiveness of the internal control over financial reporting as of the end of the period covered by such report or amendment based on such evaluation.  The Company has disclosed to the Company’s auditors and the Audit Committee of the Board of Directors (and made available to Parent a summary of the significant aspects of such disclosure) (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a

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significant role in the Company’s or its Subsidiaries’ internal control over financial reporting.  Except as disclosed in the Company SEC Documents filed prior to the date hereof, the Company has not identified any material weaknesses in the design or operation of the Company’s or its Subsidiaries’ internal control over financial reporting.  Since December 31, 2010, there have been no material changes in the Company’s and its Subsidiaries’ internal control over financial reporting.

(e)The Company’s and its Subsidiaries’ “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the chief executive officer and chief financial officer of the Company required under the Exchange Act with respect to such reports.

(f)To the knowledge of the Company, there are no SEC or other governmental inquiries or investigations or internal investigations pending or threatened in each case regarding any accounting practices of the Company or its Subsidiaries or any malfeasance by the Company or any current or former director, officer, employee, agent, independent contractor or franchisee of the Company or any of its Subsidiaries.  Since January 1, 2008, there have been no internal investigations regarding accounting or compliance with Laws discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer, general counsel or similar legal officer, the Board of Directors of the Company or any committee thereof.

(g)Each of the principal executive officer of the Company and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company, as applicable) has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act with respect to the Company SEC Documents, and the statements contained in such certifications are true and accurate.  For purposes of this Agreement, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.  The Company does not have, and has not arranged any, outstanding “extensions of credit” to directors or executive officers within the meaning of Section 402 of the Sarbanes-Oxley Act.

(h)Neither the Company nor any Subsidiary of the Company is a party to, nor does it have any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar contract (including any contract or arrangement relating to any transaction or relationship between or among the Company or any Subsidiary of the Company, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand) or any “off-balance sheet

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arrangements” (as defined in Item 303(a) of Regulation S-K of the SEC), where the result, purpose or effect of such contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of its Subsidiaries in the Company’s published financial statements or other Company SEC Documents.

Section 3.9Code of Ethics.  The Company has adopted a code of ethics, as defined by Item 406(b) of Regulation S-K of the SEC, for senior financial officers, applicable to its principal executive officer, principal financial officer, controller or principal accounting officer, or persons performing similar functions.  The Company has promptly disclosed any change in or waiver of the Company’s code of ethics with respect to any such persons, as required by Section 406(b) of the Sarbanes-Oxley Act.  To the knowledge of the Company, there have been no violations of provisions of the Company’s code of ethics by any such persons.

Section 3.10Absence of Certain Changes.  Except as specifically contemplated by this Agreement, since December 31, 2010, (a) the Company and its Subsidiaries have conducted their business in all material respects only in the ordinary course of business consistent with past practice, (b) there has been no Change that individually or in the aggregate has had, or would reasonably be expected to have, a Company Material Adverse Effect, and (c) the Company has not taken, or failed to take, any action that, if taken, or failed to be taken, after the date of this Agreement, would violate Section 5.1.

Section 3.11No Undisclosed Liabilities.  Except for (a) liabilities reflected in the Financial Statements filed with the SEC on Form 10-K or Form 10-Q since December 31, 2010 and prior to the date of this Agreement and (b) for liabilities and obligations (i) incurred in the ordinary course of business consistent with past practice since December 31, 2010 or (ii) as have not had, and as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries have any liabilities or obligations of any nature, whether or not accrued, contingent, absolute or otherwise and whether or not required to be reflected in the Financial Statements in accordance with GAAP.

Section 3.12Litigation; Orders.  There is no suit, claim, action, charge, proceeding, including, without limitation, any arbitration proceeding or alternative dispute resolution proceeding, or investigation (“Litigation”) pending or, to the knowledge of the Company, threatened against, affecting or naming as a party thereto the Company or any Subsidiary of the Company that (i) involves an amount in controversy in excess of $100,000, (ii) seeks material injunctive or other non-monetary relief, or (iii) individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect or materially delay the consummation of the Transactions.  No judgment, decree, injunction, rule or order of any Governmental Entity is outstanding against the Company or any of its Subsidiaries or any of their respective properties or assets that, individually or in the aggregate, has had or would reasonably be expected to (i) have a Company Material Adverse Effect or (ii) materially delay the consummation of the Transactions.

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Section 3.13Employee Benefit Plans; ERISA.

(a)Except as disclosed in the Company SEC Documents filed with the SEC since January 1, 2008, there exists no employment, consulting, retention, change in control, severance, termination or similar agreement, arrangement or understanding (collectively, the “Employment Agreements”) between the Company and any individual current or former employee, officer or director of, or consultant to, the Company or any trade or business, whether or not incorporated, that, together with the Company would be deemed a “single employer” within the meaning of Section 4001(b) of ERISA or Section 414 of the Code (each, an “ERISA Affiliate”).

(b)Section 3.13(b) of the Company Disclosure Schedule contains a correct and complete list of all (i) “employee pension benefit plans” (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) (sometimes referred to herein as “Pension Plans”), including any such Pension Plans that are “multiemployer plans” (as such term is defined in Section 4001(a)(3) of ERISA) (collectively, the “Multiemployer Pension Plans”), (ii) “employee welfare benefit plans” (as defined in Section 3(1) of ERISA), and (iii) all other benefit or compensation plans, policies, programs, agreements or arrangements, including any bonus, deferred compensation, severance pay, retention, change in control, employment, consulting, pension, profit-sharing, retirement, insurance, stock purchase, stock option, incentive or equity compensation or other welfare or fringe benefit plan, program, policy, agreement, arrangement or practice sponsored, maintained, contributed to or required to be contributed to, by the Company, any Subsidiary of the Company or any ERISA Affiliate, for the benefit of any current or former employees, officers, consultants or directors of the Company or an ERISA Affiliate, or with respect to which the Company, its Subsidiaries or an ERISA Affiliate could reasonably have any liability (collectively, the “Benefit Plans”). The Company has delivered or made available to Parent and Merger Sub correct and complete copies of (i) each Benefit Plan and Employment Agreement (including all amendments thereto) or complete written descriptions of each Benefit Plan or Employment Agreement that is not otherwise in writing, (ii) the most recent annual report on Form 5500 and all schedules thereto filed with respect to each Benefit Plan, to the extent applicable, (iii) the most recent summary plan description, summary of material modifications and plan prospectus for each Benefit Plan, to the extent applicable, (iv) each current trust agreement, insurance contract or policy, group annuity contract and any other funding arrangement relating to any Benefit Plan, to the extent applicable, (v) the most recent actuarial report, financial statement or valuation report, to the extent applicable, (vi) a current Internal Revenue Service favorable determination letter or opinion letter on which the Company or its ERISA Affiliate is entitled to rely, to the extent applicable, (vii) all material correspondence to or from any Governmental Entity relating to any Benefit Plan, and (viii) all discrimination tests for each Benefit Plan for the three most recent plan years, to the extent applicable.

(c)Each Benefit Plan is and has at all times been operated and administered in all material respects in accordance with its terms and in compliance in all material respects with applicable Law, including ERISA and the Code.  Each Benefit Plan and

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Employment Agreement has been administered in good faith compliance with Section 409A of the Code to the extent applicable.

(d)Each Pension Plan intended to be “qualified” within the meaning of Section 401(a) of the Code has received a recent and currently effective determination letter (or is entitled to rely on a currently effective opinion letter) from the Internal Revenue Service that such Pension Plan is so qualified and that its related trust is exempt from taxation under Section 401(a) and 501(a) of the Code, and, to the knowledge of the Company, no condition exists that would reasonably be expected to adversely affect such qualification.

(e)None of the Benefit Plans is, and the Company, any Subsidiary of the Company and any ERISA Affiliate of either have never maintained or been a party to, or had an obligation to contribute to, (i) a “single employer plan” (as such term is defined in Section 4001(a)(15) of ERISA) subject to Section 412 of the Code or Title IV of ERISA (a “Title IV Plan”), (ii) a “multiple employer plan” or “multiple employer welfare arrangement” (as such terms are defined in ERISA), or (iii) a funded welfare benefit plan (as such term is defined in Section 419 of the Code).  There are no unpaid contributions due prior to the date of this Agreement with respect to any Benefit Plan that are required to have been made under the terms of such Benefit Plan, any related insurance contract or any applicable Law and all contributions due have been timely made.

(f)Neither the Company, any Subsidiary of the Company, nor any ERISA Affiliate has engaged in a “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) or any other breach of fiduciary responsibility with respect to any Benefit Plan that reasonably could be expected to subject the Company, any Subsidiary of the Company or any ERISA Affiliate to any material tax or penalty.

(g)With respect to any Benefit Plan: (i) no filing, application or other matter is pending with the Internal Revenue Service, the United States Department of Labor or any other Governmental Entity, and (ii) there is no action, suit, audit, investigation or claim pending, or to the Company’s knowledge, threatened or anticipated, other than routine claims for benefits.  There is no contract or arrangement, plan or agreement by or with the Company or any Subsidiary of the Company (including Benefit Plans and Employment Agreements) covering any person that, individually or collectively, could give rise to the payment of any amount by the Company or any Subsidiary of the Company that would not be deductible by the Company by reason of Section 280G or Section 162(m) of the Code.  No Benefit Plan or Employment Agreement provides for any gross-up or similar payment with respect to Taxes which may be incurred in connection therewith.

(h)The Company, its Subsidiaries and any ERISA Affiliates of either have no obligations to provide any health benefits or other non-pension benefits (whether or not insured) to retired or other former employees, directors or consultants, except as specifically required by Part 6 of Title I of ERISA (“COBRA”).

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(i)Neither the negotiation or the execution of this Agreement nor the consummation of any of the transactions contemplated hereby will, either alone or in combination with another event, (i) entitle any current or former employee, director or consultant of the Company or any Subsidiary of the Company to any payment or benefit (or result in the funding of any such payment or benefit) or result in any forgiveness of indebtedness with respect to any such persons, (ii) increase the amount of any compensation, equity award or other benefits otherwise payable by the Company or any Subsidiary of the Company, (iii) result in the acceleration of the time of payment, funding or vesting of any compensation, equity award or other benefits, or (iv) result in the imposition of any restriction on the ability to amend or terminate any Benefit Plan or Employment Agreement.

(j)With respect to each Benefit Plan that is subject to the law of any jurisdiction outside the United States (each, a “Foreign Benefit Plan”): (i) all employer and employee contributions to each Foreign Benefit Plan required by Law or by the terms of such Foreign Benefit Plan have been timely made, or, if applicable, accrued, in accordance with applicable accounting practices; (ii) the fair market value of the assets of each funded Foreign Benefit Plan, the liability of each insurer for any Foreign Benefit Plan funded through insurance or the book reserve established for any Foreign Benefit Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, as of the Closing, with respect to all current and former participants in such plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Foreign Benefit Plan and no transaction contemplated by this Agreement shall cause such assets or insurance obligations to be less than such benefit obligations; and (iii) each Foreign Benefit Plan required to be registered has been registered and has been maintained in good standing with applicable Governmental Entities.

(k)Each Benefit Plan may be amended or terminated without material liability to the Company or any of its Subsidiaries on or at any time after the Closing.

Section 3.14Taxes.

(a)(i) All material Tax Returns required to be filed by or with respect to the Company or any of its Subsidiaries on or prior to the date hereof have been filed and with respect to each such Tax Return either (A) such Tax Return was timely filed or (B) the statute of limitations with respect to such Tax Return has expired, (ii) all such Tax Returns filed after December 31, 1998 were true, correct and complete in all material respects and were prepared in material accordance with all applicable Tax Laws, and (iii) since January 1, 1999 (and, to the knowledge of the Company, for all periods or portions thereof prior thereto), all material Taxes due and owing by the Company or any of its Subsidiaries (whether or not shown on such Tax Returns) have been timely paid.

(b)(i) All material Tax Returns required to be filed by the Company or any of its Subsidiaries after the date hereof and at or prior to the Effective Time will be timely filed (taking into account any extensions of time to file), (ii) such Tax Returns will be true,

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correct and complete in all material respects, and (iii) all material Taxes due and owing by the Company or any of its Subsidiaries with respect to such Tax Returns (whether or not shown on such Tax Returns) will be timely paid.

(c)None of the Company or any of its Subsidiaries has incurred any liability for Taxes since the date of the most recent Financial Statements other than in the ordinary course of business and other than related to or arising from transactions contemplated by this Agreement.

(d)Neither the Company nor any of its Subsidiaries has waived any statute of limitations in respect of Taxes (which waiver is still in effect), or agreed to any extension of time (which extension is still in effect) with respect to the assessment of any Tax.

(e)No Taxes or Tax Returns of the Company or any of its Subsidiaries are being contested as of the date hereof and there are no audits, claims, assessments or levies, or administrative or judicial proceedings pending or threatened in writing regarding Taxes or Tax Returns of the Company or any of its Subsidiaries.

(f)Section 3.14(f) of the Company Disclosure Schedule lists all jurisdictions in which Tax Returns that report income taxes (including, without limitation, franchise and excise taxes based on net income, as well as the former single business tax in Michigan, the Michigan business tax, the business and occupation tax in Washington, the margin tax in Texas, and similar taxes, but excluding franchise and similar taxes based on capital stock, net or gross assets or a fixed annual fee), sales or use taxes (including, without limitation, gross receipts taxes and value added taxes), or ad valorem property taxes or other taxes based on net worth, in each case including, without limitation, Tax Returns prepared or supplied by the relevant Taxing Authority, are currently required to be filed by the Company or any of its Subsidiaries.  No written claim has been made within the past six years by any Taxing Authority or jurisdiction that the Company or any Subsidiary of the Company was or may be required to file any Tax Return that was not filed.

(g)There are no liens for Taxes on any assets of the Company or any of its Subsidiaries except for Permitted Encumbrances.

(h)With respect to Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party, (i) all material Tax Returns required to be filed by the Company or any of its Subsidiaries on or prior to the date hereof have been filed and with respect to each such Tax Return either (A) such Tax Return was timely filed or (B) the statute of limitations with respect to such Tax Return has expired, (ii) all such Tax Returns filed after December 31, 1998 were true, correct and complete in all material respects and were prepared in material accordance with all applicable Tax Laws, and (iii) since January 1, 1999 (and, to the knowledge of the

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Company, for all periods or portions thereof prior thereto), all material Taxes due and owing by the Company or any of its Subsidiaries (whether or not shown on such Tax Returns) have been so withheld and have been paid over to the appropriate Taxing Authority.

(i)Since December 31, 2010, no Person has (i) changed any material Tax accounting methods, policies or practices of the Company or any of its Subsidiaries except as required by a change in GAAP, (ii) made, revoked or amended any material Tax election of the Company or any of its Subsidiaries, (iii) filed any material amended Tax Return or claim for refund of the Company or any of its Subsidiaries, or (iv) settled or compromised any material Tax liability or refund of the Company or any of its Subsidiaries.

(j)Neither the Company nor any of its Subsidiaries (i) has been a member of any affiliated, consolidated, combined or unitary group for any Tax purposes after December 31, 1998 (and, to the knowledge of the Company, prior thereto) (other than a group the common parent of which was the Company) or (ii) has any liability for the Taxes of any Person (other than the Company or any of its Subsidiaries) in respect of taxable periods commencing on or after January 1, 1999 (and, to the knowledge of the Company, for all periods commencing prior thereto), arising from the application of Treasury Regulations Section 1.1502-6 or any analogous provision of state, local or non-U.S. Law, or as a transferee or successor by contract or otherwise.

(k)Neither the Company nor any of its Subsidiaries currently is a party to, bound by or has any obligation under any Tax allocation, Tax sharing, Tax indemnity or similar agreement, arrangement or understanding (including, but not limited to, an indemnification agreement or arrangement).  Neither the Company nor any of its Subsidiaries currently is a party to or member of any joint venture, partnership, limited liability company or other arrangement or contract with any third party which could be treated as a partnership for federal income Tax purposes.

(l)Since October 22, 2004, neither the Company nor any of its Subsidiaries has ever taken a deduction or received any Tax benefit arising with respect to any “reportable transaction” as defined in Section 6707A(c) of the Code (or any corresponding provision of state, local or non-U.S. Law).  On its federal income Tax Returns for periods commencing on or after January 1, 1999, (and, to the knowledge of the Company, for all periods commencing prior thereto), the Company has disclosed all positions identified by its accountants in preparing its Tax Returns as positions taken that reasonably could be expected to give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.

(m)Neither the Company nor any of its Subsidiaries is the subject of any adjustment under Section 481(a) of the Code (or any corresponding provision of state, local or non-U.S. Law).  Since January 1, 2005, no Taxing Authority has proposed in writing any adjustment or change of accounting method with respect to the Company or any of its

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Subsidiaries.  Neither the Company nor any of its Subsidiaries: is a party to any “closing agreement” as described in Section 7121 of the Code (or any corresponding provision of state, local or non-U.S. Law) that affects the Company’s or such Subsidiary’s 2011 taxable year or will affect any subsequent taxable year; has participated in an installment sale or open transaction disposition for which any amount has not been included in income on a federal or state income Tax Return; or received any prepayment, other than in the ordinary course of business, the full amount of which has not been included in income on one or more applicable income Tax Returns.  Neither the Company nor any of its Subsidiaries has (i) any deferred intercompany gain or loss described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or non-U.S. Law), (ii) any excess loss account described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or non-U.S. Law), or (iii) any dual consolidated loss described in Section 1503(d) of the Code and the Treasury Regulations promulgated thereunder (or any similar provision of state, local or non-U.S. Law), and neither the Company nor any of its Subsidiaries will have any such items through the Effective Time.

(n)The Company and each of its Subsidiaries have made available to Parent true and complete copies of all federal income Tax Returns and other income Tax Returns set forth in Section 3.14(n) of the Company Disclosure Schedule, in each case, filed by, on behalf of or with respect to any of the Company or any if its Subsidiaries for each of the Taxable years and periods ending on or after January 1, 2005 which have been filed, or will be filed, prior to the Effective Time.

(o)All material written communications to or from any Taxing Authority, that (i) were received by the Company or any of its Subsidiaries since January 1, 2005 and (ii) relate either (A) to a position taken or to be taken on a Tax Return or (B) to one or more items of income, assets or activities not shown on the Tax Return to which such communication relates, have been delivered to Parent for inspection. No written ruling or determination has been received from any Taxing Authority by the Company or any of its Subsidiaries since January 1, 2005.

(p)[Intentionally left blank.]

(q)Neither the Company nor any of its Subsidiaries is a “passive foreign investment company” within the meaning of Section 1297 of the Code.  No Subsidiary of the Company that is organized outside the United States owns any real property located in the United States, or is engaged in a trade or business in the United States within the meaning of Section 882 of the Code.  Section 3.14(q) of the Company Disclosure Schedule lists (i) each entity that is treated as a “controlled foreign corporation” within the meaning of Section 957 of the Code in which the Company has an ownership interest, (ii) each non-U.S. entity that is a disregarded entity and not separate from either the Company or any of its Subsidiaries under Section 301.7701-2 of the Treasury Regulations, (iii) for each of the Company and each Subsidiary of the Company, each country in which the Company or such Subsidiary has a “permanent establishment,” as that term is defined in an applicable income Tax treaty between

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such country and the country in which the Company or such Subsidiary, as the case may be, is a resident for purposes of such treaty, and (iv) for each of the Company and each Subsidiary of the Company, each country (A) in which the Company or such Subsidiary has operations, employees, or an office and (B) that does not have an income Tax treaty with the country in which the Company or such Subsidiary is a Tax resident. Other than its Subsidiaries, neither the Company nor any Subsidiary has any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other business association or entity organized outside the United States.

(r)Since January 1, 1999 (and, to the knowledge of the Company, at any time before then), neither the Company nor any of its Subsidiaries has reduced the basis of any stock in any Subsidiary which reduction was treated as a deduction allowed for depreciation within the meaning of Section 1017(d)(1)(B) of the Code, as modified by (where and when applicable) Section 1.1502-28(b)(4) of the Treasury Regulations, which stock has a fair market value in excess of its basis, and which stock is in whole or in part “section 1245 property” the sale of which would give rise to a material amount of ordinary income.

(s)Section 3.14(s) of the Company Disclosure Schedule sets forth (i) each jurisdiction in which the Company or any of its Subsidiaries is currently the beneficiary of or is subject to any material Tax exemption, Tax holiday, or other Tax reduction agreement or order of a Taxing Authority and (ii) the nature of such Tax exemption, Tax holiday, or other Tax reduction agreement or order.

(t)None of the property owned or used by the Company or any Subsidiary of the Company is subject to a Tax benefit transfer lease executed in accordance with Section 168(f)(8) of the Internal Revenue Code of 1954, as amended by the Economic Recovery Tax Act of 1981, the sale of which property would result in the recapture of the investment tax credit or of accelerated cost recovery deductions in a material amount individually or in the aggregate.

(u)Within the past two years, neither the Company nor any of its Subsidiaries has been a “distributing corporation” or a “controlled corporation,” each within the meaning of Section 355(a)(1)(A) of the Code, in a distribution intended to qualify under Section 355 of the Code.

(v)The Company is not aware of any information or facts inconsistent with the information provided to RSM McGladrey, Inc. in connection with its preparation of the September 22, 2011, as updated October 2, 2011, earnings and profits analysis of the Company and its Subsidiaries.  To the knowledge of the Company, it is not in possession of any information that is responsive to any information or data request by RSM McGladrey, Inc. in connection with such earnings and profits analysis that the Company did not provide to RSM McGladrey, Inc.

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(w)No election has been made under Section 301.7701-3 of the Treasury Regulations with respect to Charterhouse of Cambridge Trust, a Massachusetts business trust and a wholly owned subsidiary of the Company (“Charterhouse of Cambridge”), which was filed since October 1, 2006 or effective on or after October 1, 2006.

For purposes of this Section 3.14, any reference to either the Company or any Subsidiary of the Company shall be deemed to include any entity that was merged or was liquidated into the Company or such Subsidiary, as applicable.

Notwithstanding any other provision of this Agreement, the Company makes no representation or warranty regarding the amount, availability, or use of any Tax attributes (including net operating loss carry forwards, Tax credits and Tax bases) of the Company or its Subsidiaries after the Effective Time, including in connection with any liquidation or restructuring of the Company following the Closing.

Section 3.15Material Contracts.

(a)Neither the Company, its Subsidiaries, nor, to the knowledge of the Company, any other party, is in material default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Material Contracts to which it is a party; and, to the knowledge of the Company, there has not occurred any event that, with the lapse of time or giving of notice or both, could constitute such a material default under any Material Contract.  Each of the Material Contracts is enforceable against the Company or applicable Subsidiary of the Company in accordance with its terms and, to the Company’s knowledge, is enforceable against other parties to such Material Contract in accordance with its terms.

(b)Section 3.15(b) of the Company Disclosure Schedule sets forth a list as of the date of this Agreement of

(i)all Contracts or letters of intent entered into after January 1, 2008, and all currently effective Contracts entered into before that date, regarding the acquisition of a Person or business, whether in the form of an asset purchase, merger, consolidation or otherwise to which the Company or any Subsidiary of the Company is a party;

(ii)all currently effective credit agreements, indentures, mortgages, security agreements and other Contracts related to any indebtedness for borrowed money of the Company or any of its Subsidiaries;

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(iii)all joint venture or other similar Contracts to which the Company or any Subsidiary of the Company is a party;

(iv)all currently effective Contracts (including related Contracts) under which the Company or any Subsidiary of the Company has advanced or loaned or agreed to advance or loan to any other Person (together with such Person’s Related Persons) $75,000 or more;

(v)all currently effective guarantees by the Company or any Subsidiary of the Company of any obligations or liabilities of any other Person;

(vi)all Contracts or groups of related Contracts to which the Company or any of its Subsidiaries is a party the performance of which (i) since January 1, 2010 involved annual payments or receipts by the Company and its Subsidiaries of an aggregate amount in excess of $75,000, or would reasonably be expected to involve payments or receipts by the Company and its Subsidiaries after December 31, 2010 of an aggregate amount in excess of $75,000, and (ii) are not cancelable by the Company or any of its Subsidiaries on 60 days’ or less notice without premium or penalty;

(vii)all currently effective exclusive sales representative Contracts to which the Company or any Subsidiary of the Company is a party;

(viii)all currently effective Contracts under which the Company or any Subsidiary of the Company has granted any Person registration rights (including demand and piggy-back registration rights);

(ix)all currently effective Contracts purporting to restrict or prohibit the Company or any Subsidiary of the Company from engaging or competing in any business or engaging or competing in any business in any geographic area;

(x)all currently effective labor agreements, collective bargaining agreements or other labor related Contracts (including work rules and practices) to which the Company or any Subsidiary is a party with respect to any labor union, labor organization, trade union, works council or similar organization or association of employees;

(xi)all currently effective IP Contracts to which the Company or any Subsidiary of the Company is a party other than standard license agreements for commercially-available, off-the-shelf software having an acquisition price of less than $75,000 in the aggregate for each such software product or group of related software products;

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(xii)any Contract which provides for termination, acceleration of payment or other special rights upon the occurrence of a change in control of the Company or any Subsidiary of the Company;

(xiii)each Contract to which the Company or any Subsidiary is a party with any Governmental Entity;

(xiv)any Contract that is currently effective or that was executed after January 1, 2008 which provides for the purchase, sale or exchange of, or option to purchase, sell or exchange any real property to which the Company or any Subsidiary of the Company is a party;

(xv)any currently effective Contract relating to the development or construction of, or additions or expansions to, any real property that would cause the Company and its Subsidiaries to exceed the capital budget for such property listed in Section 3.15(b)(xv) of the Company Disclosure Schedule;

(xvi)any Contract relating to the operation or management of any Owned Real Property or any Leased Real Property to which the Company or any Subsidiary of the Company is a party;

(xvii)any hotel or other management agreement or franchise agreement to which the Company or any Subsidiary of the Company is a party;

(xviii)any Contract under which the Company or any of its Subsidiaries has agreed not to bring Litigation against any Person or under which any Person has agreed not to bring any Litigation against the Company or any of its Subsidiaries;

(xix)any Contract relating to Material Artwork to which the Company or any Subsidiary of the Company is a party;

(xx)all Contracts obligating the Company or any Subsidiary of the Company to indemnify any current or former director, officer, partner, member, trustee or employee of the Company or any Subsidiary of the Company; and

(xxi)all other Contracts which are material to the Company and its Subsidiaries taken as a whole.

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The Contracts referenced in this Section 3.15(b) are referred to herein collectively as the “Material Contracts”).  The Company has furnished to Parent a correct and complete copy of each Material Contract.  For purposes of this Agreement, a Contract will be considered to be currently effective if any Person currently has or in the future may have any right, remedy, benefit, obligation or liability thereunder.

(c)No Material Contract will, by its terms, (i) terminate or accelerate as a result of the transactions contemplated hereby or (ii) require any consent from any party thereto in order to remain in full force and effect immediately after the Effective Time.

(d)Section 3.15(d) of the Company Disclosure Schedule (i) lists all currently effective Contracts pursuant to which any Person has a right to a payment from the Company or any of its Subsidiaries based upon any current or future franchise, management, incentive or other fee earned by or paid to the Company or any of its Subsidiaries and (ii) identifies the specific current or future property or properties to which the Contract relates and the amount of the fee to which such Person has a right pursuant to the Contract.

(e)Section 3.15(e) of the Company Disclosure Schedule sets forth a list, as of the date of this Agreement, of all agreements of the Company or its Subsidiaries with any executive officer or director of the Company or its Subsidiaries.  No officer or director of the Company, its Subsidiaries, or any “associate” (as such term is defined in Rule 14a-1 under the Exchange Act) of any such officer or director, has any interest in any contract or property (real or personal, tangible or intangible), used in, or pertaining to the business of the Company or its Subsidiaries which interest would be required to be disclosed pursuant to Item 404(a) of Regulation S-K promulgated by the SEC.

Section 3.16Real and Personal Property.

(a)The Company and its Subsidiaries own title to, or have a valid leasehold interest in, all of their respective properties (real, personal or mixed) and assets, free and clear of all Encumbrances (other than Permitted Encumbrances).  The Company and its Subsidiaries enjoy peaceful and undisturbed possession of all of their respective owned and leased real property.  For purposes of this Agreement, the term “Permitted Encumbrances” means (i) liens for Taxes that are (x) not yet due and payable or (y) being contested in good faith and for which appropriate reserves have been established in accordance with GAAP, and (ii) easements, covenants, conditions and other similar agreements and/or restrictions affecting title to or the use and/or operation of real property that would be disclosed by a current title report for the subject property.

(b)Section 3.16(b) of the Company Disclosure Schedule sets forth a true and complete list of all real property owned by the Company or its Subsidiaries (together with all buildings, fixtures, structures and improvements situated thereon and all easements, rights-of-way and other rights and privileges appurtenant thereto, collectively, the “Owned Real

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Property”), and for each Owned Real Property, identifies the street address of such Owned Real Property.

(c)With respect to the Owned Real Property, there are no unrecorded options, rights of first offer or rights of first refusal to purchase such Owned Real Property or any portion thereof or interest therein.  Attached to Section 3.16(c) of the Company Disclosure Schedule are all policies of title insurance currently existing in favor of the Company or its Subsidiaries with respect to Owned Real Property.

(d)Section 3.16(d) of the Company Disclosure Schedule sets forth a true and complete list of all real property leased, subleased, licensed or otherwise occupied (whether as tenant, subtenant or pursuant to other occupancy arrangements) by the Company or any of its Subsidiaries (collectively, including the improvements thereon, the “Leased Real Property”; the Leased Real Property and the Owned Real Property, together, the “Real Property”), and for each Leased Real Property, identifies the street address of such Leased Real Property. True and complete copies of all agreements under which the Company or a Subsidiary of the Company is the landlord, sublandlord, tenant, subtenant, or occupant (each a “Real Property Lease”) that have not been terminated or expired as of the date of this Agreement have been made available to Parent.  Each Real Property Lease is a valid and binding obligation of the Company or a Subsidiary of the Company and is in full force and effect.  There is no default under any Real Property Lease either by the Company, any Subsidiary of the Company or, to the Company’s knowledge, by any other party thereto, and no event has occurred that, with the lapse of time or the giving of notice or both, would constitute a default by the Company or any Subsidiary of the Company thereunder, except for such defaults that, individually or in the aggregate, have not had, and would not reasonably be expected to have, a Company Material Adverse Effect.

(e)Neither the Company nor any Subsidiary of the Company is a party to any lease, sublease, license or other agreement granting to any third party a right to the use, occupancy or enjoyment of any Owned Real Property or Leased Real Property or any portion thereof.

(f)Except as set forth in Section 3.16(f) of the Company Disclosure Schedule, (i) the Real Property includes all real property necessary for the business of the Company and/or its Subsidiaries as currently conducted; (ii) neither the Company nor its Subsidiaries have received notice of any pending condemnation or similar proceeding affecting any portion of the Real Property and, to the knowledge of the Company, no such action is presently contemplated or threatened; (iii) neither the Company nor any of its Subsidiaries has received written notice of a material violation of Law which would require any material expenditure to remediate, remedy, remove, modify or improve any portion of the Real Property in order to bring it into material compliance therewith; (iv) the Real Property has adequate direct access to and from completed, dedicated and accepted public roadways and there is no pending, or to the knowledge of the Company, threatened governmental proceeding which would impair or curtail such access; and (v) to the knowledge of the Company, there is no material structural,

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electrical, mechanical, plumbing, air conditioning, heating or other defects in the improvements located on the Real Property and all such improvements are in good condition, ordinary wear and tear excepted.

Section 3.17Intellectual Property.

(a)Set forth in Section 3.17(a) to the Company Disclosure Schedule is a true and complete list of all patents and patent applications, trademarks and service marks and all applications and registrations therefor, all Internet domain names, and all applications and registrations for copyrights included in the Company Owned IP, including the registration or application number, owner(s) thereof, and jurisdiction of filing.

(b)The Company has or the Company’s Subsidiaries have an unrestricted and exclusive ownership interest in all Company Owned IP (in each case, free and clear of any Encumbrances) and is listed in the records of the appropriate United States, foreign or other registry as the sole and exclusive current owner of record for each application and registration included in the Company Owned IP.  The Company IP includes all Intellectual Property, and the Company’s and the Company’s Subsidiaries’ rights in and to the Company IP include all Intellectual Property rights, used or otherwise exploited in or necessary for the conduct of the business of the Company and the Company’s Subsidiaries as currently conducted and as except as are not and would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.  No academic institution or Governmental Entity has any right, title or interest (including any “march in” rights) in or to any Company Owned IP, and no funding, facilities or personnel of any academic or Governmental Entity were used, directly or indirectly, to create in whole or in part, any Company Owned IP.

(c)Neither the Company nor any Subsidiary of the Company has licensed or sublicensed its rights in any Intellectual Property other than pursuant to the IP Contracts, and no royalties, honoraria or other fees are payable by the Company or any Subsidiary of the Company for the use of or right to use any Intellectual Property rights, except pursuant to the IP Contracts.  Neither the Company nor any Subsidiary of the Company is party to any contract or other agreement that would require Parent or any of its Affiliates (other than the Company or a Subsidiary of the Company) to license or make available its or its Affiliates’ Intellectual Property to any other Person, or restrict the use by Parent or any of its Affiliates (other than the Company or a Subsidiary of the Company) of such Intellectual Property as a result of the transactions contemplated hereby.

(d)To the knowledge of the Company, no Person, during the past three years, has misappropriated, infringed, diluted, or otherwise violated, either directly or indirectly, any Company IP, nor is any Person currently doing so in any material respect.  No Litigation has been brought or threatened against any Person (i) by the Company or Subsidiary of the Company during the past three years, with respect to any Company Owned IP or any Company Licensed IP with respect to which the Company or any Subsidiary of the Company has the right to bring a Litigation or (ii), with respect to any or all of the Company Licensed IP and

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to the knowledge of the Company, by any licensors of the Company or a Subsidiary of the Company during the past three years and, to the knowledge of the Company, there is no basis for any Litigation regarding any of the foregoing clauses (i) and (ii).

(e)The conduct of the business of the Company and its Subsidiaries as (x) currently conducted, and (y) conducted in the past three years, and the exploitation of the Company IP in connection with any of the foregoing, has not misappropriated, infringed, diluted, or otherwise violated and does not misappropriate, infringe, dilute, or otherwise violate, either directly or indirectly, the Intellectual Property of any Person.  Except as set forth in Section 3.17(e) of the Company Disclosure Schedule (i) there has not been any Litigation during the past six years with respect to any Company IP, there is no pending Litigation and, to the knowledge of the Company, there is no threatened Litigation (A) alleging misappropriation, infringement, dilution or other violation by the Company or any Subsidiary of the Company of any Intellectual Property of any Person, (B) challenging the Company’s or any Subsidiary of the Company’s ownership or use of, or the registrability or maintenance of, any Company IP, (C) challenging the validity or enforceability of any Company IP, (D) alleging that the use by the Company or any Subsidiary of the Company of any Company Licensed IP is in breach of any applicable grant, license, agreement, instrument or other arrangement pursuant to which the Company or any Affiliate acquired the right to use such Intellectual Property, or (E) alleging misuse or antitrust violations arising from the use or other exploitation of any Intellectual Property, and (ii) to the knowledge of the Company, there is no basis for any Litigation regarding any of the foregoing.  No Company IP has been or is being used or enforced by the Company or any Subsidiary of the Company, and to the knowledge of the Company, by any of their licensors, in a manner that, individually or in the aggregate, is reasonably likely to result in the cancellation, invalidity or unenforceability of such Intellectual Property.

(f)All patents and patent applications, trademark registrations and applications and all other applications, registrations and filings under the Company IP (i) meet all material applicable requirements for obtaining a patent, trademark registration or other Intellectual Property registration, including any applicable disclosure requirements, including with respect to prior art references or other material prosecution information and the duty of candor of each of the owners and inventors of any patents and their attorneys, agents and relevant employees and representatives, (ii) are subsisting, in full force and effect, (iii) are valid and enforceable, (iv) have not expired, been cancelled or abandoned, and (v) have had paid in a timely manner all registration, maintenance and renewal fees necessary to preserve the rights of the Company and its Subsidiaries in connection with such Company IP.

(g)Neither the Company nor any Subsidiary of the Company has entered, or is subject to, any consents, judgments, orders, indemnifications, forbearances to sue, settlement agreements, licenses or other arrangements in connection with the resolution of any disputes or Litigation that (i) restricts the Company or any Subsidiary of the Company with respect to any material Company IP, (ii) restricts the Company’s or any Subsidiary of the Company’s businesses in any material manner in order to accommodate any Person’s Intellectual

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Property, or (iii) permits any Person to use any material Company IP except as expressly permitted under an IP Contract.

(h)The Company and each Subsidiary of the Company has implemented commercially reasonable measures to maintain the confidentiality of the trade secrets and other proprietary information under the Company IP.  No current or former employee or contractor of the Company or any Subsidiary of the Company owns any right, title or interest in or to any of the Company Owned IP.  To the knowledge of the Company, there has not been any disclosure of any confidential information of the Company or any Subsidiary of the Company (including any such information of any other Person disclosed in confidence to the Company or any Subsidiary of the Company) to any Person in a manner that has resulted or is likely to result in the loss of trade secret or other rights in and to such information.  The Company and its Subsidiaries have complied with all applicable Laws, as well as their own rules, policies, and procedures, relating to privacy, data protection, and the collection and use of personally identifiable information.

(i)None of the execution, delivery or performance of this Agreement by the Company, the consummation by the Company of the Transactions or compliance by the Company with any of the provisions of this Agreement will result in the loss or impairment of or payment of any additional amounts with respect to, or require the consent of any other Person in respect of, the Company’s or its Subsidiaries’ right to own, use, or hold for use any of the Intellectual Property as owned, used, or held for use in the conduct of their businesses as they are currently conducted or presently contemplated to be conducted.

Section 3.18Material Artwork.  Section 3.18 of the Company Disclosure Schedule contains a correct and complete list of all works of art owned by the Company with a purchase price or value, in the Company’s good faith estimate, in excess of $25,000 (the “Material Artworks”), the name of the author that created each Material Artwork and to the Company’s knowledge, the provenance of each Material Artwork.  To the knowledge of the Company: (i) each Material Artwork is authentic, (ii) if any Material Artwork has been exported from any country, such exportation has been in conformity with the Laws of the country from which such Material Artwork was exported, and the importation of such Material Artwork into each new country has been in conformity with the Laws of each country into which such Material Artwork was imported, (iii) the Company or its Subsidiary is the sole and absolute owner of all Material Artworks listed on Section 3.18 of the Company Disclosure Schedule, (iv) the Company or its Subsidiary has good and marketable title to all Material Artworks, and (v) at Closing all such Material Artworks will be owned by the Company or its Subsidiary free and clear of any and all Encumbrances.  The Material Artworks are currently insured by the Company, and to the knowledge of the Company have not been damaged or modified in any way.  No work of art owned by the Company as of December 31, 2010 has been sold or otherwise transferred by the Company or any of its Subsidiaries.

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Section 3.19Labor Matters.

(a)With respect to the employees of the Company, its Subsidiaries or any property which the Company or its Subsidiaries is engaged as the operator or manager under a hotel or other management agreement, and except as set forth in Section 3.19(a) of the Company Disclosure Schedule:

(i)no employees are represented by any labor union, labor organization, trade union, works council or similar organization or employee association and, to the knowledge of the Company, there are not any union organizing activities, either by or on behalf of any employee or union or similar labor organization or association;

(ii)there is no labor strike, dispute, slowdown, stoppage or lockout pending, or to the knowledge of the Company, threatened, nor has there been any such action or event during the three years prior to the date of this Agreement;

(iii)none of the Company, its Subsidiaries, or any property which the Company or its Subsidiaries is engaged as the operator or manager under a hotel or other management agreement is a party to, bound by or in the process of negotiating any collective bargaining or similar agreement with any labor union, labor organization, trade union, works council or similar organization or employee association, or work rules or practices agreed to with any labor union, labor organization, trade union, works council or similar organization or employee association;

(iv)there is no unfair labor practice proceeding pending or, to the knowledge of the Company, threatened;

(v)there are no pending material grievances or material arbitration proceedings;

(vi)there are no consent decrees from any federal or state agency;

(vii)to the knowledge of the Company, no executive or general manager (1) is subject to any noncompete, nonsolicitation, nondisclosure, confidentiality, employment, consulting or similar agreement with any other Person in conflict with the present and proposed business activities of the Company or its Subsidiaries, except agreements between the Company, its Subsidiaries or any property which the Company or its Subsidiaries is engaged as the operator or manager under a hotel or other management agreement and such executive or general manager or (2) intends to

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terminate his or her employment with the Company, its Subsidiaries or any property which the Company or its Subsidiaries is engaged as the operator or manager under a hotel or other management agreement;

(viii)there has not been any (1) action within the past three years requiring notice to employees under the Worker Adjustment and Retraining Notification Act of 1988, as amended (the “WARN Act”), or any similar foreign, state or local Law; or (2) incurred liability or obligation under the WARN Act or any similar state or local Law that remains unsatisfied;

(ix)the Company, its Subsidiaries or any property which the Company or its Subsidiaries is engaged as the operator or manager under a hotel or other management agreement are not and have not been: (1) a “contractor” or “subcontractor” (as defined by Executive Order 11246), or (2) required to comply with Executive Order 11246, or (3) required to maintain an affirmative action plan;

(x)the execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in any breach or other violation of, or any payment due under, any collective bargaining agreement or any other labor-related agreement;

(xi)none of the Company, its Subsidiaries, or any property which the Company or its Subsidiaries is engaged as the operator or manager under a hotel or other management agreement is (1) delinquent in material payments to any oftheir respective, current or former, employees or consultants for any services or amounts required to be reimbursed or otherwise paid or (2) liable for any material payment to any trust or other fund or to any Governmental Entity with respect to unemployment compensation benefits, social security or other benefits or obligations (other than routine payments to be made in the ordinary course of business consistent with past practice); and

(xii)the Company and its Subsidiaries are and have been in compliance with all (1) applicable Laws respecting employment and employment practices, terms and conditions of employment, wages, hours of work, disability, discrimination, employee whistleblowing, employee leaves, workers compensation, labor relations, classification of employees, immigration, equal opportunity and workplace safety and health, except in each case where the foregoing, individually or in the aggregate, has not had, and would not reasonably be expected to have, a Company Material Adverse Effect and (2) obligations under any employment agreement, severance agreement, collective bargaining agreement or any similar employment or labor-related agreement or understanding.

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(b)With respect to the employees of the Company, its Subsidiaries, any property which the Company or its Subsidiaries is engaged as the operator or manager under a hotel or other management agreement, and, to the knowledge of the Company, any franchisee of the Company or its Subsidiaries, and except as set forth in Section 3.19(b) of the Company Disclosure Schedule, neither the Company nor its Subsidiaries has received (i) written notice of any charge or complaint with respect to or relating to them pending before the Equal Employment Opportunity Commission or any other Governmental Entity responsible for the prevention of unlawful employment practices, (ii) written notice of the intent of any Governmental Entity responsible for the enforcement of labor, employment, wages and hours of work, child labor, immigration or occupational safety and health Laws to conduct an investigation with respect to or relating to them or notice that such investigation is in progress, or (iii) written notice of any Litigation or other proceeding pending or threatened in any forum by or on behalf of any present or former employee of such entities, any applicant for employment or classes or representatives of the foregoing alleging breach of any express or implied contract of employment, any applicable Law governing employment or the termination thereof or other discriminatory, wrongful or tortuous conduct in connection with the employment relationship.

(c)Section 3.19(c) of the Company Disclosure Schedule contains a correct and complete list of all employees of the Company and its Subsidiaries as of the date hereof and, with respect to each such employee, each employee’s location of work, the total annual compensation (including, without limitation, salary, bonuses and incentive compensation) for the year ended December 31, 2010 and benefits presently received by such employee, such employee’s current salary and title, and the number of years of continuous service of such employee with the Company and its Subsidiaries.  Each employee of the Company and its Subsidiaries whose hourly wage is less than the federal or applicable state minimum wage has been properly classified and treated as a tipped employee and has been paid all amounts owed under applicable Law.

Section 3.20Compliance with Laws.  Except as, individually or in the aggregate, has not been, and would not reasonably be expected to be, material to the Company and its Subsidiaries, taken as a whole, (a) the Company and its Subsidiaries have complied in a timely manner with, and are in compliance with, all Laws which affect the business, operations, properties or assets of the Company and its Subsidiaries, (b) no notice, charge, claim, action or assertion has been received by the Company or has been filed, commenced or, to the Company’s knowledge, brought, initiated or threatened against the Company or any Subsidiary of the Company alleging or investigating any violation of any of the foregoing; (c) each of the Company and its Subsidiaries and, to the Company’s knowledge, their respective employees and business partners, as applicable, has all filings, licenses, permits, certificates, exemptions, orders, consents, clearances, registrations, approvals and authorizations of all Governmental Entities and third Persons necessary for the conduct of the Company’s and its Subsidiaries’ business and the use of their properties and assets, as presently conducted and used (collectively, the “Company Permits”); and (d) all such Company Permits are in full force and effect and, as of the date of this Agreement, none of the Company Permits have been withdrawn, revoked, suspended or cancelled nor is any such withdrawal, revocation, suspension or cancellation pending or threatened, and the Company has been and is in compliance with the terms of the Company Permits and any conditions placed thereon.

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Section 3.21Environmental Matters.

(a)Except as, individually or in the aggregate, has not had, and would not reasonably be expected to have, a Company Material Adverse Effect:

(i)the Company and its Subsidiaries have been and are in compliance with all applicable Environmental Laws, including possessing all permits, authorizations, licenses, exemptions and other governmental authorizations required for its operations under applicable Environmental Laws;

(ii)with respect to the real property that is currently leased or operated by the Company or any Subsidiary of the Company, there have been no spills, discharges, releases or threatened releases (as such term is defined by the Comprehensive Environmental Response, Compensation and Liability Act, 42, U.S.C. 9601, et seq. (“CERCLA”)) of Hazardous Substances or any other contaminant or pollutant on or underneath any of such real property that requires or is likely to require Cleanup under applicable Environmental Laws;

(iii)with respect to real property that was formerly owned, leased or operated by the Company or any of its predecessors in interest, there were no spills, discharges or releases (as such term is defined by CERCLA) of Hazardous Substances or any other contaminant or pollutant on or underneath any of such real property during or prior to the Company’s ownership or operation of such real property that requires or is likely to require Cleanup under applicable Environmental Laws; and

(iv)neither the Company nor any of its Subsidiaries has disposed or arranged for the disposal of Hazardous Substances (or any waste or substance containing Hazardous Substances) at any location that is: (x) listed on the FederalNational Priorities List (“NPL”) or identified on the Comprehensive Environmental Response, Compensation, and Liability Information System (“CERCLIS”), each established pursuant to CERCLA; (y) listed on any state or foreign list of hazardous waste sites that is analogous to the NPL or CERCLIS; or (z) has been subject to environmental investigation or remediation.

(b)Neither the Company nor any Subsidiary of the Company has received written notice from any Person, including any Governmental Entity, alleging that the Company or any Subsidiary of the Company has been or is in violation or potentially in violation of any applicable Environmental Law or otherwise may be liable under any applicable Environmental Law.  Neither the Company nor any Subsidiary of the Company has received any written request for information from any Person, including any Governmental Entity, related to liability under or compliance with any applicable Environmental Law.

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(c)There is no Environmental Claim pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary of the Company or, to the knowledge of the Company, against any person or entity whose liability for any Environmental Claim the Company or any Subsidiary of the Company has or may have retained or assumed either contractually or by operation of law and there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Hazardous Substance that could form the basis of any Environmental Claim against the Company, any Subsidiary of the Company or, to the knowledge of the Company, against any person or entity whose liability for any Environmental Claim the Company or any Subsidiary of the Company has or may have retained or assumed whether contractually or by operation of law.

(d)Neither the Company nor any Subsidiary of the Company has entered into any written agreement that may require it to pay to, reimburse, guarantee, pledge, defend, indemnify or hold harmless any Person from or against any liabilities or costs arising out of or related to the generation, manufacture, use, transportation or disposal of Hazardous Substances, or otherwise arising in connection with or under Environmental Laws.

(e)The following terms shall have the following meanings for the purposes of this Agreement:

(i)“Cleanup” means all actions required to: (1) clean-up, remove, treat or remediate Hazardous Substances in the indoor or outdoor environment; (2) prevent the release of Hazardous Substances so that they do not migrate, endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (3) perform pre-remedial studies and investigations and post-remedial monitoring and care; or (4) respond to any government requests for information or documents in any way relating to cleanup, removal, treatment or remediation or potential cleanup, removal, treatment or remediation of Hazardous Substances in the indoor or outdoor environment.

(ii)“Environmental Laws” means all federal, state, local, foreign and common Laws and regulations relating to pollution or protection of human health or the environment, including without limitation, laws relating to the exposure to,or releases or threatened releases of, Hazardous Substances or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, transport, handling or Cleanup of Hazardous Substances and all laws and regulations with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Substances.

(iii)“Environmental Claim” shall mean any claim, action, cause of action, investigation or notice (written or oral) by any person or entity alleging potential liability (including, without limitation, potential liability for investigatory costs, Cleanup costs, governmental response costs, natural resource damages, property damages,

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personal injuries or penalties) (a) arising out of, based on or resulting from (1) the presence, or release into the environment, of any Hazardous Substance at any location, whether or not owned or operated by the Company or (2) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law or (b) under or pursuant to any Environmental Law.

(iv)“Hazardous Substances” shall mean (a) any petrochemical or petroleum products, radioactive materials, asbestos, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined by any Environmental Law as, or included in the definition of, “hazardous substances,” “hazardous wastes,” “hazardous materials,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic substances,” “contaminants” or “pollutants” or words of similar meaning and regulatory effect; or (c) any other chemical, material or substance, exposure to which is prohibited, limited, or regulated by any applicable Environmental Law.

Section 3.22Insurance.  Section 3.22 of the Company Disclosure Schedule (i) lists all material insurance policies maintained by or on behalf of the Company or any Subsidiary of the Company as of the date of this Agreement and (ii) includes a description of any self-insurance arrangements in effect as of the date of this Agreement with respect to the Company or any Subsidiary of the Company (such arrangements, together with all similar arrangements in respect of the Company covering earlier periods, being referred to herein as the “Self-Insurance Arrangements”).  The Company has heretofore made available to Parent true, correct and complete copies of certificates of all such insurance policies.  All such policies and the Self-Insurance Arrangements are in full force and effect and will not terminate by virtue of the transactions contemplated hereby, all premiums due thereon have been paid by the Company or a Subsidiary of the Company, as applicable, and the Company and its Subsidiaries, as applicable, are otherwise in compliance in all material respects with the terms and provisions of such policies.  Furthermore, (a) neither the Company nor any Subsidiary of the Company has received any written notice of cancellation or non-renewal of any such policy or arrangement nor is the termination of any such policies or arrangements threatened, (b) there is no claim pending under any of such policies or arrangements as to which coverage has been questioned, denied or disputed by the underwriters of such policies or arrangements, (c) neither the Company nor any Subsidiary of the Company has received any written notice from any of its insurance carriers that any insurance coverage presently provided for will not be available to the Company or its Subsidiaries in the future on substantially the same terms as now in effect, and (d) none of suchpolicies or arrangements provides for any retrospective premium adjustment, experienced-based liability or loss sharing arrangement affecting the Company.

Section 3.23Certain Business Practices.  The Company, the Company’s Subsidiaries, all current and former directors, officers, employees, agents, independent contractors and franchisees of any of the foregoing and each other Person acting on behalf of the Company or any of its Subsidiaries have complied and are in compliance, in all material respects, with all applicable requirements under (i) the Foreign Corrupt Practices Act, as amended, or any rules or regulations thereunder, (ii) the Organization for Economic Cooperation and

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Development Convention Against Bribery of Foreign Public Officials in International Business Transactions and legislation implementing such convention, (iii) all other international anti-bribery conventions, and (iv) all other applicable Laws relating to corruption, bribery, ethical business conduct, money laundering, political contributions, gifts and gratuities, or lawful expenses, Laws requiring the disclosure of agency relationships or commissions and anti-corruption rules of any international financial institutions with which any of them do business (collectively, the “Anti-Bribery Laws”).  During the last ten years, neither the Company nor any of its Subsidiaries has received any communication alleging that the Company, any of its Subsidiaries, any current or former director, officer, employee or authorized agent of any of the foregoing or any other Person acting on behalf of the Company or any of its Subsidiaries has or may have violated, or has or may have any material liability under, any Anti-Bribery Law.  The Company and its Subsidiaries have retained, and continue to retain, accurate books and records and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, compliance by the Company and its Subsidiaries and their respective directors, officers, employees and agents with all applicable Anti-Bribery Laws.

Section 3.24Opinion of Financial Advisor.  The Company has received the written opinion of Deutsche Bank Securities, Inc. (the “Company Financial Advisor”), dated November 2, 2011, to the effect that, as of such date, and subject to the assumptions, qualifications and limitations set forth therein, the Merger Consideration is fair, from a financial point of view, to the holders of the Shares, and a copy of such opinion will be delivered promptly to Parent and Merger Sub, solely for informational purposes, upon receipt by the Company.  If required by applicable Law, the Company has been authorized by the Company Financial Advisor to permit the inclusion of such opinion in its entirety in the Proxy Statement, provided that any description of or reference to Company Financial Advisor or summary of such opinion in the Proxy Statement is in a form reasonably acceptable to the Company Financial Advisor and its counsel.

Section 3.25Brokers.  No broker, investment banker, financial advisor or other person, other than the Company Financial Advisor, the fees and expenses of which will be paid by the Company, is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Company or Merger Sub.  True and correct copies of all agreements between the Company and the Company Financial Advisor, including, without limitation, any fee arrangements, are included in Section 3.25 of the Company Disclosure Schedule.

Section 3.26State Takeover Statutes.  The approval of the Company’s Board of Directors of the terms of this Agreement and the consummation of the Merger and the othertransactions contemplated by this Agreement represents all the actions necessary to render inapplicable to this Agreement, the Merger and the other transactions contemplated by this Agreement, the restrictions on “business combinations” set forth in Section 912 of the NYBCL, to the extent such restrictions would otherwise be applicable to this Agreement, the Merger and the other transactions contemplated by this Agreement.  No other state takeover statute or similar statute or regulation applies to this Agreement, the Merger or the other transactions contemplated by this Agreement.

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Section 3.27Related Party Transactions.  There are no outstanding amounts payable to or receivable from, and neither the Company nor any of its Subsidiaries is a creditor or debtor of, or party to any oral or written contract or transaction with, (i) any beneficial owner of 5% or more of the outstanding Shares or any Affiliate or immediate family member of such a beneficial owner, (ii) any director, officer or employee of the Company or any of its Subsidiaries or any Affiliate or immediate family member of such a director, officer or employee, or (iii) any Affiliate of the Company or any Subsidiary of the Company (any such person, a “Related Person”).  No Related Person has any interest in any material property used by the Company or any of its Subsidiaries.  As used in this Section 3.27, the term “immediate family member” shall have the meaning given to such term in Item 404 of Regulation S-K of the SEC.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE MERGER SUB

Parent and Merger Sub represent and warrant to the Company as follows:

Section 4.1Organization.  Parent is a corporation duly organized, validly existing and in good standing under the Laws of the State of Maryland and has full corporate power and authority to own, lease and operate its properties and to carry on its business as is now being conducted.  Merger Sub is a corporation duly organized, validly existing and in good standing under the Laws of the State of New York and has full corporate power and authority to own, lease and operate its properties and to carry on its business as is now being conducted.

Section 4.2Authorization; Validity of Agreement; Necessary Action.  Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions.  The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Transactions have been duly authorized by each of the Board of Directors of Parent and Merger Sub, and by Parent as the sole stockholder of Merger Sub, and no other corporate proceeding on the part of Parent or Merger Sub is necessary to authorize the execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by them of the Transactions.  This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming due and valid authorization, execution and delivery of this Agreement by the Company, is a valid and binding obligation of each of Parent and Merger Sub enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws relating to creditors’ rights generally and to general principles of equity.

Section 4.3Consents and Approvals; No Violations.  None of the execution, delivery or performance of this Agreement by Parent or Merger Sub, the consummation by Parent or Merger Sub of the Transactions or compliance by Parent or Merger Sub with any of the provisions of this Agreement will

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(a)conflict with or result in any breach of any provision of the certificates of incorporation or the bylaws of Parent or Merger Sub,

(b)except as individually or in the aggregate would not reasonably be expected to have a material adverse effect on the ability of the Parent or Merger Sub to perform their respective obligations under this Agreement or to consummate the transactions contemplated by this Agreement,

(i)require any filing by Parent or Merger Sub with, or permit, authorization, consent or approval of, any Governmental Entity, except in the case of this Clause (b)(i) for (1) compliance with any applicable requirements of the Exchange Act, (2) any filings as may be required under the NYBCL in connection with the Merger, (3) such reports under Section 13 of the Exchange Act as may be required in connection with this Agreement and the Transactions, (4) such filings and approvals as may be required by any applicable state securities, blue sky or takeover Laws, or (5) any filings under applicable antitrust or competition Laws, or

(ii)assuming that all consents, approvals, authorizations and other actions described in subsection (b)(i) have been obtained, conflict with or violate any Law applicable to Parent, any of its Subsidiaries, or any of their properties or assets.

Section 4.4Brokers.  No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent or Merger Sub.

Section 4.5Available Funds.  Parent has delivered to the Company true, correct and complete copies of (i) the executed Equity Commitment Agreement to provide to Parent, subject to the conditions set forth therein, equity financing in the aggregate amount set forth therein (the “Equity Financing”) and (ii) the executed HPT Purchase Agreement pursuant to which HPT, subject to the satisfaction or waiver of the conditions set forth therein (including all exhibits referenced therein), has agreed to purchase from Parent, and Parent has agreed to sell to HPT, certain assets immediately following the Closing for the aggregate purchase price set forth therein (such purchase price being referred to herein as the “Purchase Funding,” and together with the Equity Financing collectively referred to as the “Funding”) and to advance the Purchase Funding to Parent and Merger Sub at the Effective Time.  Each of the Funding Agreements, in the form so delivered on the date hereof, is in full force and effect and the commitment contained in the Equity Commitment Agreement has not been withdrawn or rescinded in any respect.  The Funding Agreements are the valid, binding and enforceable obligations of Parent and Merger Sub and the other parties thereto subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws relating to creditors’ rights generally and to general principles of equity.  Subject to the satisfaction of the conditionsprecedent set forth in the Funding Agreements and ARTICLE VII, the aggregate proceeds from the Funding will be, and Merger Sub will have at the Effective Time cash and other available financial resources, sufficient to fund the payment in full of the aggregate Merger Consideration

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as well as to make all other required payments payable by Parent or Merger Sub in connection with the Merger (including without limitation the fees and expenses of Parent and Merger Sub in connection therewith).  There are no conditions precedent or other contingencies related to the funding of the full amount of the Equity Financing other than as set forth in the Equity Commitment Agreement.  There are no conditions precedent or other contingencies to the advance of the Purchase Funding under the HPT Purchase Agreement other than as set forth in the HPT Purchase Agreement.

Section 4.6Interim Operations of Parent and Merger Sub.  Each of Parent and Merger Sub was organized for the purpose of entering into this Agreement and consummating the Transactions and has not engaged in any business activities or conducted any operations other than as incident to its organization and in connection with the execution of this Agreement and the consummation of the Transactions.

ARTICLE V

INTERIM OPERATING COVENANTS

Section 5.1Interim Operations of the Company.  The Company covenants and agrees that, except as expressly contemplated by this Agreement or unless the Company shall have obtained Parent’s prior written consent, after the date of this Agreement, and prior to the earlier of (x) the termination of this Agreement in accordance with ARTICLE VIII and (y) the Effective Time:

(a)the business of the Company and its Subsidiaries shall be conducted only in the ordinary course of business consistent with past practice, and the Company shall, and shall cause its Subsidiaries to, use their commercially reasonable best efforts to preserve their present business organization intact, to keep available the services of their current officers, employees and consultants, and to maintain good relations with customers, suppliers, employees, contractors, landlords, franchisees, distributors and others having business dealings with the Company and its Subsidiaries;

(b)the Company shall not, and shall cause its Subsidiaries not to, (i) directly or indirectly, issue, sell, modify, transfer, dispose of, encumber or pledge any shares of capital stock of the Company or its Subsidiaries, securities convertible into or exchangeable for, or options, warrants or rights of any kind to acquire any shares of such capital stock or other equity interests or any other ownership interest; (ii) amend or otherwise change their certificate of incorporation, bylaws or similar organizational documents; (iii) split, combine, reclassify, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of their capital stock or other equity interests; (iv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to their capital stock or any equity interest, or (v) enter into, amend or modify any shareholder rights agreement, rights plan, “poison pill” or other similar agreement or plan;

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(c)           the Company will not, and will cause its Subsidiaries not to, (i) incur or assume any indebtedness for borrowed money, indebtedness evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances, indebtedness representing the deferred and unpaid balance of the purchase price of any property (including capitalized lease obligations), indebtedness under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, commodity swap agreement, commodity cap agreement, commodity collar agreement, foreign exchange contract, currency swap agreement or similar agreement providing for the transfer or mitigation of interest rate, commodity price or currency risks either generally or under specific contingencies, or issue any debt securities; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person; (iii) make any loans, advances or capital contributions to, or investments in, any other Person; (iv) acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any equity interest therein; or (v) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any assets or properties, other than furniture, fixtures and equipment in the ordinary course of business consistent with past practice;

(d)           except as required by the terms of a written Benefit Plan or Employment Agreement or by applicable Law, the Company shall not, and shall cause its Subsidiaries not to, (i) increase the wages, salaries, compensation, pension or other benefits or perquisites payable or provided to any of the Company’s or any of its Subsidiaries’ officers, employees, directors, independent contractors or leased personnel; provided, however, that the Company and its Subsidiaries may, in the ordinary course of business, on the anniversary of any hotel employee’s initial employment with the Company or such Subsidiary increase by no more than 3% the salary payable to such hotel employee, (ii) grant or increase any severance, change in control, termination or similar compensation or benefits payable to any, director, officer or employee of the Company or any of its Subsidiaries, (iii) pay or grant any bonus or similar compensation to any of the Company’s or any of its Subsidiaries’ officers, employees, directors, independent contractors or leased personnel, (iv) enter into, amend or terminate, any Employment Agreement or Benefit Plan, (v) accelerate the time of payment or vesting of, or the lapsing of restrictions with respect to, or fund or otherwise secure the payment of, any compensation or benefits under any Benefit Plan or Employment Agreement, (vi) enter into, amend, negotiate or terminate any labor agreement, or (vii) terminate the employment of any person who is a party to an Employment Agreement with the Company or any Subsidiary of the Company other than for cause;

(e)           the Company will not, and will cause its Subsidiaries not to, (i) modify, extend, amend or terminate any Material Contract to which the Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or any of their respective properties or assets may be bound; (ii) waive, release or assign any rights or claims under any Material Contract; or (iii) enter into any Material Contract;

(f)            the Company shall not, and shall cause its Subsidiaries not to, except as necessary in the ordinary course of business consistent with past practice, (i) grant or

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acquire, agree to grant to or acquire from any Person any Intellectual Property, or dispose of or permit to lapse any rights to any Company IP, (ii) fail to take any action necessary or advisable to protect or maintain any Company IP that is material to the conduct of the business of the Company or its Subsidiaries as currently conducted and as planned by the Company or its Subsidiaries to be conducted, including the prosecution of all pending applications for patents and trademarks, the filing of any documents or other information or the payment of any maintenance or other fees related thereto, or (iii) disclose or agree to disclose to any Person, other than Representatives of Merger Sub and Parent, any trade secret or other confidential information;

(g)           the Company will not, and will cause its Subsidiaries not to, (i) make, revoke or amend any material Tax election of the Company or any of its Subsidiaries, (ii) file any material amended Tax Return or material claim for refund of the Company or any of its Subsidiaries, (iii) enter into any closing agreement affecting any material Tax liability or refund of the Company or any of its Subsidiaries, (iv) settle or compromise any material Tax liability or refund of the Company or any of its Subsidiaries, or (v) extend or waive the application of any statute of limitations regarding the assessment or collection of any Tax of the Company or any of its Subsidiaries;

(h)           the Company will not, and will cause its Subsidiaries not to, (i) settle any Litigation involving an amount in excess of $100,000 or, in the aggregate, an amount in excess of $100,000 or (ii) enter into any consent decree, injunction or other similar restraint or form of equitable relief in settlement of any Litigation;

(i)            the Company will not, and will cause its Subsidiaries not to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company;

(j)            the Company will not, and will cause its Subsidiaries not to, fail to keep in force insurance policies or replacement or revised provisions providing insurance coverage with respect to the assets, operations and activities of the Company and its Subsidiaries as are currently in effect;

(k)           the Company shall not, and shall cause its Subsidiaries not to, make any capital expenditure except (x) in accordance with the budget for capital expenditures attached to Section 5.1(k) of the Company Disclosure Schedule or (y) for capital expenditures not reflected on such budget but which are reasonably necessary to maintain the hotels operated or managed by the Company in good working order provided the aggregate expenditures under this clause (y) do not exceed $75,000;

(l)            the Company shall not, and shall cause its Subsidiaries not to, directly or indirectly acquire (x) by merging or consolidating with, or by purchasing assets of, or

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by any other manner, any division, business or equity interest of any Person (including in a transaction involving a tender or exchange offer, business combination, recapitalization, liquidation, dissolution, joint venture or similar transaction) or (y) except in the ordinary course of business consistent with past practice, any material assets;

(m)          the Company shall not make any change in any method of accounting principles, method or practices, except for any such change required by reason of a concurrent change in GAAP or Regulation S-X promulgated under the Exchange Act (as authorized by the Company’s independent auditor);

(n)           the Company will not, and will cause its Subsidiaries not to, knowingly take or knowingly omit to take any action that is reasonably likely to result in any of the conditions to the Merger set forth in ARTICLE VII not being satisfied or that would or would reasonably be expected to materially delay the consummation of, or materially impair the ability of the Company to consummate, the Transactions in accordance with the terms of this Agreement;

(o)           the Company will not, and will cause its Subsidiaries not to, enter into any agreement, contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose or announce an intention to do any of the foregoing.

Any consent of Parent under this Section 5.1 shall not be unreasonably withheld, conditioned or delayed provided that the Company has disclosed to Parent all relevant information.  Parent’s grant of consent under this Section 5.1 shall not affect whether or not any Change is taken into account when determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur.

Section 5.2             No Solicitation.

(a)           The Company agrees that it shall immediately cease and cause to be terminated all discussions, negotiations and communications, if any, with any Persons with respect to any Acquisition Proposal and shall use its reasonable best efforts to cause any such Person (and its agents and advisors) in possession of confidential information about the Company that was furnished by or on behalf of the Company to return or destroy all such information.  The Company shall not, and it shall not authorize or permit any of its Subsidiaries, or any of its or its Subsidiaries’ officers, directors, employees, representatives, consultants, investment bankers, attorneys, accountants or other agents (collectively, “Representatives”) to, directly or indirectly (i) initiate, solicit or knowingly encourage (including by way of furnishing non-public information or assistance), or knowingly induce, or knowingly take any action to facilitate the making of, any inquiry, offer or proposal which constitutes or would reasonably be expected to lead to any Acquisition Proposal, (ii) enter into, continue or otherwise participate in any discussions or negotiations with, furnish any non-public information relating to the Company or its Subsidiaries to, or otherwise cooperate in any way with any Person (other than

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Parent or any of its Affiliates or Representatives) that is seeking to make, or has made, an Acquisition Proposal, (iii) fail to make, or withdraw or modify in any manner adverse to Parent, the Company Board Recommendation (it being understood that taking a neutral position or no position with respect to an Acquisition Proposal shall be considered an adverse modification), recommend, adopt or approve, or publicly propose to recommend, adopt or approve, any Acquisition Proposal, or publicly take any action or make any public statement inconsistent with the Company Board Recommendation (any of the foregoing in this clause (iii), an “Adverse Recommendation Change”), (iv) grant (other than to Parent or any of its Affiliates or Representatives) any waiver or release under any confidentiality, standstill or similar agreement, (v) make, or participate in, whether alone or in concert with others, any “solicitation” (as such term is used in the rules of the SEC) of proxies or consents to vote any securities of the Company in favor of any Acquisition Proposal, or (vi) enter into any merger agreement, letter of intent, share purchase agreement, asset purchase agreement or share exchange agreement, option agreement or other similar agreement relating to or any understanding or agreement contemplating or otherwise relating to, or that is intended to or would reasonably be expected to lead to, any Acquisition Proposal.  The Company shall promptly (and in any event within 24 hours) notify Parent if any proposals are received by, any non-public information is requested from, or any negotiations or discussions are sought to be initiated or continued with, the Company or any Company Representative, in each case, in connection with an Acquisition Proposal or the possibility or consideration of making an Acquisition Proposal, which notice shall identify the name of the Person making such proposal or request or seeking such negotiations or discussions and include copies of all correspondence and written materials provided to the Company or any Company Representative that describe the terms and conditions of any proposal or request and a reasonable description of any terms and conditions of any such proposal or request that were communicated orally.

(b)           Notwithstanding Section 5.2(a), prior to the receipt of Company Stockholder Approval, the Company may, subject to compliance with this Section 5.2, furnish non-public information concerning its business, properties or assets to any Person pursuant to a confidentiality agreement (a copy of which shall be provided to Parent promptly after its execution) with terms no less favorable to the Company than those contained in the Confidentiality Agreements, dated March 11, 2011 and March 16, 2011, each entered into between HPT and the Company (together, the “Confidentiality Agreement”) and may negotiate and participate in discussions and negotiations with such Person concerning an Acquisition Proposal if, but only if, (i) the Company has received on an unsolicited basis, a bona fide written Acquisition Proposal from such Person, (ii) the Board of Directors of the Company determines in good faith, after considering the advice of a nationally recognized investment banking firm and outside legal counsel that such Acquisition Proposal constitutes or is reasonably likely to result in a Superior Proposal, (iii) the Board of Directors of the Company determines in good faith, after considering the advice of outside legal counsel to the Company, that the failure to provide such information or to engage in such discussions or negotiations would be inconsistent with the Board of Directors’ fiduciary duties to the Company’s stockholders under applicable Law, and (iv) there has not been any material breach of this Section 5.2 by the Company or any of its Representatives.

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(c)           Prior to furnishing any Person with information or entering into negotiations or discussions pursuant to Section 5.2(b), the Company shall provide Parent at least 24 hours prior written notice of its intention to provide such information or enter into such negotiations or discussions, which notice shall include the name of the Person to whom it intends to provide such information or enter into such negotiations or discussions.  The Company shall promptly provide to Parent any non-public information regarding the Company provided to any other Person which was not previously provided to Parent, such additional information to be provided no later than the date of provision of such information to such other Person.  The Company shall promptly keep Parent reasonably informed of the status and details of any Acquisition Proposal (including any material changes in the terms thereof) and promptly deliver copies of all correspondence and written materials provided to the Company or any Company Representative with respect to any Acquisition Proposal (and any subsequent material changes to such terms and conditions thereof) and a reasonable description of any terms and conditions of any Acquisition Proposal that were communicated orally.

(d)           Any violation of this Section 5.2 by any of the Company’s Representatives, whether or not such Representative is so authorized and whether or not such Representative is purporting to act on behalf of the Company or otherwise, shall be deemed to be a breach of this Agreement by the Company.

(e)           Except as set forth in this Section 5.2(e), neither the Board of Directors of the Company nor any committee thereof shall make an Adverse Recommendation Change.  Notwithstanding the foregoing, prior to the receipt of Company Stockholder Approval, the Board of Directors of the Company may make an Adverse Recommendation Change with respect to a Superior Proposal if (i) the Company shall have received a Superior Proposal that did not result from a material breach of this Section 5.2 and provided the notice specified in Section 5.2(c), (ii) the Board of Directors of the Company determines in good faith, after considering the advice of outside legal counsel, that the failure to take such action would be inconsistent with the Board of Directors’ fiduciary duties to the Company’s stockholders under applicable Law, (iii) prior to effecting such Adverse Recommendation Change with respect to such Superior Proposal, the Company has provided Parent four full Business Days prior written notice that the Board of Directors of the Company intends to make an Adverse Recommendation Change as a result of such Superior Proposal (it being understood and agreed that any amendment to the financial terms or any other material term of such Acquisition Proposal shall require a new written notice to Parent and a new two full Business Day period), (iv) during such period (and any new two full Business Day period required by this Section 5.2(e)) the Company has caused its financial and legal advisors to negotiate with Parent in good faith as to any such adjustments in the terms and conditions of this Agreement proposed by Parent so as to cause such Acquisition Proposal to cease to constitute a Superior Proposal, and (v) following such period(s), the Board of Directors of the Company determines in its good faith judgment (after considering the advice of its financial advisor and outside legal counsel) that, after taking into account any adjustments to the terms and conditions of this Agreement proposed in writing by Parent, the Acquisition Proposal continues to constitute a Superior Proposal.  Any such Adverse Recommendation Change or the entry by the Company into any Acquisition Agreement shall not change the approval of the

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Board of Directors of the Company for purposes of causing or cause any state takeover statute or other state Law to be applicable to the Transactions (including the Merger).

(f)            The Company may terminate this Agreement and enter into an agreement with respect to a Superior Proposal (an “Acquisition Agreement”), provided that, prior to any such termination (and with respect to clause (iii) hereof, concurrently with the termination of this Agreement), (i) the Company shall have received a Superior Proposal and provided the notice specified in Section 5.2(c), (ii) the Board of Directors of the Company determines in good faith, after considering the advice of outside legal counsel, that the failure to take such action would be inconsistent with the Board of Directors’ fiduciary duties to the Company’s stockholders under applicable Law, (iii) the Company shall have provided Parent four full Business Days prior written notice (it being understood and agreed that any amendment to the financial terms or any other material term of such Acquisition Proposal shall require a new written notice to Parent and a new two full Business Day period) that it intends to terminate this Agreement pursuant to this Section 5.2(f), identifying the Superior Proposal then determined to be more favorable and the parties thereto and delivering to Parent a copy of the Acquisition Agreement for such Superior Proposal in the form to be entered into, (iv) during such period (and any new two full Business Day period required by this Section 5.2(f)) the Company has caused its financial and legal advisors to negotiate with Parent in good faith as to any such adjustments in the terms and conditions of this Agreement proposed by Parent so as to cause such Acquisition Proposal to cease to constitute a Superior Proposal, (v) following such period(s), the Board of Directors of the Company determines in its good faith judgment (after considering the advice of its financial advisor and outside legal advisor) that, after taking into account any adjustments to the terms and conditions of this Agreement proposed in writing by Parent, the Acquisition Proposal continues to constitute a Superior Proposal, (vi) there has not been any material breach of this Section 5.2 by the Company or any of its Representatives, (vii) the Company shall have delivered to Parent (1) a written notice of termination of this Agreement pursuant to this Section 5.2(f) and (2) a wire transfer of immediately available funds in the amount of the Termination Fee and the Reimbursable Expenses, and (viii) immediately following and conditioned on the payment of the Termination Fee and the Reimbursable Expenses pursuant to subclause (2) above, the Company enters into the Acquisition Agreement with respect to the Superior Proposal for which it has complied with the procedures set forth in this Section 5.2.

(g)           The Company shall not take any action to (i) exempt any Person (other than Parent, Merger Sub and their respective Affiliates) from the restrictions on “business combinations” contained in Section 912 of the NYBCL (or any similar provision of any other Law) or otherwise cause such restrictions not to apply or (ii) exempt any Person (other than Parent, Merger Sub and their respective Affiliates) from the provisions on “control share acquisitions” contained in any takeover Law or otherwise cause such restrictions not to apply, or agree to do any of the foregoing, in each case unless such actions are taken substantially concurrently with a termination of this Agreement pursuant to Section 5.2(f).

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(h)           Nothing contained in this Agreement shall prohibit the Company or the Board of Directors of the Company from taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or making any “stop, look and listen” communication to the Company Stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act, if in either case, in the good faith judgment of the Board of Directors of the Company, after considering the advice of outside counsel to the Company, the failure to take such action would be inconsistent with the Board of Directors’ fiduciary duties to the Company’s stockholders under applicable Law.

ARTICLE VI

ADDITIONAL AGREEMENTS

Section 6.1             Notification of Certain Matters.  The Company shall give prompt notice to Parent of (a) the occurrence or non-occurrence of any event whose occurrence or non-occurrence, as the case may be, could reasonably be expected to (i) cause any representation or warranty of the Company contained in this Agreement to be untrue or inaccurate as of the date hereof or as of such date (except for any representation or warranty that is expressly made as of a specified date, in which case as of such specified date) or (ii) cause any of the conditions to the Merger set forth in ARTICLE VII to not be satisfied at the Effective Time and (b) any notice of, or other communication relating to, a default or event which, with notice or lapse of time or both, would become a default, received by the Company subsequent to the date of this Agreement and prior to the Effective Time, under any Material Contract or any Contract entered into after the date of this Agreement that if in effect on the date of this Agreement would be a Material Contract, to which the Company or any Subsidiary of the Company is a party or is subject. The Company, on the one hand, and Parent, on the other hand, shall give prompt written notice to the other party of any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated hereby (including to avoid any termination or acceleration as a result of the Transactions).  Notwithstanding anything in this Agreement to the contrary, no such notification shall affect the representations, warranties or covenants of the parties or the conditions to the obligations of the parties hereunder.  The Company and Parent shall, to the extent permitted by Law, promptly provide the other with copies of all filings made by such party with any Governmental Entity in connection with this Agreement and the transactions contemplated by this Agreement, other than, with respect to Parent, the portions of such filing that include confidential or proprietary information not directly related to the transactions contemplated by this Agreement.

Section 6.2             Access; Confidentiality.  Subject to the restrictions imposed by applicable antitrust or competition Laws, from the date of this Agreement until the Effective Time, the Company shall afford to the officers, employees, accountants, counsel, and other Representatives of Parent and Merger Sub, reasonable access, during normal business hours to all of its and its Subsidiaries’ officers, employees, agents, properties, books, contracts and records and, during such period, the Company shall furnish promptly to Parent and Merger Sub all other information concerning its business, properties and personnel as Parent or Merger Sub may reasonably request.  Prior to the Effective Time, Parent and Merger Sub will hold any

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information obtained pursuant to this Section 6.2 in accordance with the terms of the Confidentiality Agreement.

Section 6.3             Publicity.  Each of Parent and the Company shall consult with the other regarding their initial press releases with respect to the execution of this Agreement.  Thereafter, so long as this Agreement is in effect, neither the Company nor Parent, nor any of their respective Affiliates, shall issue any press release, announcement or other oral or written external communication with respect to the Transactions, this Agreement or any other party hereto without the prior consent of the other party (such consent not to be unreasonably withheld), except such press release, announcement or communication as is required by Law or the rules of a national securities exchange, in which case the party required to make the release, announcement or communication shall use its reasonable best efforts to provide the other party with a reasonable opportunity to review and comment on such release, announcement or communication in advance of its issuance.

Section 6.4             Proxy Statement.  The Company covenants and agrees that: (a) the Proxy Statement (and the letter to stockholders, notice of meeting and form of proxy included therewith) will not, at the time that the Proxy Statement or any amendment or supplement thereto is filed with the SEC or is first mailed to the stockholders of the Company, at the time of the Company Stockholders’ Meeting and at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; and (b) the Proxy Statement (and the letter to stockholders, notice of meeting and form of proxy included therewith) will comply in all material respects with the provisions of applicable federal securities Laws.  Notwithstanding the foregoing, the Company makes no covenant, representation or warranty with respect to statements made in the Proxy Statement (and the letter to stockholders, notice of meeting and form of proxy included therewith), if any, based on information furnished in writing by Parent or Merger Sub for inclusion therein.  Parent covenants and agrees that none of the information supplied by Parent or Merger Sub in writing expressly for inclusion in the Proxy Statement will, at the time that the Proxy Statement is filed with the SEC or is first mailed to stockholders of the Company, at the time of the Company Stockholders’ Meeting and at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading.

Section 6.5             Insurance and Indemnification.

(a)           The Surviving Corporation’s certificate of incorporation and bylaws shall contain provisions no less favorable with respect to exculpation from liabilities and indemnification of individuals who were directors or officers of the Company at or prior to the Effective Time for or in respect of acts or omissions of such individuals that occurred prior to the Effective Time than the provisions set forth in the certificate of incorporation and bylaws of the Company as of the date hereof, which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights of such individuals with respect to periods prior to the Effective Time, unless such modification shall be required by Law.

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(b)           From and after the Effective Time, the Surviving Corporation shall honor (and Parent shall cause the Surviving Corporation to honor) all obligations of the Surviving Corporation under its certificate of incorporation and bylaws to indemnify individuals who were directors and officers of the Company at or prior to the Effective Time for or in respect of acts or omissions of such individuals that occurred prior to the Effective Time.

(c)           Provided the premium is not more than $360,000, the Company shall purchase, by the Effective Time, tail policies for the officers’ and directors’ liability insurance, which tail policies shall be effective for a period from at least the Effective Time, through and including the date six years after the Effective Time with respect to claims arising from facts or events that existed or occurred prior to such period.

(d)           From and after the Effective Time (but not prior thereto), the provisions of Section 6.5(a), Section 6.5(b) and Section 6.5(c) are intended to be for the benefit of, and will be enforceable by, each individual who was a director or officer of the Company at or prior to the Effective Time and his or her heirs.

Section 6.6             Further Action; Reasonable Best Efforts.

(a)           Subject to the terms and conditions of this Agreement, Parent, Merger Sub and the Company agree to use their respective reasonable best efforts to (i) make promptly any required submissions under applicable antitrust or competition Laws with respect to the Transactions and (ii) take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws and regulations to consummate and make effective the Transactions as promptly as practicable including using their respective reasonable best efforts to obtain any requisite approvals, consents, authorizations, orders, exemptions or waivers by any third Person or Governmental Entity in connection with the Transactions and to fulfill the conditions to the Merger.  If at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party hereto shall use their respective reasonable best efforts to take all such action.

(b)           Each of the parties hereto agrees to cooperate and use its reasonable best efforts to vigorously contest and resist any action, including administrative or judicial action, and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order (whether temporary, preliminary or permanent) that is in effect and that restricts, prevents or prohibits consummation of the Transactions, including, without limitation, by vigorously pursuing all available avenues of administrative and judicial appeal.

(c)           In no event shall Parent or Merger Sub be obligated pursuant to this Agreement to divest or hold separate any assets or to take or commit to take any action that which would be reasonably likely to (i) adversely impact in any material respect the benefits expected to be derived by Parent, as determined by Parent, as a result of the Transactions or (ii)

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impose material limitations on Parent’s ownership or operation (or that of any of Parent’s Subsidiaries or Affiliates) of all or a material portion of the Company’s business or assets.

(d)           The Company shall use its reasonable best efforts to take all actions and to do or cause to be done all things necessary, proper or advisable under applicable Law for the Company and its Subsidiaries to continue to conduct the management business of the Company and its Subsidiaries in Egypt as currently conducted without penalty, sanction or damage to reputation.

(e)           The Company agrees to reasonably cooperate with Parent in the planning of and preparation for the Reorganizations so that the Reorganizations can be completed on the same Business Day as the Effective Time; provided, however, that (i) the Company shall not be obligated to irrevocably commit to any action prior to the Effective Time, and (ii) Parent shall reimburse the Company for its reasonable out-of-pocket expenses it incurs pursuant to this Section 6.6(e) at the request of Parent.

Section 6.7             State Takeover Laws.  If any state takeover statute is, becomes or is deemed to become applicable to the Company or the Transactions, then the Board of Directors of the Company shall take all actions necessary to render such statute inapplicable to the foregoing.

Section 6.8             Stockholder Litigation.  The Company shall give Parent the opportunity to participate, at Parent’s expense, in the defense or settlement of any stockholder Litigation against the Company and/or its directors or officers relating to the Transactions, whether commenced prior to or after the execution and delivery of this Agreement.  The Company agrees that it shall not settle or offer to settle any Litigation commenced prior to or after the date of this Agreement against the Company or any of its directors or executive officers by any stockholder of the Company relating to this Agreement, the Merger, any other transaction contemplated hereby or otherwise, without the prior written consent of Parent.

Section 6.9             Financial Information.  During the period prior to the Effective Time, the Company shall provide to Parent monthly profit and loss statements for the Company and each of the Owned Real Properties and the Leased Real Properties no later than 15 calendar days following the end of each fiscal month.

Section 6.10           Company SEC Documents.  From the date of this Agreement to the Effective Time, the Company shall timely file with the SEC all Company SEC Documents required to be filed by it under the Exchange Act or the Securities Act.  As of its filing date, or if amended after the date of this Agreement, as of the date of the last such amendment, each such Company SEC Document shall fully comply with the applicable requirements of the Exchange Act and the Securities Act, as the case may be.  As of its filing date or, if amended after the date of this Agreement, as of the date of the last such amendment, each such Company SEC Document filed pursuant to the Exchange Act shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  All of the Financial Statements included in the Company SEC Documents filed

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after the date of this Agreement (i) shall comply in all material respects with the applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (ii) shall be prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto), and (iii) shall fairly present in all material respects the financial position and the results of operations and cash flows in accordance with GAAP (subject, in the case of unaudited interim financial statements, to normal and recurring year-end adjustments, in each case as permitted by GAAP and the applicable rules and regulations promulgated by the SEC) of the Company as of the times and for the periods referred to therein.

Section 6.11Compensation Arrangements; 401(k); Section 16.

(a)Except to the extent necessary to avoid the duplication of benefits, Parent shall recognize the service of each individual who is employed by the Company or any Subsidiary immediately before the Effective Time (each, a “Continuing Employee”) prior to the Effective Time as if such service had been performed with Parent or its Affiliates for purposes of eligibility to participate in, level of benefits under and vesting under any employee benefit plans and programs of Parent or its ERISA Affiliates in which the Continuing Employee participates after the Effective Time.  With respect to any welfare plan maintained by Parent or its Affiliates in which Continuing Employees are eligible to participate after the Effective Time, Parent shall use reasonable best efforts to (i) waive all limitations as to preexisting conditions and exclusions with respect to participation and coverage requirements applicable to such employees to the extent such conditions and exclusions were satisfied or did not apply to such employees under the welfare plans maintained by the Company or its Affiliates prior to the Effective Time and (ii) provide each Continuing Employee with credit for any deductibles paid prior to the EffectiveTime in satisfying any analogous deductible to the extent applicable under any such plan in which the Continuing Employee commenced participation during a plan year.

(b)If directed in writing by Parent at least five Business Days prior to the initial scheduled Closing Date, the Board of Directors of the Company will authorize the termination of any and all Benefit Plans intended to qualify as a qualified cash or deferred arrangement under Section 401(k) of the Code, effective no later than the day immediately preceding the date the Company becomes a member of the same Controlled Group of Corporations (as defined in Section 414(b) of the Code) as Parent.  The Company shall provide Parent evidence that such resolutions to terminate the 401(k) plan(s) of the Company have been adopted by the Board of Directors of the Company.  The form and substance of such resolutions shall be subject to the reasonable approval of Parent.  The Company shall use its reasonable best efforts to take such other actions in furtherance of terminating any such 401(k) plans as Parent may reasonably request.  Immediately prior to such termination, the Company will make (or cause to be made) all necessary payments to fund the contributions (i) necessary or required to maintain the tax-qualified status of any such 401(k) Plan, (ii) for elective deferrals made pursuant to any such 401(k) Plan for the period prior to termination, and (iii) for employer matching contributions (if any) for the period prior to termination.

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(c)Prior to the Effective Time, the Company shall take all such actions as may be required (if any) to cause any dispositions of Shares (including derivative securities with respect to Shares) resulting from the transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in accordance with the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP.

(d)Promptly (but in any event within five Business Days) following the Effective Time, Parent shall adopt a Benefit Plan for the Continuing Employees listed on Section 6.11(d) of the Company Disclosure Schedule in the form attached hereto as Exhibit B (the “Employee Retention Plan”).

(e)Promptly (but in any event within five Business Days) following the Effective Time, Parent shall contribute $2,500,000 to the Sonesta International Hotels Corporation Pension Plan, as amended and restated effective as of January 1, 2008 and as further amended through Amendment 6, executed December 20, 2010.

(f)Nothing contained in this Agreement shall limit the right of Parent or any of its Affiliates to terminate the employment of any employee of the Company or its Subsidiaries or amend, terminate or otherwise modify any benefit plan following the Closing Date or shall be construed as an amendment to any Benefit Plan.  The provisions contained in this Section 6.11 are included for the sole benefit of the Company and Parent and nothing in this Section 6.11, whether express or implied, shall create any third party beneficiary or other rights (i) in any other Person, including, without limitation, any current or former employees, any participant in any Benefit Plan, or any dependent or beneficiary thereof, or (ii) to continued employment with the Company, Parent, or any of their respective Affiliates.

Section 6.12Funding.

(a)Each of Parent and Merger Sub shall use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange and obtain the proceeds of the Funding on the terms and conditions contemplated by the Funding Agreements, including using their respective reasonable best efforts (i) to satisfy all conditions and covenants set forth in the Funding Agreements that are applicable to Parent or Merger Sub and that are within their respective control, and (ii) provided the conditions to Parent’s and Merger Sub’s obligations to effect the Merger set forth in ARTICLE VII, the conditions to funding of the Equity Financing set forth in the Equity Commitment Agreement and the conditions to advance of the Purchase Funding set forth in the HPT Purchase Agreement are satisfied (or any such condition set forth in ARTICLE VII which is not so satisfied is waived in writing by Parent and Merger Sub, any condition to funding not so satisfied is waived in writing by the Investors and any condition to the advance of the Purchase Funding under the HPT Purchase Agreement not so satisfied is waived in writing

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by HPT), cause HPT to advance the Purchase Funding and the Investors to fund the Equity Financing (with respect to amounts required to consummate the Merger).

(b)Parent shall not agree to any amendments or modifications to, or grant any waivers of, any condition or other provision under any Funding Agreement without the prior written consent of the Company (such consent not to be unreasonably withheld, delayed or conditioned) if such amendments, modifications or waivers would (i) reduce the aggregate amount of the Funding (unless the Equity Financing or Purchase Funding, as the case may be, is increased by an amount corresponding to such reduction) or (ii) impose new or additional conditions that would reasonably be expected to (A) prevent or materially delay the ability of Parent or Merger Sub to consummate the Merger or (B) adversely impact the ability of Parent or Merger Sub to enforce its rights against HPT under the HPT Purchase Agreement or the Investors under the Equity Commitment Agreement.  Parent shall not release or consent to the termination of the obligations of HPT under the HPT Purchase Agreement or the Investors under the Equity Commitment Agreement.

Section 6.13Use of Sonesta Name.  The Company hereby consents to Parent’s change of its name to “Sonesta Acquisition Corp.” and agrees to provide to Parent any consent required for Parent to register such name with the State Department of Assessments and Taxation of Maryland provided that upon termination of this Agreement in accordance with its terms, Parent shall forthwith change its name so as not to include the word “Sonesta.”

Section 6.14Tax Matters.  No later than one (1) week prior to the Closing Date, with respect to each Subsidiary of the Company (other than Charterhouse of Cambridge) that has an excess loss account set forth on Section 3.14(m) of the Company Disclosure Schedule, the Company shall either (i) liquidate or merge such Subsidiary out of existence in a manner that eliminates the excess loss account (but does not trigger or restore into income any excess loss account) or (ii) contribute sufficient assets (which, for the avoidance of doubt, may include an intercompany receivable) to such Subsidiary to eliminate any excess loss account in such Subsidiary from and after the contribution and through the Closing (assuming, for this purpose, that the Closing shall take place no later than March 31, 2012).  At least three days in advance ofimplementing the foregoing, the Company shall provide to Parent documents intended to effect the foregoing for Parent’s reasonable review and comment.

ARTICLE VII

CONDITIONS

Section 7.1Conditions to Each Party’s Obligations to Effect the Merger.  The respective obligations of each party to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions, any and all of which (other than Section 7.1(a)) may be waived in whole or in part by Parent, Merger Sub and the Company, as the case may be, to the extent permitted by applicable Law:

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(a)the Company Stockholder Approval shall have been obtained, in accordance with the requirements of the certificate of incorporation and the bylaws of the Company, and the NYBCL; and

(b)(i) no order, injunction or decree issued by any Governmental Entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger or any of the other transactions contemplated by this Agreement shall be in effect and (ii) no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any Governmental Entity that prohibits or makes illegal consummation of the Merger.

Section 7.2Conditions to the Obligations of Parent and Merger Sub to Effect the Merger.  The obligation of Parent and Merger Sub to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions, any and all of which may be waived in whole or in part by Parent and Merger Sub, as the case may be, to the extent permitted by applicable Law:

(a)there shall not be threatened or pending any suit, action or proceeding by any Governmental Entity against Merger Sub, Parent or the Company seeking to restrain or prohibit Parent’s or Merger Sub’s ownership or operation (or that of any of their respective Subsidiaries or Affiliates) of all or a material portion of their or the Company’s businesses or assets (determined on a consolidated basis), or to compel Parent or Merger Sub or their respective Subsidiaries and Affiliates to dispose of or hold separate any material portion of the business or assets of the Company, Parent or Parent’s Subsidiaries (determined on a consolidated basis);

(b)(i) there shall not be any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced, promulgated or deemed applicable to the Merger and (ii) no other action shall be taken that is reasonably likely to result, directly or indirectly, in any of the consequences referred to in Section 7.2(a) above;

(c)(i) the representations and warranties of the Company set forth in Section 3.1(a), the second and third sentence of Section 3.2, Section 3.3(a), Section 3.4, Section 3.5, Section 3.7(a) and the fourth and fifth sentence of Section 3.8(a) of this Agreement shall be true and correct in all respects both as of the date hereof and as of the Closing Date as thoughmade on and as of the Closing Date (except for any representation or warranty that is expressly made as of a specified date, in which case as of such specified date), and (ii) all other representations and warranties of the Company contained in this Agreement (other than in Section 2.3) shall be true and correct in all respects both as of the date hereof and as of the Closing Date as though made on and as of the Closing Date (except for any representation or warranty that is expressly made as of a specified date, in which case as of such specified date), except in the case of this clause (ii) where the failure of any such representations and warranties to be true and correct in all respects, without giving effect to any limitation as to “materiality” or

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“material adverse effect” set forth herein, has not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;

(d)(i) the Company shall not have breached or failed to perform or to comply with, in any material respect, any agreement or covenant required to be performed or complied with by it under this Agreement (other than in Section 2.3) on or prior to the Closing Date or (ii) any such breach or failure shall have been cured to the reasonable satisfaction of Parent and Merger Sub;

(e)(i) any required approval or consent under any antitrust, competition or merger control Laws applicable to the transactions contemplated by this Agreement shall have been obtained and (ii) there shall not be any pending or threatened further action or investigation, whether formal or informal, with respect to any such approval or consent;

(f)no Company Material Adverse Effect shall have arisen or occurred after the execution and delivery of this Agreement that is continuing;

(g)the Company shall have delivered to Parent an executed election on Internal Revenue Service Form 8832 to treat Charterhouse of Cambridge as disregarded as a separate entity from the Company, such election being effective at least one day prior to the Effective Time, which election shall not be filed until after the Effective Time; and

(h)the Company shall have delivered a certificate, validly executed for and on behalf of the Company and in its name by the Chairman, Chief Executive Officer and Vice President and Treasurer of the Company, to Parent certifying the satisfaction of the conditions set forth in Section 7.2(c), Section 7.2(d) and Section 7.2(f).

Section 7.3Conditions to the Obligation of the Company to Effect the Merger. The obligation of the Company to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions, any and all of which may be waived in whole or in part by the Company, as the case may be, to the extent permitted by applicable Law:

(a)the representations and warranties of Parent and Merger Sub contained in this Agreement shall be true and correct in all respects both as of the date hereof and as of the Closing Date as though made on and as of the Closing Date (except for any representation or warranty that is expressly made as of a specified date, in which case as of such specified date), except where the failure of such representations and warranties to be true and correct in all respects, individually or in the aggregate, has not had, and would not reasonably beexpected to have, any material adverse effect on the ability of Parent or Merger Sub to consummate the Merger;

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(b)(i) Parent and Merger Sub shall not have breached or failed to perform or to comply with, in any material respect, any other agreement or covenant required to be performed or complied with by them under this Agreement on or prior to the Closing Date or (ii) any such breach or failure shall have been cured to the reasonable satisfaction of the Company; and

(c)Parent shall have delivered a certificate, validly executed for and on behalf of the Company and in its name by an officer of Parent, to the Company certifying the satisfaction of the conditions set forth in Section 7.3(a) and Section 7.3(b).

ARTICLE VIII

TERMINATION

Section 8.1Termination.  This Agreement may be terminated and the Transactions may be abandoned at any time before the Effective Time, whether before or after receipt of the Company Stockholder Approval:

(a)By mutual written consent of Parent, Merger Sub and the Company; or

(b)By either Parent or the Company if:

(i)a court of competent jurisdiction or other Governmental Entity shall have issued a final and nonappealable Order or taken any other action permanently restraining, enjoining or otherwise prohibiting any of the Transactions which shall have become final and nonappealable; provided, however, that the party seeking to terminate this Agreement pursuant to this Section 8.1(b)(i) shall have used its reasonable best efforts to remove such Order or to reverse such action; or

(ii)the Merger shall not have been consummated by April 30, 2012 (the “Outside Date”); provided, however, that the right to terminate this Agreement pursuant to clause (ii) of this Section 8.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement or the failure of whose representations and warranties to be true has been the principal cause of, or principally resulted in, the failure of any such condition; or

(iii)the Company Stockholder Approval shall not have been obtained at the Company Stockholders’ Meeting duly convened therefor or any adjournment or postponement thereof at which a vote on adoption of this Agreement was taken; or

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(c)By Parent if:

(i)(A) an Adverse Recommendation Change shall have occurred or (B) the Board of Directors of the Company shall have failed to publicly confirm the Company Board Recommendation within four Business Days of a written request by Parent that it do so; or

(ii)the Company shall have breached any representation, warranty, covenant or other agreement contained in this Agreement which (A) would give rise to the failure of any condition set forth in ARTICLE VII and (B) cannot be or has not been cured within the earlier of (1) fifteen days after the giving of written notice to the Company and (2) the Outside Date; or

(iii)the Company shall have materially violated or breached any of its obligations under Section 5.2; or

(d)By the Company:

(i)pursuant to and in compliance with Section 5.2(f); or

(ii)if Parent or Merger Sub shall have breached any representation, warranty, covenant or other agreement contained in this Agreement and such breach cannot be or has not been cured within the earlier of (1) fifteen days after the giving of written notice to Parent and (2) the Outside Date, except for any such breach which, individually or in the aggregate, has not had, and would not reasonably be expected to have, a material adverse effect on the ability of Parent and Merger Sub to perform their obligations under this Agreement or to consummate the transactions contemplated by this Agreement.

Section 8.2Notice of Termination; Effect of Termination.

(a)In the event of the termination of this Agreement as provided in Section 8.1, written notice thereof shall forthwith be given to the other party or parties specifying the provision of this Agreement pursuant to which such termination is made, and this Agreement shall forthwith become null and void (except for the last sentence of Section 6.2, the last sentence of Section 9.2 and for Section 9.3, Section 9.5 through Section 9.9, Section 9.11, Section 9.13, Section 9.14, Section 9.15 and this Section 8.2, which shall survive such termination) and there shall be no liability on the part of Parent, Merger Sub or the Company, except (i) as set forth in this Section 8.2, and (ii) nothing herein shall relieve Parent, Merger Sub or the Company from liability for its fraud or willful and material breach of this Agreement but such liability shall be subject to the Damages Cap.

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(b)If:

(i)Parent shall have terminated this Agreement pursuant to Section 8.1(c)(i); or

(ii)Parent shall have terminated this Agreement pursuant to Section 8.1(c)(iii) as a result of a willful breach of Section 5.2; or

(iii)the Company shall have terminated this Agreement pursuant to Section 8.1(d)(i); or

(iv)(A) either Parent or the Company shall have terminated this Agreement pursuant to Section 8.1(b)(ii) or Section 8.1(b)(iii) or Parent shall have terminated this Agreement pursuant Section 8.1(c)(ii) or Section 8.1(c)(iii), (B) prior to termination of this Agreement pursuant to Section 8.1(b)(ii), Section 8.1(b)(iii), Section 8.1(c)(ii) or Section 8.1(c)(iii), a Person shall have made an Acquisition Proposal or expressed any interest publicly or to the Company with respect to the making of an Acquisition Proposal, and (C) either (1) within 12 months after any such termination, the Company enters into a definitive agreement with respect to an Acquisition Proposal (whether or not such Acquisition Proposal was made prior to the termination of this Agreement) and in the case of a termination by Parent pursuant to Section 8.1(b)(ii) or Section 8.1(b)(iii), the transaction contemplated by such Acquisition Proposal (or an amended version thereof) is consummated (whether such consummation is within such 12 months or thereafter), or (2) within 12 months after any such termination, an Acquisition Proposal is consummated (whether or not such Acquisition Proposal was made prior to the termination of this Agreement);

then the Company shall pay to Parent a termination fee of $4,000,000 (the “Termination Fee”), plus (to the extent not already paid pursuant to Section 8.2(c)) an amount equal to Parent’s out-of-pocket fees and expenses (including, without limitation, legal, investment banking, accounting, banking and consulting fees and expenses) incurred by Parent and Merger Sub in connection with the due diligence investigation, the Merger, this Agreement and the consummation of the Transactions contemplated hereby (subject to reasonable documentation), but not in excess of $500,000 (the “Reimbursable Expenses”) (A) concurrently with such termination in the case of a termination pursuant to Section 8.1(d)(i), (B) within one Business Days after such termination in the case of a termination pursuant to Section 8.1(c)(i) or a termination pursuant to Section 8.1(c)(iii) as a result of a willful breach of Section 5.2, (C) upon the earlier of the entry into an agreement with respect to an Acquisition Proposal or the consummation of an Acquisition Proposal in the case of a termination by the Company pursuant to Section 8.1(b)(ii) or Section 8.1(b)(iii) or a termination pursuant to Section 8.1(c)(ii) or Section 8.1(c)(iii) (not required to be paid earlier under subclause (B)), and upon consummation of an Acquisition Proposal in the case of a termination by Parent pursuant to Section 8.1(b)(ii) or Section 8.1(b)(iii).  The Termination Fee and Reimbursable Expenses shall be paid by wire transfer of immediately available funds to

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such account as Parent may designate in writing to the Company.  Each of Parent, Merger Sub and the Company agree that, in the circumstances in which the Termination Fee becomes payable, the payment of the Termination Fee and the Reimbursable Expenses in accordance with this Agreement, (A) constitutes liquidated damages, (B) subject to Section 8.2(a) and Section 9.9, is the sole and exclusive remedy available to Parent and Merger Sub and (C) is not a penalty, but rather a reasonable amount that will compensate Parent and Merger Sub for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby.

(c)If Parent shall have terminated this Agreement pursuant Section 8.1(c)(ii) or Section 8.1(c)(iii), then the Company shall pay to Parent an amount equal to the Reimbursable Expenses as promptly as possible, but in any event within two Business Days after Parent or Merger Sub’s delivery of an invoice therefor (with reasonable documentation of such expenses).  The payment of Reimbursable Expenses pursuant to this Section 8.2(c) shall not relieve the Company from any obligation to pay the applicable Termination Fee pursuant to Section 8.2(b).

(d)If the Company shall have terminated this Agreement pursuant to Section 8.1(d)(ii), then Parent shall pay to the Company an amount equal to the Company’s out-of-pocket fees and expenses (including, without limitation, legal, investment banking, accounting, banking and consulting fees and expenses) incurred by the Company in connection with the Merger, this Agreement and the consummation of the Transactions contemplated hereby (subject to reasonable documentation), but not in excess of $500,000 as promptly as possible, but in any event within two Business Days after the Company’s delivery of an invoice therefor (with reasonable documentation of such expenses).

(e)The parties hereto acknowledge and agree that (i) none of HPT or any of its Subsidiaries or any of their respective former, current or future shareholders, directors, trustees, officers or Affiliates (collectively, the “HPT Related Persons”) shall have any liability to the Company or any other Person, whether in contract, tort or some other theory of liability, for any claim, action or proceeding arising out of or related to the HPT Purchase Agreement, this Agreement or the transactions contemplated by the HPT Purchase Agreement or this Agreement, or any breach or failure to perform hereunder or thereunder, except as and to the extent expressly provided for in the HPT Purchase Agreement; and (ii) the Investors shall have no liability to the Company or any other Person, whether in contract, tort or some other theory of liability, for any claim, action or proceeding arising out of or related to the Equity Commitment Agreement, this Agreement or the transactions contemplated by the Equity Commitment Agreement or this Agreement, or any breach or failure to perform hereunder or thereunder, except as and to the extent expressly provided for in the Equity Commitment Agreement.  For the avoidance of doubt, (i) in no event shall the Company or its stockholders be entitled to monetary damages in excess of an aggregate of $8,500,000 (the “Damages Cap”), inclusive of amounts payable pursuant to Section 8.2(d), and (ii) while prior to the termination of this Agreement, the Company may pursue both a grant of specific performance in accordance with Section 9.9 and monetary

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damages, under no circumstances shall the Company be entitled to receive both a grant of specific performance and monetary damages.  The provisions of this Section 8.2(e) are intended to be for the benefit of the HPT Related Persons and the Investors.

ARTICLE IX

MISCELLANEOUS

Section 9.1Amendment and Modification.  Subject to applicable Law and the provisions of this Agreement, this Agreement may be amended by the parties hereto at any time prior to the Effective Time, whether before or after the receipt of Company Stockholder Approval; provided, however, that, after the receipt of Company Stockholder Approval, no amendment may be made which by Law or any applicable rule or regulation of any stockexchange requires the further approval of the stockholders of the Company without such further approval.  This Agreement may not be amended except by an instrument in writing signed by the parties hereto.

Section 9.2Non-survival; Investigation.  None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants and agreements, shall survive the Effective Time, except for (i) those covenants and agreements contained herein that by their terms are to be performed in whole or in part after the Effective Time, including those covenants and agreements contained in Section 6.11(d) and Section 6.11(e), and (ii) this ARTICLE IX.  No investigation by and of any party or its Representatives shall affect the representations, warranties, covenants, agreements, rights or remedies of the parties set forth herein.

Section 9.3Expenses.  Except as set forth in Section 8.2(b), Section 8.2(c) and Section 8.2(d), all fees, costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such fees, costs and expenses.

Section 9.4Certain Definitions.  As used in this Agreement, the following terms shall have the meanings indicated below.

“Acquisition Proposal” means (i) any bona fide proposal made by any Person (other than Parent, Merger Sub or any Affiliate thereof) relating to any direct or indirect acquisition or purchase of 20% or more of the assets or business of the Company and its Subsidiaries, taken as a whole, or of 20% or more of any class of equity securities of the Company, (ii) any tender offer or exchange offer involving any class of equity securities of the Company, (iii) any merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company (or any Subsidiary or Subsidiaries which constitute 20% or more of the assets or business of the Company and its Subsidiaries, taken as a whole), or (iv) any other transaction, or series of related transactions, similar to any of the foregoing with respect to the Company, in each case other than any Transactions to be effected pursuant to this Agreement.

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“Business Day” shall mean a day other than Saturday or Sunday and on which commercial banks are open for business in Boston, Massachusetts.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Company IP” shall mean the Company Licensed IP and the Company Owned IP.

“Company Licensed IP” shall mean all Intellectual Property owned or controlled by a third Person and licensed to the Company or any Subsidiary of the Company.

“Company Owned IP” shall mean any Intellectual Property in which the Company or any Subsidiary of the Company has any ownership interest, whether singly, jointly or otherwise.

“Encumbrances” shall mean any liens, charges, security interests, options, claims, mortgages, pledges, or other encumbrances and restrictions of any nature whatsoever.

“Equity Commitment Agreement” shall mean the commitment letter, dated as of the date hereof, executed by the Investors and Parent.

“Funding Agreements” shall mean the Equity Commitment Agreement and the HPT Purchase Agreement.

“Intellectual Property” means all intellectual property and proprietary rights of any kind, including those arising from or in respect of the following throughout the world:  (i) all patents and industrial designs, including, without limitation, any continuations, divisionals, continuations-in-part, renewals, reissues, re-examinations, substitutions, extensions and applications for any of the foregoing; (ii) all trade secrets and other confidential or proprietary information, technology, know-how, inventions, processes, formulae, algorithms, models and methodologies; (iii) all copyrights, including without limitation moral rights and rights of attribution and integrity, copyrights in software and in the content contained on any Internet site, copyrights in works of art, and registrations and applications for any of the foregoing; (iv) all computer programs (whether in source code or object code form), databases, compilations and data, and all documentation related to any of the foregoing; (v) all trademarks, service marks, corporate names, trade names, domain names, logos, slogans, trade dress and other similar designations of source or origin and general intangibles of like nature, together with the goodwill of the business symbolized by any of the foregoing, registrations and applications relating to any of the foregoing; (vi) all rights of publicity, privacy and rights to personal information; and (vii) all rights in the foregoing and in other similar intangible assets.

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“IP Contracts” means all Contracts under which the Company or any of its Subsidiaries has obtained or granted any right, title or interest in or to, or which by their terms expressly restrict the Company or any of its Subsidiaries with respect to, any Intellectual Property, including all (i) licenses, consents to use, non-assertion agreements and coexistence agreements concerning Intellectual Property, and (ii) employee assignment agreements, nondisclosure agreements, consulting agreements, material transfer agreements and evaluation agreements with respect to any Intellectual Property.

“Investors” shall mean the stockholders of Parent.

“knowledge” of any Person which is not an individual means the actual knowledge, after due inquiry, of such Person’s and its Subsidiaries’ officers and directors.

“Law” shall mean with respect to any Person, any federal, state, foreign, local, municipal or other law, statute, constitution, principle of common law, ordinance, code, permit, rule, regulation, policy, guideline, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity or securities exchange or securities quotation system, and any orders, writs, injunctions, binding awards of a court or arbitrator, judgments and decrees applicable to such Person or its Subsidiaries, their business or any of their respective assets or properties.

“Order” shall mean any writ, judgment, injunction, consent, order, decree, stipulation, award or executive order of or by any Governmental Entity.

“HPT” shall mean Hospitality Properties Trust, a Maryland real estate investment trust.

“HPT Purchase Agreement” shall mean the Purchase Agreement, dated as of the date hereof, by and among Parent, Merger Sub and HPT.

“Reorganizations” shall mean the post-Closing corporate reorganizations of HPT, Parent, the Surviving Corporation and their respective Subsidiaries as described in an outline of such reorganizations provided by Parent to the Company prior to the execution of this Agreement.

“Securities Act” shall mean the U.S. Securities Act of 1933, as amended (including the rules and regulations promulgated thereunder).

“Superior Proposal” shall mean any bona fide, written Acquisition Proposal (except that references in the definition of “Acquisition Proposal” to “20% or more” shall be

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replaced by “100%”) that (a) provides for consideration to be received directly by holders of all, but not less than all, of the issued and outstanding Shares; (b) is received by the Company on an unsolicited basis, and in the absence of any material violation of Section 5.2 by the Company or any of its Representatives, (c) which the Board of Directors determines in good faith, after receiving advice from a nationally recognized investment banking firm and after considering the advice of outside legal counsel, is more favorable to the holders of the Shares than the Merger (or, if applicable, any written proposal by Parent to amend the terms of this Agreement) taking into account all the terms and conditions of such proposal and this Agreement (including the expected timing and likelihood of consummation, taking into account any governmental, regulatory and other approval requirements); and (d) which is not conditioned upon obtaining any financing.

“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means any and all taxes, including any interest, penalties, or other additions to tax that may become payable in respect thereof or in respect of a failure to timely or accurately file a Tax Return imposed by any Governmental Entity, including, without limiting the generality of the foregoing, all income taxes, profits taxes, taxes on gains, alternative minimum taxes, estimated taxes, payroll taxes, withholding taxes, unemployment insurance taxes, social security taxes, welfare taxes, disability taxes, severance taxes, taxes on stock, sales taxes, use taxes, ad valorem taxes, premium taxes, value added taxes, excise taxes, franchise taxes, gross receipts taxes, margins taxes, business organization taxes, business license taxes, occupation taxes, real or personal property taxes, stamp taxes, environmental taxes, transfer taxes, workers’ compensation taxes, windfall taxes, net worth taxes, and other taxes of the same or of a similar nature to any of the foregoing.

“Tax Return” shall mean any and all returns, reports, information returns, declarations, statements, certificates, bills, documents, claims for refund, or other written information of or with respect to any Tax which is supplied to, required to be supplied to orsupplied by any Taxing Authority, including any and all schedules, attachments, amendments and supplements thereto.

“Taxing Authority” means any and all U.S. federal, state, local and non-U.S. governments, agencies, and political subdivisions of any such government having jurisdiction over the assessment, determination, collection, imposition or administration of any Tax.

“Treasury Regulations” means the regulations promulgated under the Code.

Other capitalized terms defined elsewhere in this Agreement and not defined in this Section 9.4 shall have the meanings assigned to such terms in this Agreement.

Section 9.5Notices.  All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by a nationally recognized overnight courier service, such as Federal Express (providing

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proof of delivery), to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

(a)if to the Company to:

Sonesta International Hotels Corporation
116 Huntington Avenue
Boston, MA 02116
Fax No.:  (617) 421-5423
Attention:  Office of the Treasurer

with a copy to:

Goodwin Procter LLP
Exchange Place
53 State Street
Boston, MA 02109
Fax No:  (617) 523-1231
Attention:  Stuart M. Cable, Esq. and John T. Haggerty, Esq.

(b)if to Parent or Merger Sub to:

Property Acquisition Corp.
(a/k/a Sonesta Acquisition Corp.)
Suite 300
Two Newton Place
255 Washington Street
Newton, MA  02458
Fax No:  (617) 928-1305
Attention:  Jennifer B. Clark, Esq.

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, MA 02108
Fax No:  (617) 573-4822
Attention:  Margaret R. Cohen, Esq.

Section 9.6Interpretation.  When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated.  Whenever the words “include,” “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.”  As used in this Agreement, the term “Affiliates” shall have the meaning set forth in Rule 12b-2 of the Exchange Act.  The words describing the singular number shall include the plural and vice versa.  The words “hereof,” “herein,” “hereby” and “hereunder” and words of similar import when used in this Agreement

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shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The word “or” shall not be exclusive.  Whenever a reference is made in this Agreement to a document or material having been “furnished” to Parent, such term means that such document or material has been provided by the Company to Parent and its Representatives at least two Business Days prior to the date hereof (i) for review at the Company’s principal executive offices or (ii) in the virtual data room maintained on behalf of the Company.  Whenever used in this Agreement, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders.  The parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.  Headings in this Agreement are for the convenience of the parties only and shall be given no substantive or interpretive effect whatsoever.

Section 9.7Jurisdiction.  Each of Parent, Merger Sub and the Company hereby expressly, irrevocably and unconditionally submits, for itself and its property, to the exclusive personal jurisdiction of the courts of the Commonwealth of Massachusetts and to the jurisdiction of any other competent court of the Commonwealth of Massachusetts (collectively, the “Massachusetts Courts”), preserving, however, all rights of removal to the United States District Court for the District of Massachusetts under 28 U.S.C. Section 1441, assuming such jurisdiction exists, in connection with all disputes arising out of or in connection with this Agreement or the transactions contemplated hereby and agrees not to commence any Litigation relating thereto except in such courts.  Each such party hereby waives the right to any other jurisdiction or venue for any Litigation arising out of or in connection with this Agreement or the transactions contemplated hereby to which any of them may be entitled by reason of its present or future domicile.  Notwithstanding the foregoing, each such party agrees that each of the other parties shall have the right to bring any action or proceeding for enforcement of a judgment entered by the Massachusetts Courts, or the United States District Court for District of Massachusetts if the action was removed, in any other court or jurisdiction.

Section 9.8Service of Process.  Each of Parent, Merger Sub and the Company irrevocably consents to the service of process outside the territorial jurisdiction of the courts referred to in Section 9.7 of this Agreement in any such action or proceeding by mailing copies thereof by registered United States mail, postage prepaid, return receipt requested, to its address as specified in or pursuant to Section 9.5 of this Agreement.  However, the foregoing shall not limit the right of a party to effect service of process on the other party by any other legally available method.

Section 9.9Remedies.

(a)Each of Parent, Merger Sub and the Company acknowledges and agrees that in the event of any breach of this Agreement, each non-breaching party would be irreparably and immediately harmed and could not be made whole by monetary damages.  It is accordingly agreed that the parties hereto (a) will waive, in any action for specific performance, the defense of adequacy of a remedy at Law and (b) shall be entitled, in addition to any other remedy to which they may be entitled at Law or in equity, to compel specific performance of this

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Agreement.  For the avoidance of doubt, (x) after a valid termination of this Agreement pursuant to Section 8.1, no party shall have any right to compel specific performance of any Section of this Agreement other than the Sections of this Agreement that Section 8.2(a) expressly provides survive such termination, and (y) any action for specific performance commenced by the Company prior to termination of this Agreement shall not be construed as a waiver by the Company of its right to terminate this Agreement if otherwise available to the Company under Section 8.1.

(b)Subject to the Damages Cap, the Company has the right, prior to the Effective Time, to pursue damages of any type, including, without limitation, consequential or loss of the economic benefits of the Merger to stockholders, in the event of Parent’s or Merger Sub’s willful and material breach of this Agreement, fraud or failure to consummate the Merger if all conditions in Section 7.1 and Section 7.2 have been satisfied or waived on or prior to the Closing Date.

Section 9.10Counterparts.  This Agreement may be executed manually, electronically, or by facsimile by the parties hereto, in any number of counterparts, each of which shall be considered one and the same agreement and shall become effective when a counterpart of this Agreement shall have been signed by each of the parties and delivered to the other parties.

Section 9.11Entire Agreement; No Third-Party Beneficiaries.  This Agreement, the Company Disclosure Schedule and the Confidentiality Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and oral, among the parties or between any of them with respect to the subject matter hereof and thereof (provided that the provisions of this Agreement shall supersede any conflicting provisions of the Confidentiality Agreement).  Except as provided in Section 6.5, Section 8.2(e) and the last sentence of this Section 9.11, nothing in this Agreement, express or implied, is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder, other than if the Effective Time occurs, the right to receive payment of the Merger Consideration pursuant to ARTICLE II, which the holders of Certificates and Book Entry Shares are entitled to enforce after theEffective Time.  Peter J. Sonnabend shall have the right to enforce Section 6.11(d) and Section 6.11(e) of this Agreement on behalf of the Company after the Effective Time.

Section 9.12Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Entity to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party.  Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to give effect to the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the fullest extent possible.

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Section 9.13Governing Law.  This Agreement shall be governed by and construed in accordance with the Laws of the State of New York without giving effect to the principles of conflicts of law thereof.

Section 9.14Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING UNDER OR CONCERNING THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF OR CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING.

Section 9.15Assignment.  This Agreement shall not be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties, except that Merger Sub may assign any or all of its rights, interests and obligations hereunder to Parent, one or more Affiliates of Parent, or a combination thereof, at any time.  Subject to the foregoing, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and permitted assigns.

Section 9.16Performance of Merger Sub.  Parent hereby guarantees the due prompt and faithful performance and discharge by Merger Sub of its obligation to pay the Merger Consideration in accordance with the terms hereof and of all other obligations under this Agreement.

Section 9.17Remedies Cumulative.  Except as otherwise provided herein, all rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

[Signature Page Follows]

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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.

PROPERTY ACQUISITION CORP.
(a/k/a SONESTA ACQUISITION CORP.)
By
	Name:
	Title:
PAC MERGER CORP.
By
	Name:
	Title:
SONESTA INTERNATIONAL HOTELS CORPORATION
By
	Name:
	Title:

[Signature Page to Agreement and Plan of Merger]

Exhibit A
Voting Agreement

Exhibit B
Employee Retention Plan

EX-10.2

Exhibit 10.2

[FORM OF]

MANAGEMENT AGREEMENT

by and between

as “MANAGER”

as “OWNER”

Dated as of [·], 20  

ARTICLE I APPOINTMENT OF MANAGER	1
1.01 Appointment	1
1.02 Management of the Hotel	1
1.03 Services Provided by Manager	4
1.04 Employees	4
1.05 Right to Inspect	5
ARTICLE II TERM	5
2.01 Term	5
2.02 Early Termination	5
ARTICLE III COMPENSATION OF MANAGER; DISBURSEMENTS	6
3.01 Fees	6
3.02 Disbursements	6
3.03 Timing of Payments	7
ARTICLE IV ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS; WORKING CAPITAL AND OPERATING LOSSES	8
4.01 Accounting, Interim Payment and Annual Reconciliation	8
4.02 Books and Records	9
4.03 Accounts	9
4.04 Annual Operating Projection	10
4.05 Working Capital	10
4.06 Operating Losses	10
ARTICLE V REPAIRS, MAINTENANCE AND REPLACEMENTS	11
5.01 Manager’s Maintenance Obligation	11
5.02 Repairs and Maintenance to be Paid from Gross Revenues	11
5.03 Repairs and Maintenance to be Paid by Owner or Landlord	11
5.04 Capital Estimate	12
5.05 Additional Requirements	13
5.06 Ownership of Replacements	13
ARTICLE VI INSURANCE, DAMAGE, CONDEMNATION, AND FORCE MAJEURE	13
6.01 General Insurance Requirements	13
6.02 Waiver of Subrogation	13
6.03 Risk Management	14

6.04 Damage and Repair	14
6.05 Damage Near End of Term	15
6.06 Condemnation	15
6.07 Partial Condemnation	15
6.08 Temporary Condemnation	16
6.09 Allocation of Award	16
6.10 Effect of Condemnation	17
ARTICLE VII TAXES	17
7.01 Real Estate and Personal Property Taxes	17
ARTICLE VIII OWNERSHIP OF THE HOTEL	18
8.01 Ownership of the Hotel	18
8.02 No Covenants, Conditions or Restrictions	18
8.03 Liens; Credit	19
8.04 Financing	19
ARTICLE IX DEFAULTS	20
9.01 Manager Events of Default	20
9.02 Remedies for Manager Events of Default	21
9.03 Owner Events of Default	22
9.04 Remedies for Owner Events of Default	23
ARTICLE X ASSIGNMENT AND SALE	24
10.01 Assignment	24
10.02 Sale of the Hotel	25
10.03 Amendment of the Lease	25
ARTICLE XI MISCELLANEOUS	25
11.01 Right to Make Agreement	25
11.02 Actions By Manager	26
11.03 Relationship	26
11.04 Applicable Law	26
11.05 Notices	26
11.06 Environmental Matters	27
11.07 Confidentiality	28
11.08 Projections	28
11.09 Actions to be Taken Upon Termination	28
11.10 Trademarks, Trade Names and Service Marks	30
11.11 Waiver	31
11.12 Partial Invalidity	31

ii

11.13 Survival	31
11.14 Negotiation of Agreement	31
11.15 Entire Agreement	31
11.16 Affiliates	31
11.17 Arbitration	32
11.18 Permitted Contests	34
11.19 Estoppel Certificates	34
11.20 Indemnification	35
11.21 Remedies Cumulative	35
11.22 Amendments and Modifications	35
11.23 Claims; Binding Effect; Time of the Essence; Nonrecourse	35
11.24 Counterparts; Headings	36
11.25 No Political Contributions	36
11.26 REIT Qualification	36
11.27 Adverse Regulatory Event	37
11.28 Tax Matters	37
11.29 Third Party Beneficiaries	37
ARTICLE XII DEFINITION OF TERMS; CONSTRUCTION	37
12.01 Definition of Terms	37
12.02 Construction	48

Exhibit A                        The Site

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THIS MANAGEMENT AGREEMENT (this “Agreement”) is executed as of the [·] day of [·] 20     (the “Effective Date”), by [·], a [·] and [·] (“Owner”); and [·], a Delaware corporation (“Manager”).

R E C I T A L S:

A.[·] (“Landlord”) is the owner of fee title to the real property (the “Site”) described on Exhibit A to this Agreement on which certain improvements have been constructed consisting of a building or buildings containing [·] Guest Rooms, and certain other amenities and related facilities (collectively, the “Building”).  The Site and the Building, in addition to certain other rights, improvements, and personal property, are referred to as the “Hotel” and more particularly described in the definition in Section 12.01.  Pursuant to the Lease, Landlord has leased the Hotel to Owner.

B.Owner desires to engage Manager and Manager desires to be engaged to manage and operate the Hotel as of the Effective Date on the terms and conditions in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt of which is hereby acknowledged, Owner and Manager agree as follows:

ARTICLE I

APPOINTMENT OF MANAGER

1.01Appointment.  Subject to the provisions of this Agreement, Owner hereby engages Manager to supervise, direct and control the management and operation of the Hotel during the Term.  Manager accepts such engagement and agrees to manage and operate the Hotel during the Term in accordance with the terms and conditions of this Agreement.  The Hotel shall be known as a [insert Sonesta brand name].  All capitalized terms shall have the meaning ascribed to them in Article XII.

1.02Management of the Hotel.

A.The management and operation of the Hotel shall be under the exclusive supervision and control of Manager except as otherwise specifically provided in this Agreement.  Manager shall manage and operate the Hotel in an efficient and economical manner consistent with standards prevailing in other hotels in the System, including all activities in connection therewith which are customary and usual to such an operation (provided, however, that if the market area or the physical peculiarities of the Hotel warrant, in the reasonable judgment of Manager, a deviation from such standards shall be permitted (the “Operating Standards”)).  Manager shall, in accordance with the System Standards, the Operating Standards and the terms of this Agreement:

1.Recruit, employ, supervise, direct and (when appropriate) discharge the employees at the Hotel.

2.Establish Guest Room rates and prices, rates and charges for services provided in the Hotel.

3.Establish administrative policies and procedures, including policies and procedures for employment, control of revenue and expenditures, maintenance of bank accounts for the purchasing of supplies and services, control of credit, and scheduling of maintenance and verify that the foregoing procedures are operating in a sound manner.

4.Manage expenditures to replenish Inventories and Fixed Asset Supplies, make payments on accounts payable and collect accounts receivable.

5.Arrange for and supervise public relations and advertising and prepare marketing plans.

6.Procure all Inventories and replacement Fixed Asset Supplies.

7.Prepare and deliver Monthly Statements, Annual Operating Statements, Annual Operating Projections, Capital Estimates, Capital Statements and such other information required by this Agreement or as Owner may reasonably request.

8.Plan, execute and supervise repairs, maintenance alterations and improvements at the Hotel.

9.Provide, or cause to be provided, risk management services relating to the types of insurance required to be obtained or provided by Manager under this Agreement and provide such information related to risk management as Owner may from time to time reasonably request.

10.Obtain and keep in full force and effect, either in its own name or in Owner’s and/or Landlord’s name, as may be required by applicable law, any and all licenses and permits to the extent within the control of Manager (or, if not within the control of Manager, Manager shall use commercially reasonable efforts to obtain and keep same in full force and effect).

11.Reasonably cooperate in a Sale of the Hotel or in obtaining a Mortgage.

12.Subject to Section 10.01.C, negotiate and administer, on behalf of Owner, leases, subleases, licenses and concession agreements for all public space at the Hotel, including all retail, office and lobby space.

13.On behalf of Owner, negotiate, enter into and administer service contracts and licenses for the operation of the Hotel, including contracts and licenses for health and safety, systems maintenance, electricity, gas, telephone, cleaning, elevator and boiler maintenance, air conditioning maintenance, laundry and dry cleaning, master television service, internet service, use of copyrighted materials (such as music and videos), entertainment and other services as Manager deems advisable.

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14.Negotiate, enter into and administer contracts for the use of banquet and meeting facilities and Guest Rooms by groups and individuals.

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

16.Make representatives available to consult with and advise Owner, at Owner’s reasonable request, concerning policies and procedures affecting the conduct of the business of the Hotel.

17.Collect on behalf of Owner and account for and remit to governmental authorities all applicable excise, sales, occupancy and use taxes or similar governmental charges collected by or at the Hotel directly from guests, members or other patrons, or as part of the sales price of any goods, services or displays, such as gross receipts, admission or similar or equivalent taxes, duties, levies or charges.

18.Keep Owner advised of significant events which occur with respect to the Hotel which might reasonably be expected to have a material adverse effect on the financial performance or value of the Hotel.

19.Perform such other tasks with respect to the Hotel as are customary and consistent with the Operating Standards and the System Standards.

B.Manager shall use commercially reasonable efforts to comply with all Legal Requirements and Insurance Requirements pertaining to its operation of the Hotel.

C.Manager shall use commercially reasonable efforts to obtain and maintain all approvals necessary to use and operate the Hotel in accordance with the System Standards, Operating Standards and Legal Requirements.  Owner shall cooperate with Manager and shall (or cause Landlord to) execute all applications and consents reasonably required to be executed by Owner in order for Manager to obtain and maintain such approvals.

D.Manager shall not use, and shall exercise commercially reasonable efforts to prevent the use of, the Hotel and Owner’s Personal Property, if any, for any unlawful purpose.  Manager shall not commit, and shall use commercially reasonable efforts to prevent the commission of, any waste at the Hotel.  Manager shall not use, and shall use commercially reasonable efforts to prevent the use of, the Hotel in such a manner as will constitute an unlawful nuisance.  Manager shall use commercially reasonable efforts to prevent the use of the Hotel in such a manner as might reasonably be expected to impair Owner’s or Landlord’s title thereto or any portion thereof or might reasonably be expected to give rise for a claim or claims for adverse use or adverse possession by the public, or of implied dedication of the Hotel or any portion thereof.

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1.03Services Provided by Manager.  Manager shall furnish certain services, from time to time during the Term, which are furnished generally on a central or regional basis to other hotels in the System which are managed by Manager, and which benefit the Hotel as a participant in the System, such as:  national sales office services; central operational support for rooms, food and beverage and engineering; central training services; career development; management personnel relocation; central safety and loss prevention services; central advertising and promotion (including direct and image media and advertising administration); consumer affairs to the extent not charged or allocated directly to the Hotel; the national reservations system service and inventory and revenue management services; centralized payroll and accounting services; computer system development, support and operating costs; central monitoring and management support from “line management” personnel such as area managers; and such additional central or regional services as are or may be, from time to time, furnished for the benefit of hotels in the System or in substitution for services now performed at individual hotels which may be more efficiently performed on a group basis.

Other than the charges for the national reservation system services, for which Manager receives the Reservation Fee, the charges for the services listed in this Section 1.03 shall not be separately compensated and are included in the System Fee.

1.04Employees.

A.All personnel employed at the Hotel shall at all times be the employees of Manager.  Subject to the terms of this Agreement, Manager shall have absolute discretion with respect to all personnel employed at the Hotel, including, without limitation, decisions regarding hiring, promoting, transferring, compensating, supervising, terminating, directing and training all employees at the Hotel, and, generally, establishing and maintaining all policies relating to employment; provided Manager shall not enter into any written employment agreements with any person which purport to bind Owner and/or purport to be effective regardless of a termination, without obtaining Owner’s consent.  Manager shall comply with all Legal Requirements regarding labor relations; if either Manager or Owner shall be required, pursuant to any such Legal Requirement, to recognize a labor union or to enter into a collective bargaining with a labor union, the party so required shall promptly notify the other party.  Manager shall have the authority to negotiate and settle labor union contracts with union employees and union representatives and Manager is authorized to settle labor disputes and administrative claims as may be routinely necessary in the daily management of the Hotels, provided Owner shall be given prompt notice of any negotiations which could reasonably be expected to result in contracts which would bind Owner and shall be provided with any written materials in connection therewith and at least ten (10) days prior to execution of any contract or amendment.  Manager shall indemnify Owner and Landlord for all costs and expenses (including reasonable attorneys’ fees) incurred by either of them if either of them are joined in or made party to any suit or cause of action alleging that Manager has failed to comply with all Legal Requirements pertaining to the employment of Manager’s employees at the Hotel.

B.Manager shall have the authority to hire, dismiss or transfer the Hotel’s general manager, provided Manager shall keep Owner reasonably informed with respect to such actions.

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C.Manager shall decide which, if any, of the employees of the Hotel shall reside at the Hotel (provided that Owner’s prior approval shall be obtained if more than two (2) such employees and their immediate families reside at the Hotel), and shall be permitted to provide free accommodations and amenities to its employees and representatives living at or visiting the Hotel in connection with its management or operation consistent with Manager’s usual practices for hotels in the System.  No person shall otherwise be given gratuitous accommodations or services without prior approval of Owner and Manager, except in accordance with usual practices of the hotel and travel industry.

1.05Right to Inspect.  Manager shall permit Owner and Landlord and their respective authorized representatives to inspect or show the Hotel during usual business hours upon not less than twenty-four (24) hours’ notice and to make such repairs as Owner and Landlord are permitted or required to make pursuant to the terms of the Lease, provided that any inspection or repair by Owner or Landlord or their representatives shall not unreasonably interfere with the use and operation of the Hotel and further provided that in the event of an emergency as determined by Owner or Landlord in its reasonable discretion, prior notice shall not be required.

ARTICLE II

TERM

2.01Term.

A.The term of this Agreement (the “Term”) shall begin on the Effective Date and shall continue until [25 years] (the “Initial Term”) and, provided there exists no Manager Event of Default, the Term shall thereafter automatically be extended for each of two (2) successive periods of fifteen (15) years (each, a “Renewal Term”), unless Manager gives notice of Manager’s decision not to extend on or before the date which is twenty-four (24) months prior to the date of the expiration of the Initial Term or first Renewal Term, as the case may be, time being of the essence.  If Manager does not extend the Initial Term or the first Renewal Term, as the case may be, this Agreement shall automatically terminate at the end of the Term then in effect, and Manager shall have no further option to extend the Term, provided during the twenty-four (24) month period prior to the date of the expiration of the Initial Term or first Renewal Term, as the case may be, Owner shall have the right to effect an earlier termination of this Agreement by notice to Manager, which termination shall be effective as of the date which is set forth in such notice, provided that such date shall be at least ninety (90) days after the date of such notice, and such termination shall be in accordance with the provisions of Section 11.09.

B.Each Renewal Term shall commence on the day succeeding the expiration of the Initial Term or the preceding Renewal Term, as the case may be.  All of the terms, covenants and provisions of this Agreement shall apply to each Renewal Term, except that the Term shall not be extended beyond [55 years].

2.02Early Termination.  Without limiting either party’s rights under Article IX:

1.Beginning [after third full year of Term], Owner may terminate this Agreement without cause at any time, upon sixty (60) days notice to Manager given within thirty

5

(30) days prior to or after January 1 in any Year.  Upon termination under this Section 2.02 by Owner, Owner shall pay Manager the Termination Fee, within sixty (60) days of the effective date of termination, as liquidated damages and in lieu of any other remedy of Manager at law or in equity, and such termination shall otherwise be in accordance with the provisions of Section 11.09.

2.Owner may terminate this Agreement upon sixty (60) days notice to Manager given within thirty (30) days prior to or after January 1 in any Year if the actual amounts paid to Owner as Owner’s Priority during any three (3) of four (4) consecutive Years are less than six percent (6%) of Invested Capital, determined annually, in those years, and such termination shall be in accordance with the provisions of Section 11.09.

3.Manager may terminate this Agreement upon sixty (60) days notice to Owner given within sixty (60) days following a Change in Control of Owner and such termination shall be in accordance with the provisions of Section 11.09.

4.Owner may terminate this Agreement upon sixty (60) days notice to Manager given within sixty (60) days following a Change in Control of Manager and such termination shall be in accordance with the provisions of Section 11.09.

ARTICLE III

COMPENSATION OF MANAGER; DISBURSEMENTS

3.01Fees.(1)  In consideration of the management services to be performed during the Term, Manager shall be paid the sum of the following:

A.Base Management Fee;

B.Reservation Fee;

C.System Fee;

D.Procurement and Construction Supervision Fee; and

E.Incentive Management Fee.

3.02Disbursements.  Gross Revenues shall be distributed in the following order of priority:

A.First, to pay all Deductions (excluding the Base Management Fee, the Reservation Fee and the System Fee);

B.Second, to Manager, an amount equal to the Base Management Fee, the Reservation Fee and the System Fee;

(1)  For the Royal Sonesta New Orleans, a Base Management Fee of 3% will be the only fee.

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C.Third, to Owner, an amount equal to Owner’s Priority.

D.Fourth, pari passu, to (i) Owner, in an amount necessary to reimburse Owner for all Owner Working Capital Advances and Owner Operating Loss Advances (collectively, “Owner Advances”) which have not yet been repaid pursuant to this Section 3.02, and (ii) to Manager, in an amount necessary to reimburse Manager for all Additional Manager Advances which have not yet been repaid pursuant to this Section 3.02.  If at any time the amounts available for distribution to Owner and Manager pursuant to this Section 3.02 are insufficient (a) to repay all outstanding Owner Advances, and (b) all outstanding Additional Manager Advances, then Owner and Manager shall be paid from such amounts the amount obtained by multiplying a number equal to the amount of the funds available for distribution by a fraction, the numerator of which is the sum of all outstanding Owner Advances, or all outstanding Additional Manager Advances, as the case may be, and the denominator of which is the sum of all outstanding Owner Advances plus the sum of all outstanding Additional Manager Advances.

E.Fifth, to Manager, an amount equal to the Incentive Management Fee.

F.Finally, to Owner, the Owner’s Residual Payment.

3.03Timing of Payments.  Payment of the Deductions, excluding the Base Management Fee, the Reservation Fee and the System Fee, shall be made in the ordinary course of business.  The Base Management Fee, the Reservation Fee and the System Fee shall be paid on the last Business Day of each calendar month, in arrears, based upon the prior month’s Gross Revenues or Gross Room Revenues, as the case may be, as reflected in the Monthly Statement for such prior month.  The Owner’s Priority shall be paid on the last Business Day of each calendar month, in arrears, in equal monthly installments, based upon Invested Capital most recently reported to Manager by Owner.  If any installment of the Base Management Fee, the Reservation Fee, the System Fee or the Owner Priority is not paid when due, it shall accrue interest at the Interest Rate. The Incentive Fee and Owner’s Residual Payment shall be paid on the last Business Day of the calendar month following the calendar quarter to which such Incentive Fee and/or Owner’s Residual Payment relates, in arrears, based upon the year-to-date Operating Profit as reflected in the Monthly Statement for the last calendar month of such calendar quarter and shall be adjusted, after the first calendar quarter, to reflect distributions for prior calendar quarters.  Additional adjustments to all payments will be made on an annual basis based upon the Annual Operating Statement for the Year and any audit conducted pursuant to Section 4.02.

If the portion of Gross Revenues to be distributed to Manager or Owner pursuant to Section 3.02 is insufficient to pay amounts then due in full, any amounts left unpaid shall be paid from and to the extent of Gross Revenues available therefor at the time distributions are made in successive calendar months until such amounts are paid in full, together with interest thereon, if applicable, and such payments shall be made from such available Gross Revenues in the same order of priority as other payments made on account of such items in successive calendar months.

Calculations and payments of the fees and other payments in Section 3.02 and distributions of Gross Revenues within a Year shall be accounted for cumulatively within a Year,

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but shall not be cumulative from one Year to the next.  Calculations and payments of Reimbursable Advances shall be accounted for cumulatively within a Year, and shall be cumulative from one Year to the next.

ARTICLE IV

ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS; WORKING CAPITAL AND OPERATING LOSSES

4.01Accounting, Interim Payment and Annual Reconciliation.

A.Within twenty (20) days after the close of each calendar month, Manager shall deliver an accounting (the “Monthly Statement”) to Owner showing Gross Revenues, Gross Room Revenues, occupancy percentage and average daily rate, Deductions, Operating Profit, and applications and distributions thereof for the preceding calendar month and year-to-date.

B.Within sixty (60) days after the end of each Year, Manager shall deliver to Owner and Landlord a statement (the “Annual Operating Statement”) in reasonable detail summarizing the operations of the Hotel for the immediately preceding Year and an Officer’s Certificate setting forth the totals of Gross Revenues, Deductions, and the calculation of the Incentive Management Fee and Owner’s Residual Payment for the preceding Year and certifying that such Annual Operating Statement is true and correct.  Manager and Owner shall, within ten (10) Business Days after Owner’s receipt of such statement, make any adjustments, by cash payment, in the amounts paid or retained for such Year as are required because of variances between the Monthly Statements and the Annual Operating Statement.  Any payments shall be made together with interest at the Interest Rate from the date such amounts were due or paid, as the case may be, until paid or repaid.  The Annual Operating Statement shall be controlling over the Monthly Statements and shall be final, subject to adjustments required as a result of an audit requested by Owner or Landlord pursuant to Section 4.02.B.

C.1.  In addition, Manager shall provide such information relating to the Hotel and public information relating to Manager and its Affiliates that (a) may be reasonably required in order for Landlord, Owner or HPT, to prepare financial statements in accordance with GAAP or to comply with applicable securities laws and regulations and the SEC’s interpretation thereof, (b) may be reasonably required for Landlord, Owner or HPT, as applicable, to prepare federal, state or local tax returns, or (c) is of the type that Manager customarily prepares for other hotel owners.  The foregoing does not constitute an agreement by Manager either to join Landlord, Owner or HPT, as applicable, in a filing with or appearance before the SEC or any other regulatory authority or to take or consent to any other action which would cause Manager to be liable to any third party for any statement or information other than those statements incorporated by reference pursuant to clause (a) above.

2.Owner may at any time, and from time to time, provide copies of any of the statements furnished under this Section 4.01 to any Person which has made or is contemplating making a Mortgage, or a prospective purchaser in connection with a Sale of the Hotel, subject to such Person entering into a confidentiality agreement with Manager as Manager may reasonably require.

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3.In addition, Owner or Landlord shall have the right, from time to time at Owner’s or Landlord’s as the case may be, sole cost and expense, upon reasonable notice, during Manager’s customary business hours, to cause Manager’s books and records with respect to the Hotel to be audited by auditors selected by Owner or Landlord, as applicable, at the place or places where such books and records are customarily kept.

4.02Books and Records.

A.Books of control and account pertaining to operations at the Hotel shall be kept on the accrual basis and in all material respects in accordance with the Uniform System of Accounts and with GAAP (provided that, to the extent of a conflict, GAAP shall control over the Uniform System of Accounts), or in accordance with such industry standards or such other standards with which Manager is required to comply from time to time, with the exceptions, if any, provided in this Agreement, to the extent applicable which will accurately record the Gross Revenues and the application thereof.  Manager shall retain, for at least three (3) years after the expiration of each Year, reasonably adequate records showing Gross Revenues and the application thereof for such Year.  The provisions of this Section 4.02.A shall survive termination.

B.Owner and Landlord may at reasonable intervals during Manager’s normal business hours, examine such books and records including, without limitation, supporting data and sales and excise tax returns.  If Owner or Landlord desires, at its own expense, to audit, examine, or review the Annual Operating Statement, it shall notify Manager in writing within one (1) year after receipt of such statement of its intention to audit and begin such audit within such one (1) year after Manager’s receipt of such notice.  Owner or Landlord, as the case may be, shall use commercially reasonable efforts to complete such audit as soon as practicable after the commencement thereof, subject to reasonable extension if Landlord’s or Owner’s accountant’s inability to complete the audit within such time is caused by Manager.  If neither Landlord nor Owner makes such an audit, then such statement shall be deemed to be conclusively accepted by Owner as being correct, and neither Landlord nor Owner shall have any right thereafter, except in the event of fraud by Manager, to question or examine the same.  If any audit by Owner or Landlord discloses an understatement or overpayment of any net amounts due Owner or Manager, Manager shall promptly after completion of the audit, render a statement to Owner and Landlord setting forth the adjustments required to be made to the distributions under Section 3.02 for such Year as a result of such audit and Owner and Manager, as the case may be, shall make any additional payments required to comply with such revised statement together with interest at the Interest Rate from the date when due or overpaid.  Any dispute concerning the correctness of an audit shall be settled by arbitration.  Manager shall pay the cost of any audit revealing understatement of Operating Profit by more than three percent (3%), and such amount shall not be a Deduction. The provision of this Section 4.02.B shall survive termination.

4.03Accounts.  All funds derived from the operation of the Hotel shall be deposited by Manager in a bank account(s) in a bank designated by Manager.  Withdrawals from such accounts shall be made solely by representatives of Manager whose signatures have been authorized.  Reasonable petty cash shall be maintained at the Hotel.

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4.04Annual Operating Projection.  Manager shall furnish to Owner for its review, at least thirty (30) days prior to the beginning of each Year, a statement of the estimated financial results of the operation of the Hotel for the forthcoming Year (“Annual Operating Projection”).  Such projection shall project the estimated Gross Revenues, Deductions, and Operating Profit.  Manager agrees to make qualified personnel from Manager’s staff available to explain such Annual Operating Projections, at Owner’s request.  Manager will at all times give good faith consideration to Owner’s suggestions regarding any Annual Operating Projection.  Manager shall thereafter submit to Owner, by no later than seventy-five (75) days after the beginning of such Year, a modified Annual Operating Projection if any changes are made following receipt of comments from Owner.  Manager shall endeavor to adhere to the Annual Operating Projection.  It is understood, however, that the Annual Operating Projection is an estimate only and that unforeseen circumstances including the costs of labor, material, services and supplies, casualty, operation of law, or economic and market conditions may make adherence to the Annual Operating Projection impracticable, and Manager shall be entitled to depart therefrom due to causes of the foregoing nature; provided, however, that nothing herein shall be deemed to authorize Manager to take any action prohibited by this Agreement or to reduce Manager’s other rights or obligations hereunder.

4.05Working Capital.  On the Effective Date, Owner will advance to Manager, as Working Capital, an amount equal to [$1,500/full service hotel] [$750/limited service hotel] multiplied by the number of Guest Rooms .  Upon notice from Manager, Owner shall have the right, without any obligation and in its sole discretion, to advance additional funds necessary to maintain Working Capital (“Additional Working Capital”) at levels determined by Manager to be reasonably necessary to satisfy the needs of the Hotel as its operation may from time to time require within ten (10) Business Days of such request.  Any such request by Manager shall be accompanied by a reasonably detailed explanation of the reasons for the request.  If Owner does not advance such Additional Working Capital, Manager shall have the right, without any obligation and in its sole discretion, to fund Additional Working Capital within ten (10) Business Days after such initial ten (10) day period.  All such advances shall be Owner Working Capital Advances or Additional Manager Advances, as applicable.  If neither party elects to fund Additional Working Capital, Manager may elect, by notice to Owner given within thirty (30) days thereafter, to terminate this Agreement, which termination shall be effective thirty (30) days after the date such notice is given; upon such termination, Owner shall pay Manager the Termination Fee, within sixty (60) days of the effective date of termination, as liquidated damages and in lieu of any other remedy of Manager at law or in equity, and such termination shall otherwise be in accordance with the provisions of Section 11.09.

4.06Operating Losses.  To the extent there is an Operating Loss for any calendar month, Owner shall have the right, without any obligation and in its sole discretion, to fund such Operating Loss within twenty (20) days after Manager has delivered notice thereof to Owner and any Operating Loss funded by Owner shall be a “Owner Operating Loss Advance.”  If Owner does not fund such Operating Loss, Manager shall have the right, without any obligation and in its sole discretion, to fund such Operating Loss within twenty (20) days after such initial twenty (20) day period, and any Operating Loss so funded by Manager shall be an Additional Manager Advance.  If neither party elects to fund such Operating Loss, Manager may elect, by notice to Owner given within thirty (30) days thereafter, to terminate this Agreement, which termination

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shall be effective thirty (30) days after the date such notice is given; upon such termination, Owner shall pay Manager the Termination Fee, within sixty (60) days of the effective date of termination, as liquidated damages and in lieu of any other remedy of Manager at law or in equity and such termination shall otherwise be in accordance with the provisions of Section 11.09.

ARTICLE V

REPAIRS, MAINTENANCE AND REPLACEMENTS

5.01Manager’s Maintenance Obligation.  Manager shall maintain the Hotel, including all private roadways, sidewalks and curbs located thereon, in good order and repair, reasonable wear and tear excepted, and in conformity with Legal Requirements, Insurance Requirements, System Standards and any Existing CC&Rs or Future CC&Rs.  Manager shall promptly make or cause to be made all necessary and appropriate repairs, replacements, renewals, and additions thereto of every kind and nature, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the commencement of the Term.  All repairs, renovations, alterations, improvements, renewals, replacements or additions shall be made in a good, workmanlike manner, consistent with Manager’s and industry standards for like hotels in like locales, in accordance with all applicable federal, state and local statutes, ordinances, by-laws, codes, rules and regulations relating to any such work.  Manager shall not take or omit to take any action, with respect to the Hotel the taking or omission of which would materially and adversely impair the value of the Hotel or any part thereof for its use as a hotel.  The cost and expense incurred in connection with Manager’s obligations hereunder shall be paid either from Gross Revenues or Working Capital or from funds provided by Owner or Landlord, as the case may be.

5.02Repairs and Maintenance to be Paid from Gross Revenues.  Manager shall promptly make or cause to be made, such routine maintenance, repairs and minor alterations as it determines are necessary to comply with Manager’s obligations under Section 5.01.  The phrase “routine maintenance, repairs, and minor alterations” shall include only those which are normally expensed under GAAP.  The cost of such maintenance, repairs and alterations shall be paid from Gross Revenue or Working Capital.

5.03Repairs and Maintenance to be Paid by Owner or Landlord.  To the extent funds are provided by Owner or Landlord under Section 5.04, Manager shall promptly make or cause to be made, all of the items listed below as are necessary to comply with Manager’s obligations under Section 5.01:

1.Replacements, renewals and additions related to the FF&E;

2.Routine or non-major repairs, renovations, renewals, additions, alterations, improvements or replacements and maintenance which are normally capitalized (as opposed to expensed) under GAAP, such as exterior and interior repainting; resurfacing building walls, floors, roofs and parking areas; and replacing folding walls and the like (but which are not major repairs, alterations, improvements, renewals, replacements, or additions to the Hotel’s structure,

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roof, or exterior façade, or to its mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation systems); and

3.Major repairs, renovations, additions, alterations, improvements, renewals or replacements to the Hotel including, without limitation, with respect to its structure, roof, or exterior façade, and to its mechanical, electrical, heating, ventilating, air conditioning, plumbing or vertical transportation systems.

5.04Capital Estimate.

A.Manager shall prepare and deliver to Owner and Landlord for their review and approval, at the same time the Annual Operating Projection is submitted, an estimate for the Hotel of the capital expenditures necessary during the forthcoming Year for replacements, renewals, and additions to the FF&E of the Hotel and repairs, renovations, additions, alterations, improvements, renewals or replacements to the Hotel of the nature described in Section 5.03 (a “Capital Estimate”).  Manager agrees to make qualified personnel from Manager’s staff available to explain each Capital Estimate, at Owner’s request.  Failure of Owner or Landlord to approve or disapprove a Capital Estimate within twenty (20) Business Days after receipt of all information and materials requested by Owner or Landlord in connection therewith shall be deemed to constitute approval.

B.If any dispute shall arise with respect to the approval by either Owner or Landlord of a Capital Estimate, Manager shall meet with Owner and Landlord to discuss the objections, and Manager, Owner and Landlord shall attempt in good faith to resolve any disagreement relating to the Capital Estimate.  If after sixty (60) days such disagreement has not been resolved, any party may submit the issue to arbitration.

C.Provided that there then exists no Manager Event of Default, and Manager shall otherwise comply with the provisions of Section 5.05, as applicable, Owner shall, within ten (10) Business Days after notice given not more often than monthly, disburse (or cause Landlord to disburse) such funds as are required to fund the capital expenditures in an approved Capital Estimate to Manager.  In consideration for Manager’s services under Section 5.03, Manager shall receive the Procurement and Construction Supervision Fee which shall be paid on the last Business Day of the calendar month following the calendar quarter to which the Procurement and Construction Supervision Fee relates, in arrears, based upon the prior month’s Capital Statement.

D.A failure or refusal by Owner or Landlord to provide the additional funds required under an approved Capital Estimate (including after resolution by arbitration, if applicable) shall entitle Manager, at its option, to notify Owner and Landlord that Manager will terminate this Agreement.  If Owner or Landlord does not make the funds available within thirty (30) days after receipt of such notice of intent to terminate, Manager may, without obligation and in its sole discretion, fund all or a portion of the amounts required and any amounts funded by Manager shall constitute an Additional Manager Advance, or elect to terminate this Agreement by notice to Owner given within thirty (30) days thereafter and this Agreement shall terminate as of the date that is one hundred eighty (180) days after the date of Owner’s receipt of Manager’s notice; upon such termination, Owner shall pay Manager the Termination Fee, within sixty (60) days of

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the effective date of termination, as liquidated damages and in lieu of any other remedy of Manager at law or in equity and such termination shall otherwise be in accordance with the provisions of Section 11.09.

5.05Additional Requirements.

A.All expenditures from amounts funded pursuant to the Capital Estimate shall be (as to both the amount of each such expenditure and the timing thereof) both reasonable and necessary given the objective that the Hotel will be maintained and operated to a standard comparable to competitive properties and in accordance with the System Standards.

B.Manager shall provide to Owner and Landlord within twenty (20) days after the end of each calendar month, a statement (“Capital Statement”) setting forth, on a line item basis, expenditures made to date and any variances or anticipated variances and/or amendments from the applicable Capital Estimate.

C.Other than Owner’s or Manager’s personal property, all materials which are scrapped or removed in connection with the making of any major or non-major repairs, renovation, additions, alterations, improvements, removals or replacements shall be disposed of by Manager and the net proceeds thereof shall be added to Working Capital and not included in Gross Revenue.

D.Owner and Landlord may not withhold their approval of a Capital Estimate with respect to such items as are (1) required in order for the Hotel to comply with System Standards, except during the last two (2) years of the Term, during which time approval may be withheld in Owner’s or Landlord’s discretion; or (2) required by reason of or under any Insurance Requirement or Legal Requirement, or otherwise required for the continued safe and orderly operation of the Hotel.

5.06Ownership of Replacements.  All repairs, renovations, additions, alterations, improvements, renewals or replacements made pursuant to this Article V, shall, except as otherwise provided in this Agreement, be the property of Landlord or Owner, as applicable, as provided under the Lease.

ARTICLE VI

INSURANCE, DAMAGE, CONDEMNATION, AND FORCE MAJEURE

6.01General Insurance Requirements. Manager shall, at all times during the Term, keep (or cause to be kept) the Hotel and all property located therein or thereon, insured against the risks and in such amounts as Owner and Manager shall agree and as may be commercially reasonable.  Any disputes regarding such matters not resolved by the parties within ten (10) Business Days (which period may be extended upon mutual agreement of the parties) shall be resolved by arbitration.

6.02Waiver of Subrogation.  Owner and Manager agree that (insofar as and to the extent that such agreement may be effective without invalidating or making it impossible to

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secure insurance coverage from responsible insurance companies doing business in the State) with respect to any property loss which is covered by insurance then being carried by Owner or Manager, the party carrying such insurance and suffering said loss releases the others of and from any and all claims with respect to such loss; and they further agree that their respective insurance companies (and, if Owner or Manager shall self insure in accordance with the terms hereof, Owner or Manager, as the case may be) shall have no right of subrogation against the other on account thereof, even though extra premium may result therefrom.  If any extra premium is payable by Manager as a result of this provision, Owner shall not be liable for reimbursement to Manager for such extra premium.

6.03Risk Management.  Manager shall be responsible for the provision of risk management oversight at the Hotel.

6.04Damage and Repair.

A.If, during the Term, the Hotel shall be totally or partially destroyed and the Hotel is thereby rendered Unsuitable for Its Permitted Use, (1) Manager may terminate this Agreement by sixty (60) days notice to Owner and Landlord, or (2) Owner may terminate this Agreement by sixty (60) days notice to Manager and Landlord, whereupon, this Agreement, shall terminate and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage.

B.If, during the Term, the Hotel is damaged or destroyed by fire, casualty or other cause but is not rendered Unsuitable for Its Permitted Use, subject to Sections 6.04.C and 6.04.D, Manager shall cause the Hotel to be repaired and restored, in compliance with all Legal Requirements and Insurance Requirements and so that the Hotel shall be, to the extent practicable, substantially equivalent in value and general utility to its general utility and value immediately prior to such damage or destruction and in compliance with System Standards in consideration of the Procurement and Construction Supervision Fee.

C.1.  If the cost of the repair or restoration of the Hotel is less than the sum of the amount of insurance proceeds received by Owner and Landlord plus the deductible amount, Owner shall (or shall cause Landlord to) make the funds necessary to cause the Hotel to be repaired and restored available to Manager.

2.If the amount of insurance proceeds received by Landlord and Owner plus the deductible amount, is less than the cost of the repair or restoration of the Hotel, Manager shall give notice to Owner and Landlord setting forth the deficiency in reasonable detail.  Owner shall have the right, without any obligation and in its sole discretion, to fund the deficiency and shall give Manager and Landlord notice within twenty (20) days after notice from Manager.  If Owner elects not to fund the deficiency, Landlord shall have the right, without obligation and in its sole discretion, to fund the deficiency and shall give Manager and Owner notice within twenty (20) days after notice from Owner.  If neither Landlord nor Owner elect to fund the deficiency, this Agreement shall terminate and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage.

D.If Owner is required or if Owner or Landlord elects to make the funds necessary to cause the Hotel to be repaired and restored available to Manager, Owner shall (or shall cause

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Landlord to) advance the insurance proceeds and any additional amounts payable by Owner or Landlord to Manager regularly during the repair and restoration period.  Any such advances shall be made not more frequently than monthly within ten (10) Business Days after Manager submits to Owner a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Owner and Landlord.  Owner or Landlord may condition advancement of the insurance proceeds and other amounts on (i) the absence of an event of default under the Lease, (ii) approval of plans and specifications of an architect satisfactory to Landlord and Owner (which approval shall not be unreasonably withheld or delayed), (iii) general contractors’ estimates, (iv) architect’s certificates, (v) unconditional lien waivers of general contractors, if available, (vi) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required and (vii) such other certificates as Landlord and Owner may, from time to time, reasonably require.  The Procurement and Construction Supervision Fee shall be paid on the last Business Day of the calendar month following the calendar quarter to which the Procurement and Construction Supervision Fee relates, in arrears, based upon requisitions submitted in such calendar quarter.

E.All business interruption insurance proceeds shall be paid to Manager and included in Gross Revenues.  Any casualty which does not result in a termination of this Agreement shall not excuse the payment of sums due to Owner hereunder.

F.Manager hereby waives any statutory rights of termination which may arise by reason of any damage to or destruction of the Hotel.

6.05Damage Near End of Term.  Notwithstanding any provisions of Section 6.04 to the contrary, if damage to or destruction of the Hotel occurs during the last twelve (12) months of the Term (including any exercised Renewal Term) and if such damage or destruction cannot reasonably be expected to be fully repaired and restored prior to the date that is nine (9) months prior to the end of the Term (including any exercised Renewal Term), the provisions of Section 6.04.A shall apply as if the Hotel had been totally or partially destroyed and rendered Unsuitable for Its Permitted Use.

6.06Condemnation.  If, during the Term, either the whole of the Hotel shall be taken by Condemnation, or a partial Condemnation renders the Hotel Unsuitable for Its Permitted Use, this Agreement shall terminate and Owner and Landlord shall seek the Award for their interests in the Hotel as provided in the Lease.  In addition, Manager shall have the right to initiate such proceedings as it deems advisable to recover any damages to which Manager may be entitled; provided, however, that Manager shall be entitled to retain any Award it may obtain through such proceedings which are conducted separately from those of Owner and Landlord only if such Award does not reduce the Award otherwise available to Owner and Landlord.  Any Award received by any Mortgagee under a Mortgage on the Hotel shall be deemed to be an award of compensation received by Landlord.

6.07Partial Condemnation.  If, during the Term, there is a partial Condemnation but the Hotel is not rendered Unsuitable for Its Permitted Use, subject to Section 6.07.A and 6.07.B, Manager shall cause the untaken portion of the Hotel to be repaired and restored, in compliance with all Legal Requirements and Insurance Requirements and so that the untaken portion of the Hotel shall constitute a complete architectural unit of the same general character and condition,

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to the extent practicable, as the Hotel immediately prior to such partial Condemnation and in compliance with System Standards in consideration of the Procurement and Construction Supervision Fee.

A.If the amount of the Award is less than the cost of the repair and restoration of the Hotel, Manager shall give notice to Owner and Landlord setting forth the deficiency in reasonable detail.  Owner shall have the right without any obligation and in its sole discretion, to fund the deficiency and shall give Manager and Landlord notice within twenty (20) days after notice from Manager.  If Owner elects not to fund the deficiency, Landlord shall have the right without obligation and in its sole discretion, to fund the deficiency and shall give Manager and Owner notice within twenty (20) days after notice from Owner.  If neither Landlord nor Owner elect to fund the deficiency, this Agreement shall terminate and Owner and Landlord shall be entitled to retain the Award.

B.If Owner or Landlord elects to make the funds necessary to cause the Hotel to be repaired and restored available to Manager, Owner shall (or shall cause Landlord to) advance the Award and any additional amounts payable by Owner or Landlord to Manager regularly during the repair and restoration period.  Any such advances shall be made not more frequently than monthly within ten (10) Business Days after Manager submits to Owner a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Owner and Landlord.  Owner or Landlord may condition advancement of the insurance proceeds and other amounts on (i) the absence of an event of default under the Lease, (ii) approval of plans and specifications of an architect satisfactory to Landlord and Owner (which approval shall not be unreasonably withheld or delayed), (iii) general contractors’ estimates, (iv) architect’s certificates, (v) unconditional lien waivers of general contractors, if available, (vi) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required and (vii) such other certificates as Landlord and Owner may, from time to time, reasonably require.  The Procurement and Construction Supervision Fee shall be paid on the last Business Day of the calendar month following the calendar quarter to which the Procurement and Construction Supervision Fee relates, in arrears, based upon requisitions submitted in such calendar quarter.

6.08Temporary Condemnation.  In the event of any temporary Condemnation of the Hotel or Owner’s interest therein, this Agreement shall continue in full force and effect.  The entire amount of any Award made for such temporary Condemnation allocable to the Term, whether paid by way of damages, rent or otherwise, shall be paid to Manager and shall constitute Gross Revenues.  A Condemnation shall be deemed to be temporary if the period of such Condemnation is not expected to, and does not, exceed twelve (12) months.

6.09Allocation of Award.  Except as provided in Sections 6.06, 6.08 and this Section 6.09, the total Award shall be solely the property of and payable to Landlord.  Any portion of the Award made for the taking of Owner’s leasehold interest in the Hotel, loss of business, the taking of Owner’s Personal Property, or Owner’s removal and relocation expenses shall be the sole property of, and payable to, Owner.  Any portion of the Award made for the taking of Manager’s interest in the Hotel or Manager’s loss of business during the remainder of the Term shall be the sole property of, and payable to, Manager, subject to the provisions of Section 6.06.  In any

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Condemnation proceedings, Landlord, Owner, and Manager shall each seek its own Award in conformity herewith, at its own expense.

6.10Effect of Condemnation.  Any Condemnation which does not result in a termination of this Agreement in accordance with its terms with respect to the Hotel shall not excuse the payment of sums due to Owner hereunder with respect to the Hotel and this Agreement shall remain in full force and effect.

ARTICLE VII

TAXES

7.01Real Estate and Personal Property Taxes.

A.Subject to Section 11.18 relating to permitted contests, Manager shall pay, from Gross Revenues, all Impositions with respect to the Hotel, before any fine, penalty, interest or cost (other than any opportunity cost as a result of a failure to take advantage of any discount for early payment) may be added for non-payment, such payments to be made directly to the taxing authorities where feasible, and shall promptly, upon request, furnish to Landlord and Owner copies of official receipts or other reasonably satisfactory proof evidencing such payments.  If any such Imposition may, at the option of the taxpayer, lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Manager may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay such installments during the Term as the same become due and before any fine, penalty, premium, further interest or cost may be added thereto.  Manager shall, upon request, provide such data as is maintained by Manager with respect to the Hotel as may be necessary to prepare any required returns and reports by Owner or Landlord.

Owner shall give, and will use reasonable efforts to cause Landlord to give, copies of official tax bills and assessments which it may receive with respect to the Hotel and prompt notice to Owner and Manager of all Impositions payable by Owner under the Lease of which Owner or Landlord, as the case may be, at any time has knowledge; provided, however, that Landlord’s or Owner’s failure to give any such notice shall in no way diminish Manager’s obligation hereunder to pay such Impositions (except that Owner or Landlord, as applicable, shall be responsible for any interest or penalties incurred as a result of Landlord’s or Owner’s, as applicable, failure promptly to forward the same).

B.Notwithstanding anything herein to the contrary, each of Owner and Manager shall pay from its own funds (and not from Gross Revenues of the Hotel) any franchise, corporate, estate, inheritance, succession, capital levy or transfer tax imposed on Owner or Manager, as applicable, or any income tax imposed (but not gross receipt or general excise taxes) on any income of Owner or Manager (including distributions pursuant to Article III).

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ARTICLE VIII

OWNERSHIP OF THE HOTEL

8.01Ownership of the Hotel.

A.Owner and Landlord hereby covenant that neither will hereafter impose or consent to the imposition of any liens, encumbrances or other charges, except as follows:

1.easements or other encumbrances that do not adversely affect the operation of the Hotel by Manager and that are not prohibited pursuant to Section 8.02;

2.Mortgages and related security instruments;

3.liens for taxes, assessments, levies or other public charges not yet due or due but not yet payable; or

4.equipment leases for office equipment, telephone, motor vehicles and other property approved by Manager.

B.Subject to liens permitted by Section 8.01.A, Owner and Landlord covenant that, so long as there then exists no Manager Event of Default, Manager shall quietly hold, occupy and enjoy the Hotel throughout the Term free from hindrance, ejection or molestation by Owner or Landlord or other party claiming under, through or by right of Owner or Landlord.  Owner agrees to pay and discharge any payments and charges and, at its expense, to prosecute all appropriate actions, judicial or otherwise, necessary to assure such free and quiet occupation as set forth in the preceding sentence.

8.02No Covenants, Conditions or Restrictions.

A.Owner and Landlord agree that during the Term, any covenants, conditions or restrictions, including reciprocal easement agreements or cost-sharing arrangements affecting the Site or Hotel (collectively “Future CC&Rs”) which would (i) prohibit or limit Manager from operating the Hotel in accordance with System Standards, including related amenities of the Hotel; (ii) allow the Hotel facilities (for example, parking spaces) to be used by persons other than guests, invitees or employees of the Hotel; (iii) allow the Hotel facilities to be used for specified charges or rates that have not been approved by Manager; or (iv) subject the Hotel to exclusive arrangements regarding food and beverage operation or retail merchandise, will not be entered into unless Manager has given its prior written consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed. Manager hereby consents to any easements, covenants, conditions or restrictions, including without limitation any reciprocal easement agreements or cost-sharing agreements, existing as of the date of this Agreement (collectively, the “Existing CC&Rs”).

B.All financial obligations imposed on Owner or on the Hotel pursuant to any Future CC&Rs for which Manager’s consent was required under Section 8.02.A, but not obtained, shall be paid by Owner.

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C.Manager shall manage, operate, maintain and repair the Hotel in compliance with all obligations imposed on Owner, Landlord or the Hotel pursuant to any Existing CC&Rs or Future CC&Rs (unless Manager’s consent was required under Section 8.02.A, but not obtained) to the extent such Existing CC&Rs and Future CC&Rs relate to the management, operation, maintenance and repair of the Hotel.

8.03Liens; Credit.  Manager and Owner shall use commercially reasonable efforts to prevent any liens from being filed against the Hotel which arise from any maintenance, repairs, alterations, improvements, renewals or replacements in or to the Hotel.  Manager and Owner shall cooperate, and Owner shall cause Landlord to cooperate, in obtaining the release of any such liens.  In no event shall any party borrow money in the name of, or pledge the credit of, any other party.  Manager shall not allow any lien to exist with respect to its interest in this Agreement.

Subject to encumbrances permitted under Section 8.01, Manager shall not, to the extent funds to pay the same are available or provided on a timely basis as required hereunder, directly or indirectly, create or allow to remain and shall promptly discharge any lien, encumbrance, attachment, title retention agreement or claim upon the Hotel, except (a) existing liens for those taxes of Landlord which Manager is not required to pay hereunder, (b) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet due and payable, or (ii) are being contested in accordance with Section 11.18, (c) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with Section 11.18 and (d) any Mortgages or other liens which are the responsibility of Landlord.

8.04Financing.  Landlord shall be entitled to encumber the Hotel with a Mortgage on commercially reasonable terms and in such event, Landlord, Owner and Manager shall be required to execute and Landlord agrees to require Mortgagee to execute and deliver an instrument (a “Subordination Agreement”) which shall be recorded in the jurisdiction where the Hotel is located, which provides:

(i)This Agreement and any extensions, renewals, replacements or modifications thereto, and all right and interest of Manager in and to the Hotel, shall be subject and subordinate to the Mortgage; and

(ii)If there is a foreclosure of the Mortgage in connection with which title or possession of such Hotel is transferred to the Mortgagee (or its designee) or to a purchaser at foreclosure or to a subsequent purchaser from the Mortgagee (or from its designee) (each of the foregoing, a “Subsequent Holder”), Manager shall not be disturbed in its rights under this Agreement, so long as (a) no Manager Event of Default (beyond the applicable notice and cure period, if any) has occurred thereunder which entitles Owner to terminate this Agreement, and (b) the Lease has not been terminated as a result of a monetary default which arises from acts or failure to act by Manager pursuant to this Agreement, provided, however, that such Subsequent Holder shall not be (a) liable in any way to Manager for any act or omission, neglect or default of the prior Landlord or Owner (b) responsible for any monies owing or on deposit with any prior Landlord or Owner to the credit of Manager (except to the extent actually paid or

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delivered to such Subsequent Holder), (c) subject to any counterclaim or setoff which theretofore accrued to Manager against any prior Landlord or Owner, (d) bound by any modification of this Agreement subsequent to such Mortgage which was not approved by the Mortgagee, (e) liable to Manager or beyond such Subsequent Holder’s interest in the Hotel and the rents, income, receipts, revenues, issues and profits issuing from the Hotel, or (f) required to remove any Person occupying the Hotel or any part thereof, except if such person claims by, through or under such Subsequent Holder.  If the Lease is terminated as a result of a non-monetary default which was not caused by Manager Event of Default pursuant to the terms of this Agreement or such Subsequent Holder succeeds to the interest of Owner thereunder, the Mortgagee or Subsequent Holder, as applicable, and Manager shall agree that the Hotel will continue to be subject to this Agreement (but neither the Mortgagee nor Subsequent Holder will not be responsible to pay past due amounts hereunder).

ARTICLE IX

DEFAULTS

9.01Manager Events of Default.  Each of the following shall constitute a “Manager Event of Default”:

A.The filing by Manager of a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law, or the admission by Manager that it is unable to pay its debts as they become due, or the institution of any proceeding by Manager for its dissolution or termination.

B.The consent by Manager to an involuntary petition in bankruptcy or the failure to vacate, within ninety (90) days from the date of entry thereof, any order approving an involuntary petition by Manager.

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

D.At Owner’s election, the failure of Manager to make any payment required to be made in accordance with the terms of this Agreement, on or before the date due which failure continues for five (5) Business Days after notice from Owner.

E.At Owner’s election, the failure of Manager to perform, keep or fulfill any of the other covenants, undertakings, obligations or conditions set forth in this Agreement, on or before the date required for the same, which failure continues for thirty (30) days after notice from Owner, or, if the Manager Event of Default is susceptible of cure, but such cure cannot be accomplished within such thirty (30) day period, if Manager fails to commence the cure of such Manager Event of Default within fifteen (15) days of such notice or thereafter fails to diligently

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pursue such efforts to completion, provided in no event shall such additional time exceed ninety (90) days.

F.At Owner’s election, the failure of Manager to maintain insurance coverages required to be maintained by Manager under Article VI, which failure continues for five (5) Business Days after notice from Owner (except that no notice shall be required if any such insurance coverage shall have lapsed).

9.02Remedies for Manager Events of Default.

A.In the event of a Manager Event of Default, Owner shall have the right to:  (1) terminate this Agreement by notice to Manager, which termination shall be effective as of the date set forth in the notice, which shall be at least thirty (30) days after the date of the notice; (2) institute any and all proceedings permitted by law or equity, including, without limitation, actions for specific performance and/or damages; or (3) avail itself of any remedy described in this Section 9.02.

B.None of (i) the termination of this Agreement in connection with a Manager Event of Default, (ii) the repossession of the Hotel or any portion thereof, (iii) the failure of Owner to engage a replacement manager, nor (iv) the engagement of any replacement manager for all or any portion of the Hotel, shall relieve Manager of its liability and obligations hereunder, all of which shall survive any such termination, repossession or engagement.  In the event of any termination of this Agreement as a result of a Manager Event of Default, Manager shall forthwith pay to Owner all amounts due and payable through and including the date of such termination.  Thereafter, Manger shall be liable to Owner for, and shall pay to Owner, as current damages, the amounts which Owner would have received hereunder for the remainder of the Term (including any Renewal Terms) had such termination not occurred, less the net amounts, if any, received from a replacement manager, after deducting all reasonable expenses in connection with engaging such replacement, including, all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, advertising, expenses of employees, alteration costs and expenses of preparation for such engagement and in the case of Owner’s Priority and Owner’s Residual Payment, calculated based upon the average of each of such payments made in each of the three (3) calendar years ended prior to the date of termination.  Manager shall pay such current damages to Owner as soon after the end of each calendar month as practicable to determine the amounts.

C.At any time after such termination, whether or not Owner shall have collected any amounts owing and due up to and including the date of termination of this Agreement, as liquidated final damages and in lieu of Owner’s right to receive any other damages due to the termination of this Agreement, at Owner’s election, Manager shall pay to Owner an amount equal to the present value of the payments which have been made to Owner between the date of termination and the scheduled expiration of the Term (including any Renewal Terms) as Owner’s Priority and the Owner’s Residual Payment if this Agreement had not been terminated, calculated based upon the average of each of such payments made in each of the three (3) calendar years ended prior to the date of termination, discounted at an annual rate equal to the Discount Rate.  Nothing contained in this Agreement shall, however, limit or prejudice the right of Owner to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to

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the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

D.In case of any Manager Event of Default resulting in Manager being obligated to vacate the Hotel, Owner may (i) engage a replacement manager for the Hotel or any part or parts thereof, either in the name of Owner or otherwise, for a term or terms which may at Owner’s option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term (including any Renewal Terms) and may grant concessions or other accommodations to the extent that Owner reasonably considers advisable and necessary to engage such replacement manager(s), and (ii) may make such reasonable alterations, repairs and decorations in the Hotel or any portion thereof as Owner, in its sole and absolute discretion, considers advisable and necessary for the purpose of engaging a replacement manager for the Hotel; and the making of such alterations, repairs and decorations shall not operate or be construed to release Manager from liability hereunder.  Subject to the last sentence of this paragraph, Owner shall in no event be liable in any way whatsoever for any failure to engage a replacement manager for the Hotel, or, in the event a replacement manager is engaged, for failure to collect amounts due Owner.  To the maximum extent permitted by law, Manager hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Manager being evicted or dispossessed, or in the event of Owner obtaining possession of the Hotel, by reason of the occurrence and continuation of a Manager Event of Default hereunder.  Owner covenants and agrees, in the event of any termination of this Agreement as a result of a Manager Event of Default, to use reasonable efforts to mitigate its damages.

E.Any payments received by Owner under any of the provisions of this Agreement during the existence or continuance of a Manager Event of Default shall be applied to Manager’s current and past due obligations under this Agreement in such order as Owner may determine or as may be prescribed by applicable law.

F.If a Manager Event of Default shall have occurred and be continuing, Owner, after notice to Manager (which notice shall not be required if Owner shall reasonably determine immediate action is necessary to protect person or property), without waiving or releasing any obligation of Manager and without waiving or releasing any Manager Event of Default, may (but shall not be obligated to), at any time thereafter, make such payment or perform such act for the account and at the expense of Manager, and may, to the maximum extent permitted by law, enter upon the Hotel or any portion thereof for such purpose and take all such action thereon as, in Owner’s sole and absolute discretion, may be necessary or appropriate therefor.  No such entry shall be deemed an eviction of Manager or result in the termination hereof.  All reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by Owner in connection therewith, together with interest thereon (to the extent permitted by law) at the Overdue Rate from the date such sums are paid by Owner until repaid, shall be paid by Manager to Owner, on demand.

9.03Owner Events of Default.  Each of the following shall constitute a “Owner Event of Default” to the extent permitted by applicable law:

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A.The filing by Owner or HPT of a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law, or the admission by Owner that it is unable to pay its debts as they become due, or the institution of any proceeding by Owner for its dissolution or termination.

B.The consent by Owner or HPT to an involuntary petition in bankruptcy or the failure to vacate, within ninety (90) days from the date of entry thereof, any order approving an involuntary petition by Owner.

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

D.At Manager’s option, the failure of Owner to make any payment required to be made in accordance with the terms of this Agreement on or before the due date which failure continues for five (5) Business Days after notice from Manager.

E.At Manager’s option, the failure of Owner to perform, keep or fulfill any of the other covenants, undertakings, obligations or conditions set forth in this Agreement which failure continues for thirty (30) days after notice from Manager, or, if the Owner Event of Default is susceptible of cure, but such cure cannot be accomplished within such thirty (30) day period, if Owner fails to commence the cure of such Owner Event of Default within fifteen (15) days of such notice or thereafter fails to diligently pursue such efforts to completion, provided that in no event shall such additional time exceed ninety (90) days.

F.The occurrence of an event of default beyond any applicable notice and cure period under any obligation, agreement, instrument or document which is secured in whole or in part by Owner’s or Landlord’s interest in the Hotel or the acceleration of the indebtedness secured thereby or the commencement of a foreclosure thereunder.

9.04Remedies for Owner Events of Default.

A.In the event of a Owner Event of Default, Manager shall have the right to institute any and all proceedings permitted by law or equity, including, without limitation, actions for specific performance and/or damages, provided except as expressly provided in this Agreement, Manager shall have no right to terminate this Agreement by reason of a Owner Event of Default.

B.Upon the occurrence of a Owner Event of Default pursuant to any of Sections 9.03.A, 9.03.B or 9.03.C, or which arises with respect to a violation by Owner or Landlord of Section 10.02 with respect to a Sale of the Hotel, Manager shall have, in addition to all other rights and remedies provided for herein, the right to terminate this Agreement by notice to Owner, which termination shall be effective as of the date set forth in the notice, which shall be at least thirty (30) days after the date of the notice.  At any time after such termination, whether or not Manger shall have collected any amounts owing and due up to and including the date of

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termination of this Agreement, as liquidated final damages and in lieu of Manager’s right to receive any other damages due to the termination of this Agreement, at Manager’s election, Owner shall pay to Manager the Termination Fee. Nothing contained in this Agreement shall, however, limit or prejudice the right of Manager to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

ARTICLE X

ASSIGNMENT AND SALE

10.01Assignment.

A.Except as provided in Section 10.01.C, Manager shall not assign mortgage, pledge, hypothecate or otherwise transfer its interest in all or any portion of this Agreement or any rights arising under this Agreement or suffer or permit such interests or rights to be assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether voluntarily, involuntarily or by operation of law, except in the case of an assignment or delegation by Manager to a Person which may take over the property and carry on the affairs of Manager and which remains under the Control of one or more Persons who Controlled the operations of Manager prior to such assignment or delegation, or permit the use or operation of the Hotel by anyone other than Manager or Owner.

B.Manager shall have the right, without Owner’s consent, to sublease or grant concessions or licenses to shops or any other space at the Hotel so long as the terms of any such subleases or concessions do not exceed the Term, provided that (a) such subleases or concessions are for newsstand, gift shop, parking garage, health club, restaurant, bar or commissary purposes or similar concessions, (b) such subleases are on commercially reasonable terms, and (e) such subleases or concessions will not violate or affect any Legal Requirement or Insurance Requirement, and Manager shall obtain or cause the subtenant to obtain such additional insurance coverage applicable to the activities to be conducted in such subleased space as Landlord and any Mortgagee may reasonably require.

C.Owner shall not assign or transfer its interest in this Agreement without the prior written consent of Manager; provided, however, that Owner shall have the right, without such consent to (1) assign its interest in this Agreement in connection with a Sale of the Hotel which complies with the provisions of Section 10.02, (2) assign its interest hereunder to Landlord or an Affiliate of Landlord under the terms of the Lease, (3) assign its interest hereunder to Manager or an Affiliate of Manager, and (4) assign its interest hereunder to an Affiliate of Owner in a corporate restructuring of Owner or any of its Affiliates, provided such Affiliate satisfies the criteria of Section 10.02.A.

D.If either party consents to an assignment of this Agreement by the other, no further assignment shall be made without the express consent in writing of such party, unless such assignment may otherwise be made without such consent pursuant to the terms of this

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Agreement.  An assignment by Owner of its interest in this Agreement approved or permitted pursuant to the terms hereof shall relieve Owner from its obligations under this Agreement arising from and after the effective date of such assignment.  An assignment by Manager of its interest in this Agreement shall not relieve Manager from its obligations under this Agreement unless such assignment occurs in the context of a sale of all or substantially all of the business of Manager and which is otherwise permitted or approved, if required, pursuant to this Agreement, in which event Manager shall be relieved from such obligations arising from and after the effective date of such assignment.

10.02Sale of the Hotel.

A.Neither Owner nor Landlord shall enter into any Sale of the Hotel to any Person (or any Affiliate of any Person) who (a) does not have sufficient financial resources and liquidity to fulfill Owner’s obligations with respect to the Hotel under this Agreement, or Landlord’s obligations under the Lease, as the case may be, (b) is known in the community as being of bad moral character, or has been convicted of a felony in any state or federal court, or is in control of or controlled by Persons who have been convicted of felonies in any state or federal court; (c) fails to expressly assume in writing the obligations of Owner hereunder or Landlord obligations under the Lease, as the case may be, or (d) is, or has an Affiliate that is, a Specially Designated National or Blocked Person.

B.In connection with any Sale of a Hotel, Manager and the purchaser or its Owner shall enter into a new management agreement, which new management agreement will be on all of the terms and conditions of this except that the Initial Term and Renewal Term(s) of any such new management agreement shall consist only of the balance of the Initial Term and Renewal Term(s) remaining under this Agreement at the time of execution of such new management agreement.  Such new management agreement shall be executed by Manager and such new Owner at the time of closing of a Sale of the Hotel, and a memorandum of such new management agreement shall be executed by the parties and recorded immediately following recording of the deed or memorandum of lease or assignment and prior to recordation of any other documents.

10.03Amendment of the Lease.  The Lease shall not be amended or modified in any way which would materially reduce Manager’s rights hereunder or impose any material cost, expense or obligation on Manager.

ARTICLE XI

MISCELLANEOUS

11.01Right to Make Agreement.  Each party warrants, with respect to itself, that neither the execution of this Agreement nor the finalization of the transactions contemplated hereby shall violate any provision of law or judgment, writ, injunction, order or decree of any court or governmental authority having jurisdiction over it; result in or constitute a breach or default under any indenture, contract, other commitment or restriction to which it is a party or by which it is bound; or require any consent, vote or approval which has not been taken, or at the time of the transaction involved shall not have been given or taken.  Each party covenants that it has and

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will continue to have throughout the Term, the full right to enter into this Agreement and perform its obligations hereunder.

11.02Actions By Manager.  Manager covenants and agrees that it shall not take any action which would be binding upon Owner or Landlord except to the extent it is permitted to do so pursuant to the terms of this Agreement.

11.03Relationship.  In the performance of this Agreement, Manager shall act solely as an independent contractor.  Neither this Agreement nor any agreements, instruments, documents or transactions contemplated hereby shall in any respect be interpreted, deemed or construed as making Manager a partner, joint venturer with, or agent of, Owner.  Owner and Manager agree that neither party will make any contrary assertion, claim or counterclaim in any action, suit, arbitration or other legal proceedings involving Owner and Manager.  Nothing contained herein is intended to, nor shall be construed as, creating any landlord-tenant relationship between Manager and Owner or between Manager and Landlord.  Each of Manager and Owner shall prepare and shall cause their Affiliates to prepare their financial statements and tax returns consistent with the foregoing characterization.

11.04Applicable Law.  The Agreement shall be construed under and shall be governed by the laws of the State of Maryland, without regard to its “choice of law” rules.

11.05Notices.  Notices, statements and other communications to be given under the terms of the Agreement shall be in writing and delivered by hand against receipt or sent by Express Mail service or by nationally recognized overnight delivery service, addressed to the parties as follows:

To Owner:	c/o HPT [·]
	Two Newton Place
	255 Washington Street, Suite 300
	Newton, Massachusetts 02458
	Attn: President
	Phone: (617) 964-8389
	Fax: (617) 969-5730
To Manager:	c/o [·]
	Two Newton Place
	255 Washington Street, Suite 300
	Newton, Massachusetts 02458
	Attn: President
	Phone: (617)
	Fax: (617)

or at such other address as is from time to time designated by the party receiving the notice.  Any such notice that is given in accordance herewith shall be deemed received when delivery is received or refused, as the case may be.  Additionally, notices may be given by facsimile transmission, provided that a hard copy of the transmission shall be delivered to the addressee by nationally recognized overnight delivery service by no later than the second (2nd) Business Day

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following such transmission.  Facsimiles shall be deemed delivered on the date of such transmission, if sent on a Business Day and received during the receiving party’s normal business hours or, if not received during the receiving party’s normal business hours, then on the next succeeding Business Day.

11.06Environmental Matters.

A.Subject to Section 11.06.D, during the Term or at any other time while Manager is in possession of the Hotel, (1) Manager shall not store, spill upon, generate, dispose of or transfer to or from the Hotel any Hazardous Substance, except in compliance with all Legal Requirements, (2) Manager shall maintain the Hotel at all times free of any Hazardous Substance (except in compliance with all Legal Requirements), and (3) Manager (a) upon receipt of notice or knowledge shall promptly notify Owner and Landlord in writing of any material change in the nature or extent of Hazardous Substances at the Hotel, (b) shall file and transmit to Owner and Landlord a copy of any Community Right to Know or similar report or notice which is required to be filed by Manager with respect to the Hotel pursuant to Title III of the Superfund Amendments and Reauthorization Act of 1986 or any other Legal Requirements, (c) shall transmit to Owner and Landlord copies of any citations, orders, notices or other governmental communications received by Manager with respect to Hazardous Substances or environmental compliance (collectively, “Environmental Notice”), which Environmental Notice requires a written response or any action to be taken and/or if such Environmental Notice gives notice of and/or presents a material risk of any material violation of any Legal Requirement and/or presents a material risk of any material cost, expense, loss or damage (an “Environmental Obligation”), (d) shall observe and comply with all Legal Requirements relating to the use, maintenance and disposal of Hazardous Substances and all orders or directives from any official, court or agency of competent jurisdiction relating to the use, maintenance or disposal or requiring the removal, treatment, containment or other disposition of Hazardous Substances, and (e) shall pay or otherwise dispose of any fine, charge or Imposition related thereto, unless Owner or Manager shall contest the same in good faith and by appropriate proceedings and the right to use and the value of the Hotel are not materially and adversely affected thereby.

B.In the event of the discovery of Hazardous Substances other than those maintained in accordance with Legal Requirements on any portion of any Site or in the Hotel during the Term, Manager shall promptly (i) clean up and remove from and about the Hotel all Hazardous Substances thereon in accordance with all applicable Environmental Laws (as defined below), (ii) contain and prevent any further release or threat of release of Hazardous Substances on or about the Hotel, and (iii) use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about the Hotel, and (iv) otherwise effect a remediation of the problem in accordance with all applicable federal, state and local statutes, laws, rules and regulations (now or hereafter in effect) dealing with the use, generation, treatment, storage, release, disposal, remediation or abatement of Hazardous Substances (collectively referred to as “Environmental Laws”).

C.The actual costs incurred or the estimated costs to be incurred with respect to any matter arising under Section 11.06.B together with any costs incurred by Owner with respect to any judgment or settlement approved by Manager (such approval not to be unreasonably withheld, conditioned or delayed with respect to any third-party claims including, without

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limitation, claims by Landlord arising under the Lease) relating to claims arising from the release or threat of release of Hazardous Substances on or about any of the Hotels (including reasonable attorneys’ and consultants’ fees incurred with respect to such matters) are collectively referred to as “Environmental Costs.”

D.All Environmental Costs shall be deemed repairs and maintenance under Section 5.02 or 5.03 and paid as provided therein, as applicable, for the Hotel; provided, however, that if any of the foregoing costs arise as a result of the gross negligence or willful misconduct of Manager or any employee of Manager, such costs shall be paid by Manager at its sole cost and expense and not as a Deduction, and Manager shall indemnify Owner for any loss, cost, claim or expense (including reasonable attorneys’ fees) incurred by Owner in connection therewith.  The provisions of this Section 11.06.D shall survive termination.

11.07Confidentiality.  The parties hereto agree that the matters set forth in this Agreement are strictly confidential and each party will make every effort to ensure that the information is not disclosed to any outside person or entities (including the press) without the prior written consent of the other party except as may be required by law, including the rules and regulations the SEC or any stock exchange applicable to Owner or its Affiliates, in any report, prospectus or other filing made by Owner or its Affiliates with the SEC or any such stock exchange, or in a press release issued by a party or its Affiliates which is consistent with its investor relations program conducted in the ordinary course, and as may be reasonably necessary to obtain licenses, permits, and other public approvals necessary for the refurbishment or operation of the Hotel, or, subject to Section 4.01.C(2), in connection with financing or proposed financing of the Hotel, a Sale of the Hotel, or a sale of a Controlling Interest in Owner.

11.08Projections.  Owner acknowledges that any written or oral projections, pro formas, or other similar information that has been, prior to execution of this Agreement, or will, during the Term, be provided by Manager, or any Affiliate to Owner is for information purposes only and that Manager and any such Affiliate do not guarantee that the Hotel will achieve the results set forth in any such projections, pro formas, or other similar information.  Any such projections, pro formas, or other similar information are based on assumptions and estimates, and unanticipated events may occur subsequent to the date of preparation of such projections, pro formas, and other similar information.  Therefore, the actual results achieved by the Hotel are likely to vary from the estimates contained in any such projections, pro formas, or other similar information and such variations might be material.

11.09Actions to be Taken Upon Termination.  Upon termination of this Agreement:

A.Manager shall, within ninety (90) days after termination of this Agreement, prepare and deliver to Owner a final accounting statement “(Final Statement”) with respect to the Hotel, consistent with the Annual Operating Statement, along with a statement of any sums due Manager as of the date of termination.  Within thirty (30) days of the receipt by Owner of such Final Statement, the parties will make any adjustments, by cash payment,  in the amounts paid or retained as are needed because of the figures set forth in the Final Statement.  Any payments shall be made together with interest at the Interest Rate from the date such amounts were due or paid, as the case may be, until paid or repaid.  If any dispute shall arise with respect to the Final Statement which cannot be resolved by the parties within the thirty (30) day period,

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it shall be settled by arbitration, provided however, that any cash adjustments relating to items which are not in dispute shall be made within the thirty (30) day period.  The cost of preparing the Final Statement shall be a Deduction, unless the termination occurs as a result of a Manager Event of Default or a Owner Event of Default, in which case the defaulting party shall pay such cost.  Manager and Owner acknowledge that there may be certain adjustments for which the information will not be available at the time of the Final Statement and the parties agree to readjust such amounts and make the necessary cash adjustments when such information becomes available, provided, however, that all accounts shall be deemed final as of the second (2nd) anniversary of the date of termination.

B.Upon a termination, Manager shall disburse to Owner all Working Capital (excluding funds to be held in escrow pursuant to Section 11.09.I) remaining after payment of all Deductions and all amounts the payable to Manager or Owner.

C.Manager shall make available to Owner such books and records respecting the Hotel (including those from prior years, subject to Manager’s reasonable records retention policies) as will be needed by Owner to prepare the accounting statements, in accordance with the Uniform System of Accounts, for the Hotel for the Year in which the termination occurs and for any subsequent Year.

D.Manager shall (to the extent permitted by law) assign to Owner or its designee all operating licenses and permits for the Hotel which have been issued in Manager’s name (including liquor and restaurant licenses, if any).

E.If Landlord does not exercise its right under Section 11.09.G and/or a successor Manager is not a franchisee of Manager, Manager shall have the option, to be exercised within thirty (30) days after termination, to purchase at their then book value, any items of Inventories and Fixed Asset Supplies marked with any Trade Name, other trade name, symbol, logo or design.  If Manager does not exercise such option, Owner agrees that any such items not so purchased will be used exclusively at the Hotel until they are consumed.

F.Manager shall, at Owner’s sole cost and expense, use commercially reasonable efforts to cooperate with Owner or its designee in connection with the transfer of management of the Hotel including processing of all applications for licenses, operating permits and other governmental authorizations and the assignment of all contracts entered into by Manager with respect to the use and operation of the Hotel as then operated, but excluding all insurance contracts and multi-property contracts not limited in scope to the Hotel (if applicable) and all contracts with Affiliates of Manager.

G.Owner or its designee shall have the right to operate the improvements on the Site without modifying the architectural design, notwithstanding the fact that such design or certain features thereof may be proprietary to Manager and/or protected by trademarks or service marks held by Manager or an Affiliate, provided that such use shall be confined to the Site.  Further, provided that the Hotel then satisfies the System Standards, Owner or its designee shall be entitled (but not obligated) to operate the Hotel under the Trade Names for a period of one (1) year following termination in consideration for which Owner or its designee shall pay the then standard franchise fees of Manager and its Affiliates and shall comply with the other applicable

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terms and conditions of the form of franchise agreement then being entered into and Manager will continue to provide services to the Hotel including, reservations and communication services; provided, however, that all such services shall be provided in accordance with the applicable terms and conditions of the form of franchise agreement.

H.Any computer software (including upgrades and replacements) at the Hotel owned by Manager, an Affiliate, or the licensor of any of them is proprietary to Manager, such Affiliate, or the licensor of any of them and shall in all events remain the exclusive property of Manager, the Affiliate or the licensor of any of them, as the case may be, and nothing contained in this Agreement shall confer on Owner the right to use any of such software.  Manager shall have the right to remove from the Hotel without compensation to Owner any computer software (including upgrades and replacements), including, without limitation, the System software, owned by Manager, any Affiliate or the licensor of any of them and any computer equipment utilized as part of a centralized reservation system or owned by a party other than Owner.

I.If this Agreement is terminated for any reason, other than by reason of a Manager Event Default, and excluding a termination as a result of the expiration of the Term, an escrow fund shall be established from Gross Revenues to reimburse Manager for all reasonable costs and expenses incurred by Manager in terminating its employees at the Hotel, such as severance pay, unemployment compensation, employment relocation, and other employee liability costs arising out of the termination of employment of such employees.  If Gross Revenues are insufficient to meet the requirements of such escrow fund, then Manager shall have the right to withdraw the amount of such expenses from Working Capital or any other funds of Owner with respect to the Hotel held by or under the control of Manager.  Owner or its designee shall have the right to offer employment to any employee whom Manager proposes to terminate and Manager shall cooperate with Owner in connection therewith.

J.Manager shall peacefully vacate and surrender the Hotel to Owner.

The provisions of this Section 11.09 shall survive termination.

11.10Trademarks, Trade Names and Service Marks.  The names “Sonesta,” and [·] (each of the foregoing names, together with any combination thereof, collectively, the “Trade Names”) when used alone or in connection with another word or words, and the Sonesta trademarks, service marks, other trade names, symbols, logos and designs shall in all events remain the exclusive property of [Entity(2)] and except as provided in Section 11.09.E and 11.09.G, nothing contained in this Agreement shall confer on Owner the right to use any of the Trade Names, or the Sonesta trademarks, service marks, other trade names, symbols, logos or designs affiliated or used therewith.  Except as provided in Section 11.09.E and 11.09.G, upon termination of this Agreement, any use of any of the Trade Names, or any of the Sonesta trademarks, service marks, other trade names, symbols, logos or designs at the Hotel shall cease and Owner shall promptly remove from the Hotel any signs or similar items which contain any of the Trade Names, trademarks, service marks, other trade names, symbols, logos or designs.  If Owner has not removed such signs or similar items within ten (10) Business Days, Manager shall have the right to do so.  The cost of such removal shall be a Deduction.  Included under the terms

(2) Manager or an Affiliate of Manager.

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of this Section 11.10 are all trademarks, service marks, trade names, symbols, logos or designs used in conjunction with the Hotel, including restaurant names, lounge names, etc., whether or not the marks contain the “Sonesta” name.  The right to use such trademarks, service marks, trade names, symbols, logos or designs belongs exclusively to Manager, and the use thereof inures to the benefit of Manager whether or not the same are registered and regardless of the source of the same.  The provisions of this Section 11.10 shall survive termination.

11.11       Waiver.  The failure of either party to insist upon a strict performance of any of the terms or provisions of the Agreement, or to exercise any option, right or remedy contained in this Agreement, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in full force and effect.  No waiver by either party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party.

11.12       Partial Invalidity.  If any portion of this Agreement shall be declared invalid by order, decree or judgment of a court, or otherwise, this Agreement shall be construed as if such portion had not been so inserted except when such construction would operate as an undue hardship on Manager or Owner or constitute a substantial deviation from the general intent and purpose of the parties as reflected in this Agreement.

11.13       Survival.  Except as otherwise specifically provided herein, the rights and obligations of the parties herein shall not survive any termination of this Agreement.

11.14       Negotiation of Agreement.  Each of Manager and Owner is a business entity having substantial experience with the subject matter of this Agreement and has fully participated in the negotiation and drafting of this Agreement.  Accordingly, this Agreement shall be construed without regard to the rule that ambiguities in a document are to be construed against the draftsman.  No inferences shall be drawn from the fact that the final, duly executed Agreement differs in any respect from any previous draft hereof.

11.15       Entire Agreement.  This Agreement, together with any other writings signed by the parties expressly stated to be supplemental hereto and together with any instruments to be executed and delivered pursuant to this Agreement, constitutes the entire agreement between the parties and supersedes all prior understandings and writings, and may be changed only by a writing signed by the parties hereto.

11.16       Affiliates.  Manager shall be entitled to contract with companies that are Affiliates (or companies in which Manager has an ownership interest if such interest is not sufficient to make such a company an Affiliate) to provide goods and/or services to the Hotel; provided that the prices and/or terms for such goods and/or services are competitive.  Additionally, Manager may contract for the purchase of goods and services for the Hotel with third parties that have other contractual relationships with Manager and its Affiliates, so long as the prices and terms are competitive.  In determining whether such prices and/or terms are competitive, they will be compared to the prices and/or terms which would be available from reputable and qualified parties for goods and/or services of similar quality, and the goods and/or services which are being purchased shall be grouped in reasonable categories, rather than being compared item by item.  Any dispute as to whether prices and/or terms are competitive shall be settled by

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arbitration.  The prices paid may include overhead and the allowance of a reasonable return to Manager’s Affiliates (or companies in which Manager has an ownership interest if such interest is not sufficient to make such a company an Affiliate), provided that such prices are competitive.  Owner acknowledges and agrees that, with respect to any purchases of goods and/or services pursuant to this Section 11.16, Manager’s Affiliates may retain for their own benefit any allowances, credits, rebates, commissions and discounts received with respect to any such purchases.

11.17       Arbitration.  Any disputes, claims or controversies between the parties (i) arising out of or relating to this Agreement, or (ii) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Section 11.17, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC (“RMR”) or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 11.17.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 11.17, the term “party” shall include any direct or indirect parent of a party.

There shall be three (3) arbitrators.  If there are only two (2) parties to the Dispute, each party shall select one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of such parties.  If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three (3) arbitrators proposed by AAA.  If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three (3) arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall

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select, within fifteen (15) days thereafter, one of the three (3) arbitrators it had proposed as the second arbitrator.  The two (2) arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator.  If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.

In rendering an award or decision (the “Arbitration Award”), the arbitrators shall be required to follow the laws of State of Maryland.  Any arbitration proceedings or Arbitration Award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  The Arbitration Award shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of law on which it is based.

Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

An Arbitration Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between such parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon the Arbitration Award may be entered in any court having jurisdiction.  To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Each party against which the Arbitration Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of the Arbitration Award or such other date as the Arbitration Award may provide.

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This Section 11.17 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including RMR or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

11.18       Permitted Contests.  Manager shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy, encumbrance, charge or claim (collectively, “Claims”) as to the Hotel, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) such contest shall not cause Landlord or Owner to be in default under any Mortgage or reasonably be expected to result in a lien attaching to the Hotel, unless such lien is fully bonded or otherwise secured to the reasonable satisfaction of Landlord, (b) no part of the Hotel nor any Gross Revenues therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (c) Manager shall indemnify and hold harmless Owner and Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys’ fees, incurred by Owner or Landlord in connection therewith or as a result thereof.  Owner and Landlord shall sign all required applications and otherwise cooperate with Manager in expediting the matter, provided that neither Owner nor Landlord shall thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith), and any such costs or expenses incurred in connection therewith shall be paid as a Deduction. Landlord shall agree to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) and Manager agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord.  Any amounts paid under any such indemnity of Manager to Owner or Landlord shall be a Deduction.  Any refund of any Claims and such charges and penalties or interest thereon shall be paid to Manager and included in Gross Revenues.

11.19       Estoppel Certificates.  Each party to this Agreement shall at any time and from time to time, upon not less than thirty (30) days’ prior notice from the other party, execute, acknowledge and deliver to such other party, or to any third party specified by such other party, a statement in writing:  (a) certifying that this Agreement is unmodified and in full force and effect (or if there have been modifications, that the same, as modified, is in full force and effect and stating the modifications); (b) stating whether or not to the best knowledge of the certifying party (i) there is a continuing default by the non-certifying party in the performance or observance of any covenant, agreement or condition contained in this Agreement, or (ii) there shall have occurred any event which, with the giving of notice or passage of time or both, would become such a default, and, if so, specifying each such default or occurrence of which the certifying party may have knowledge; (c) stating the date to which distributions of Operating Profit have been made; and (d) stating such other information as the non-certifying party may reasonably request.  Such statement shall be binding upon the certifying party and may be relied upon by the non-certifying party and/or such third party specified by the non-certifying party as aforesaid, including, without limitation its lenders and any prospective purchaser or mortgagee of the Hotel or the leasehold estate created by the Lease.  Upon termination, each party shall, on request,

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within the time period described above, execute and deliver to the non-certifying party and to any such third party a statement certifying that this Agreement has been terminated.

11.20       Indemnification.  Notwithstanding the existence of any insurance provided for herein and without regard to the policy limits of any such insurance, Manager shall protect, indemnify and hold harmless Owner and Landlord for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys’ fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Owner or Landlord by reason of: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about the Hotel or adjoining sidewalks or rights of way under Manager’s control, (b) any use, misuse, non-use, condition, management, maintenance or repair by Manager or anyone claiming under Manager of the Hotel or Owner’s Personal Property or any litigation, proceeding or claim by governmental entities or other third parties to which Owner or Landlord is made a party or participant relating to the Hotel or Owner’s Personal Property or such use, misuse, non-use, condition, management, maintenance, or repair thereof including, failure to perform obligations (other than Condemnation proceedings) to which Owner or Landlord is made a party, (c) any Impositions that are the obligations of Manager to pay pursuant to the applicable provisions of this Agreement, and (d) infringement and other claims relating to the propriety marks of  Manager or its Affiliates; provided, however, that Manager’s obligations hereunder shall not apply to any liability, obligation, claim, damage, penalty, cause of action, cost or expense to the extent the same arises from any negligence or willful misconduct of Owner or Landlord or their respective employees, agents or invitees.  Manager, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Owner or Landlord (but shall not be responsible for any duplicative attorneys’ fees incurred by Owner or Landlord) or may compromise or otherwise dispose of the same, with Owner’s or Landlord’s, as appropriate, prior written consent (which consent may not be unreasonably withheld or delayed).  If Owner or Landlord unreasonably delays or withholds consent, Manager shall not be liable under this Section 11.20 for any incremental increase in costs or expenses resulting therefrom.  The obligations of Manager under this Section 11.20 shall not be applicable to Environmental Costs with respect to which a specific indemnity is provided in Section 11.06.D, to the extent addressed therein.  The obligations under this Section 11.20 shall survive termination.

11.21       Remedies Cumulative.  To the maximum extent permitted by law, each legal, equitable or contractual right, power and remedy of Owner or Manager, now or hereafter provided either in this Agreement or by statute or otherwise, shall be cumulative and concurrent and shall be in addition to every other right, power and remedy and the exercise or beginning of the exercise by Owner or Manager of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Owner or Manager of any or all of such rights, powers and remedies.

11.22       Amendments and Modifications.  This Agreement shall not be modified or amended except in writing signed by Owner and Manager.

11.23       Claims; Binding Effect; Time of the Essence; Nonrecourse.  Anything contained in this Agreement to the contrary notwithstanding, all claims against, and liabilities of, Manager or Owner arising prior to any date of termination of this Agreement shall survive such

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termination.  All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.  Time is of the essence with respect to the exercise of any rights of Manager, Owner or Landlord under this Agreement.  Nothing contained in this Agreement shall be construed to create or impose any liabilities or obligations and no such liabilities or obligations shall be imposed on any of the shareholders, beneficial owners, direct or indirect, officers, directors, trustees, employees or agents of Owner or Landlord or their respective Affiliates or Manager or its Affiliates for the payment or performance of the obligations or liabilities of Owner, Landlord or Manager, as applicable.

11.24       Counterparts; Headings.  This Agreement may be executed in two (2) or more counterparts, each of which shall constitute an original, but which, when taken together, shall constitute but one instrument and shall become effective as of the date hereof when copies hereof, which, when taken together, bear the signatures of each of the parties hereto shall have been signed.  Headings in this Agreement are for purposes of reference only and shall not limit or affect the meaning of the provisions hereof.

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

11.26       REIT Qualification.(3)

A.            Manager shall take all commercially reasonable actions reasonably requested by Owner or Landlord for the purpose of qualifying Landlord’s rental income from Owner under the Lease as “rents from real property” pursuant to Sections 856(d)(2), 856(d)(8)(B) and 856(d)(9) of the Code.  Manager shall not be liable if such reasonably requested actions, once implemented, fail to have the desired result of qualifying Landlord’s rental income from Owner under the Lease as “rents from real property” pursuant to Sections 856(d)(2), 856(d)(8)(B) and 856(d)(9) of the Code.  This Section 11.26 shall not apply in situations where an Adverse Regulatory Event has occurred; instead, Section 11.28 shall apply.

B.            If Owner or Landlord wish to invoke the terms of Section 11.26.A, Owner or Landlord (as appropriate) shall contact Manager and the parties shall meet with each other to discuss the relevant issues and to develop a mutually-agreed upon plan for implementing such reasonably requested actions.

C.            Any additional out-of-pocket costs or expenses incurred by Manager in complying with such a request shall be borne by Owner (and shall not be a Deduction).  Owner

(3)  To be deleted with respect to Agreement for Royal Sonesta New Orleans.

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shall reimburse Manager for such expense or cost promptly, but not later than five (5) Business Days after such expense or cost is incurred.

D.            Manager shall not authorize any wagering activities to be conducted at or in connection with the Hotel, and Manager shall use commercially reasonable efforts to achieve the goal of having at least one-half of the guest rooms in the Hotel being used on a transient basis and the goal of having no Hotel amenities and facilities that are not customary for similarly situated properties.

11.27       Adverse Regulatory Event.(4)  In the event of an Adverse Regulatory Event arising from or in connection with this Agreement, Owner and Manager shall work together in good faith to amend this Agreement to eliminate the impact of such Adverse Regulatory Effect.  For purposes of this Agreement, the term “Adverse Regulatory Effect” means any time that a law, statute, ordinance, code, rule or regulation imposes upon Owner (or could imposes upon Owner in Owner’s reasonable opinion), any material threat to either Landlord’s or Landlord’s Affiliate’s status as a “real estate investment trust” under the Code or to the treatment of amounts paid to Landlord as “rents from real property” under Section 856(d) of the Code.  Each of Manager and Owner shall inform the other of any Adverse Regulatory Event of which it is aware and which it believes likely to impair compliance of any of the Hotel with respect to the aforementioned sections of the Code.

11.28       Tax Matters.  Manager will prepare or cause to be prepared all tax returns required in the operation of the Hotel, which include payroll, sales and use tax returns, personal property tax returns and business, professional and occupational license tax returns. Manager shall timely file or cause to be filed such returns as required by the State; provided that, Owner shall promptly provide all relevant information to Manager upon request, and any late fees or penalties resulting from delays caused by Owner shall be borne by Owner.  Manager shall not be responsible for the preparation of Landlord’s or Owner’s federal or state income tax returns, provided Manager shall cooperate fully with Owner and Landlord as may be necessary to enable Owner or Landlord to file such federal or state income tax returns, including by preparing data reasonably requested by Owner or Landlord and submitting it to Owner or Landlord, as applicable, as soon as reasonably practicable following such request.

11.29       Third Party Beneficiaries.  The terms and conditions of this Agreement shall inure to the benefit of, and be binding upon, the respective successors, heirs, legal representatives or permitted assigns of each of the parties hereto and except for Landlord and HPT, which are intended third party beneficiaries, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

ARTICLE XII

DEFINITION OF TERMS; CONSTRUCTION

12.01       Definition of Terms.

(4)  To be deleted with respect to Agreement for Royal Sonesta New Orleans.

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The following terms when used in this Agreement and the Addenda attached hereto shall have the meanings indicated:

“AAA” has the meaning ascribed to such term in Section 11.17.

“Additional Manager Advances” means advances by Manager under Sections  4.05 and 5.04, together with simple interest at the rate of nine percent (9%) per annum on the outstanding balance thereof from time to time.

“Additional Working Capital” has the meaning ascribed to such term in Section 4.05.

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person.  For purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) of a Person means the possession, directly or indirectly, of the power:  (i) to vote fifty percent (50%) or more of the voting stock or equity interests of such Person; or (ii) to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting stock or equity interests, by contract or otherwise.

“Agreement” means this Management Agreement.

“Annual Operating Projection” has the meaning ascribed to such term in Section 4.04.

“Annual Operating Statement” has the meaning ascribed to such term in Section 4.01.B.

“Arbitration Award” has the meaning ascribed to such term in Section 11.17.

“Award” has the meaning ascribed to such term in the Lease.

“Base Management Fee” means an amount equal to [three percent (3%) for full service hotels and the New Orleans hotel] [five percent (5%) for limited service hotels] of Gross Revenues.

“Building” has the meaning ascribed to such term in Section A of the Recitals.

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

“Capital Estimate” has the meaning ascribed to such term in Section 5.04.

“Capital Statement” has the meaning ascribed to such term in Section 5.05.B.

“Change in Control” means (a) the acquisition by any Person, or two (2) or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of 9.8% or more, or rights, options or warrants to acquire 9.8% or more, of the outstanding shares of voting stock or other voting interests of Manager or Owner, as the case may be (either, a “Relevant Person”) or of any direct or indirect parent of a

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Relevant Person (“Parent”), or the power to direct the management and policies of a Relevant Person or Parent, directly or indirectly, (b) the merger or consolidation of a Relevant Person or Parent with and into any Person or the merger or consolidation of any Person with and into a Relevant Person or any Parent (other than the merger or consolidation of any Person into a Relevant Person or Parent that does not result in a Change in Control of a Relevant Person or Parent under clauses (a), (c), (d), (e) or (f) of this definition), (c) any one or more sales, conveyances, dividends or distributions to any Person of all or any material portion of the assets (including capital stock or other equity interests) or business of a Relevant Person or Parent, whether or not otherwise a Change in Control, (d) the cessation, for any reason, of the individuals who at the beginning of any twenty-four (24) consecutive month period (commencing on the date hereof) constituted the board of directors of a Relevant Person or any Parent (together with any new directors whose election by such board or whose nomination for election by the shareholders of a Relevant Person or any Parent was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of any such period or whose election or nomination for election was previously so approved, but excluding any individual whose initial nomination for, or assumption of, office as a member of such board of directors occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any Person other than a solicitation for the election of one or more directors by or on behalf of the board of directors) to constitute a majority of the board of directors of a Relevant Person or any Parent then in office, or (e) the adoption of any proposal (other than a precatory proposal) by a Relevant Person or any Parent not approved by vote of a majority of the directors of a Relevant Person or any Parent, as the case may be, in office immediately prior to the making of such proposal, or (f) the election to the board of directors of a Relevant Person or any Parent of any individual not nominated or appointed by vote of a majority of the directors of a Relevant Person or any Parent in office immediately prior to the nomination or appointment of such individual.

“Claims” has the meaning ascribed to such term in Section 11.18.

“Code” means the Internal Revenue Code of 1986.

“Condemnation” means (a) the exercise of any governmental power with respect to the Hotel or any interest therein, whether by legal proceedings or otherwise, by a Condemnor of its power of condemnation, (b) a voluntary sale or transfer of the Hotel or any interest therein, to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending, or (c) a taking or voluntary conveyance of the Hotel or any interest therein, or right accruing thereto or use thereof, as the result or in settlement of any Condemnation or other eminent domain proceeding affecting the Hotel or any interest therein, whether or not the same shall have actually been commenced.

“Condemnor” means any public or quasi-public authority, or private corporation or individual, having the power of Condemnation.

“Controlling Interest” means (i) if the Person is a corporation, the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of such Person (through ownership of such shares or by contract), or (ii) if the Person is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of

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the business, management or policies of such Person.  “Control”, “Controlling” and “Controlled” have corrective meanings.

“Deduction” has the meaning ascribed to such term in the definition of Operating Profit.

“Discount Rate” means an annual rate of eight percent (8%).

“Disputes” the meaning ascribed to such term in Section 11.17.

“Effective Date” has the meaning ascribed to such term in the Preamble.

“Environmental Costs” has the meaning ascribed to such term in Section 11.06.C.

“Environmental Laws” has the meaning ascribed to such term in Section 11.06.B.

“Environmental Notice” has the meaning ascribed to such term in Section 11.06.A.

“Environmental Obligation” has the meaning ascribed to such term in Section 11.06.A.

“Existing CC&Rs” has the meaning ascribed to such term in Section 8.02.A.

“FF&E” means furniture, fixtures and equipment, including without limitation:  furnishings, fixtures, decorative items, signage, audio-visual equipment, kitchen equipment and appliances, cabinetry, laundry equipment, housekeeping equipment, telecommunications systems, security systems and front desk and back-of-the house computer equipment; provided, however, that the term “FF&E” shall not include Fixed Asset Supplies or software.

“Final Statement” has the meaning ascribed to such term in Section 11.09.A.

“Fixed Asset Supplies” means items included within “Operating Equipment” under the Uniform System of Accounts that may be consumed in the operation of the Hotel or are not capitalized, including linen, china, glassware, tableware, uniforms, and similar items used in the operation of the Hotel.

“Future CC&Rs” has the meaning ascribed to such term in Section 8.02.A.

“GAAP” means generally accepted accounting principles, consistently applied.

“Government Agencies” means any court, agency, authority, board (including, without limitation, environmental protection, planning and zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi-governmental unit of the United States or the State or any county or any political subdivision of any of the foregoing, whether now or hereafter in existence, having jurisdiction over Owner, Landlord or the Hotel.

“Gross Revenues” means for any period, all revenues and receipts of every kind derived from operating the Hotel and all departments and parts thereof during such period, including:  income (from both cash and credit transactions) after deductions for bad debts and discounts for

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prompt cash payments and refunds from rental of Guest Rooms and other spaces at the Hotel, telephone charges, stores, offices, exhibit or sales space of every kind; license, lease and concession fees and rentals (not including gross receipts of licensees, lessees and concessionaires); income from vending machines; income from parking; health club membership fees; food and beverage sales; wholesale and retail sales of merchandise; service charges; and proceeds, if any, from business interruption or other loss of income insurance; provided, however, that Gross Revenues shall not include the following:  gratuities to employees of the Hotel; federal, state or municipal excise, sales or use taxes or any other taxes collected directly from patrons or guests or included as part of the sales price of any goods or services; proceeds from the sale of FF&E; interest received or accrued with respect to the funds in the operating accounts of the Hotel; any refunds, rebates, discounts and credits of a similar nature, given, paid or returned in the course of obtaining Gross Revenues or components thereof; insurance proceeds (other than proceeds from business interruption or other loss of income insurance); condemnation proceeds (other than for a temporary taking); or any proceeds from any Sale of the Hotel or from the refinancing of any debt encumbering the Hotel.

“Gross Room Revenues” includes, all gross revenues attributable to or payable for rental of Guest Rooms, after deductions for bad debts and discounts for prompt cash payments and refunds from rental of Guest Rooms, including, without limitation, all credit transactions, whether or not collected, but excluding (i) any sales or room taxes collected by Manager for transmittal to the appropriate taxing authority, and (ii) any revenues from sales or rentals of ancillary goods, such as VCR rentals, telephone income and fireplace log sales and sales from in-room service bars.  Gross Room Revenues shall also include the proceeds from any business interruption insurance or other loss of income insurance.  Gross Room Revenues shall be accounted for in accordance with the Uniform System of Accounts.

“Guest Room” means a lodging unit in the Hotel.

“Hazardous Substances” means any substance:

(i)            the presence of which requires or may hereafter require notification, investigation or remediation under any federal, state or local statute, regulation, rule, ordinance, order, action or policy; or

(ii)           which is or becomes defined as a “hazardous waste”, “hazardous material”, or “hazardous substance”, “dangerous waster”, “pollutant” or “contaminant” or term of similar import under any present or future federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.) and the regulations promulgated thereunder; or

(iii)          which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, any state of the United States, or any political subdivision thereof; or

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

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

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

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

(viii)        without limitation, constitutes materials which are now or may hereafter be listed as medical waste pursuant to the Medical Waste Tracking Act of 1988, or analogous state or local laws or regulations or guidelines promulgated thereunder.

“Hotel” means the Site together with the Building and all other improvements constructed or to be constructed on the Site, and all FF&E installed or located on the Site or in the Building, and all easements or other Owner rights thereto owned by Landlord together with, for purposes of this Agreement, all office equipment, telephone equipment, motor vehicles, and other equipment leased by Owner, Fixed Asset Supplies and Inventories at the Hotel.

“HPT” means Hospitality Properties Trust.

“Interest Rate” means an annual rate of 9%, but not higher than the highest rate permitted by law.

“Impositions” has the meaning ascribed to such term in the Lease but shall not include:

1.             Special assessments (regardless of when due or whether they are paid as a lump sum or in installments over time) imposed because of facilities which are constructed by or on behalf of the assessing jurisdiction (for example, roads, sidewalks, sewers, culverts, etc.) which directly benefit the Hotel (regardless of whether or not they also benefit other buildings), which assessments shall be treated as capital costs of construction and not as Deductions; and

2.             Impact fees (regardless of when due or whether they are paid as a lump sum or in installments over time) which are required as a condition to the issuance of site plan approval, zoning variances or building permits, which impact fees shall be treated as capital costs of construction and not as Deductions.

“Incentive Management Fee” with respect to each Year or portion thereof, an amount equal to twenty percent (20%) of Operating Profit remaining after deducting amounts paid or payable in respect of Owner’s Priority Return and Reimbursable Advances for such Year; provided that for purposes of determining the Incentive Management Fee, Operating Profit shall be determined based upon 95% of Gross Revenues.

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“Initial Term” has the meaning ascribed to such term in Section 2.01.A.

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

“Inventories” means “Inventories” as defined in the Uniform System of Accounts, including provisions in storerooms, refrigerators, pantries and kitchens; beverages in wine cellars and bars; other merchandise intended for sale; fuel; mechanical supplies; stationery; and other expensed supplies and similar items.

“Invested Capital” means an amount equal to                          [to be agreed at time of management agreement, but generally the purchase price of the Hotel paid by Landlord (including acquisition expenses and the principal amount of any indebtedness secured by a mortgage and any refinancing thereof)] increased by the sum of any amounts paid by (a)  Landlord pursuant to Sections 5.1.2(b), 10.2.3 or 11.2 of the Lease or, (b) Owner pursuant to Section 5.04, in excess of an amount equal to five percent (5%) of Gross Revenues, in each case determined on a cumulative basis from the Effective Time or pursuant to Section 6.04 or Section 6.07 in excess of the insurance proceeds or Award, as the case may be.

“Landlord” means as of any date the landlord under the Lease as of such date.

“Lease” means the Lease Agreement between Landlord and Owner dated [·], 20     as amended, from time to time, and any replacement lease(s) of the Hotel by the fee owner thereof.

“Legal Requirements” means all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Hotel or the maintenance, construction, alteration or operation thereof, whether now or hereafter enacted or in existence, including, without limitation, (a) all permits, licenses, authorizations, certificates and regulations necessary to operate the Hotel, and (b) all covenants, agreements, restrictions and encumbrances contained in any instruments at any time in force affecting the Hotel which either (i) do not require the approval of Manager, or (ii) have been approved by Manager as required hereby, including those which may (A) require material repairs, modifications or alterations in or to the Hotel or (B) in any way materially and adversely affect the use and enjoyment thereof, but excluding any requirements under Sections 11.26, 11.27 or 11.28, and (c) all valid and lawful requirements of Government Agencies or pertaining to reporting, licensing, permitting, investigation, remediation and removal of underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or emissions, discharges, releases or threatened releases of Hazardous Substances, chemical substances, pesticides, petroleum or petroleum products, pollutants, contaminants or hazardous or toxic substances, materials or wastes whether solid, liquid or gaseous in nature, into the environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid of gaseous in nature.

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“Manager” has the meaning ascribed to such term in the Preamble hereto or shall mean any successor or permitted assign, as applicable.

“Manager Event of Default” has the meaning ascribed to such term in Section 9.01.

“Marketing Programs” means advertising, marketing, promotional and public relations  programs and campaigns including so-called “frequent stay” rewards programs which are intended for the benefit of all hotels in the System.

“Mortgage” means any mortgage indebtedness obtained by Landlord to finance the Hotel, and may take the form of a mortgage, deed of trust or security document customarily in use in the State.

“Mortgagee” means the holder of any Mortgage.

“Officer’s Certificate” means a certificate executed by an officer of Manager which certifies that with respect to the Annual Operating Statement delivered under Section 4.01.B, the accompanying statement has been properly prepared in accordance with GAAP and fairly presents the financial operations of the Hotel.

“Operating Loss” means a negative Operating Profit for the Hotel.

“Operating Profit” means the excess of Gross Revenues over the following expenses incurred by Manager in accordance with the Operating Standards and the terms of this Agreement, on behalf of Owner, in operating the Hotel:

1.             the cost of sales, including, without limitation, compensation, fringe benefits, payroll taxes and other costs related to Hotel employees (the foregoing costs shall not include salaries and other employee costs of executive personnel of Manager who do not work at the Hotel on a regular basis; except that the foregoing costs shall include the allocable portion of the salary and other employee costs of any general manager or other supervisory personnel assigned to a “cluster” of hotels which includes the Hotel);

2.             departmental expenses incurred at departments within the Hotel; administrative and general expenses; the cost of marketing incurred by the Hotel; advertising and business promotion incurred by the Hotel;

3.             routine repairs, maintenance and minor alterations under Section 5.02;

4.             all charges for electricity, power, gas, oil, water and other utilities consumed in the operation of the Hotel;

5.             the cost of Inventories and Fixed Asset Supplies consumed in the operation of the Hotel;

6.             lease payments for equipment and other personal property reasonably necessary for the operation of the Hotel;

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7.             a reasonable reserve for uncollectible accounts receivable as determined by Manager;

8.             all costs and fees of independent professionals or other third parties who are retained by Manager to perform services required or permitted hereunder;

9.             all costs and fees of technical consultants and operational experts who are retained or employed by Manager and/or Affiliates of Manager for specialized services (including, without limitation, quality assurance inspectors) and the cost of attendance by employees of the Hotel at training and manpower development programs sponsored by Manager;

10.           the Base Management Fee, Reservations Fee and Systems Fee;

11.           insurance costs and expenses for coverage required to be maintained under Section 6.01;

12.           taxes, if any, payable by or assessed against Manager related to this Agreement or to Manager’s operation of the Hotel (exclusive of Manager’s income taxes) and all Impositions;

13.           contributions to Marketing Programs, but only if and to the extent Owner has approved the Marketing Program and the applicable cost allocation formula;

14.           the Hotel’s share of the costs and expenses of participating in programs and activities prescribed for members of the System (including those central or regional services set forth in Section 1.03(ii)) to the extent such costs are not paid pursuant to a Marketing Program;

15.           the costs of commercially reasonable efforts of causing the Hotel to be in compliance with each and every provision of the Lease (regardless of whether or not such compliance is a requirement of this Agreement);

16.           such other costs and expenses incurred by Manager to comply with Legal Requirements and Insurance Requirements or are otherwise reasonably necessary for the proper and efficient operation of the Hotel; and

17.           such other costs and expenses paid to Owner or Landlord pursuant to the Lease or this Agreement, if such costs and expenses would have been a Deduction if paid directly by Manager to a third person in respect of the Hotel, collectively, “Deductions.”

Deductions shall not include (a)  payments with respect to items for which Manager has agreed to be liable at its own cost and expense in this Agreement or under any other agreement between Manager and Owner including indemnities, (b) debt service payments pursuant to any Mortgage, (c) payments pursuant to equipment leases or other forms of financing obtained by Owner for the FF&E located in or connected with the Hotel, both of which shall be paid or caused to be paid by Owner, (d) rent payable under the Lease, (e) any reimbursement to Manager for advances Manager makes with respect to the Hotel as permitted hereunder, (f) the Incentive

45

Management Fee, (g) the Procurement and Construction Supervision Fee or, (h) any item specifically stated not to be a Deduction.

“Operating Standards” has the meaning ascribed to such term in Section 1.02.A.

“Overdue Rate” means an annual rate of 12% but not higher than the highest rate permitted by law.

“Owner” has the meaning ascribed to such term in the Preamble or shall mean any successor or permitted assignee, as applicable.

“Owner Advances” has the meaning ascribed to such term in Section 3.02.D.

“Owner Event of Default” has the meaning ascribed to such term in Section 9.03.

“Owner Operating Loss Advances” has the meaning ascribed to such term in Section 4.06.

“Owner’s Personal Property” means all motor vehicles, consumable inventories and supplies, furniture, furnishings, movable walls and partitions, equipment and machinery and all other tangible personal property of Owner, if any, acquired by Owner on and after the date hereof and located at the Hotel or used in Owner’s business at the Hotel, and all modifications, replacements, alterations and additions to such personal property.

“Owner’s Priority” means, for each Year or portion thereof, an amount equal to eight percent (8)% of Invested Capital.

“Owner’s Residual Payment” with respect to each Year or portion thereof, an amount equal to Operating Profit remaining after deducting amounts paid or payable in respect of Owner’s Priority, Reimbursable Advances and the Incentive Management Fee for such Year.

“Owner Working Capital Advances” means the aggregate of all funds remitted by Owner to Manager as Additional Working Capital.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company partnership or other entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such Peron where the context so permits.

“Procurement and Construction Supervision Fee” means an amount equal to three percent (3%) of all third party costs of capital expenditures under Sections 5.04, 6.04 and 6.07.

“Reimbursable Advances” means the amounts paid or payable in respect of Section 3.02.D.

“Renewal Term(s)” has the meaning ascribed to such term in Section 2.01.A.

“Reservation Fee” one and one-half percent (1.5%) of Gross Room Revenues.

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“RMR” has the meaning ascribed to such term in Section 11.17.

“Rules” has the meaning ascribed to such term in Section 11.17.

“Sale of the Hotel” means any sale, assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary, of Owner’s leasehold title to the Hotel or Landlord’s fee title to the Hotel, as the case may be.  For purposes of this Agreement, a Sale of the Hotel shall also include a lease (or sublease) of all or substantially all of Owner’s leasehold interest in the Hotel and any sale, assignment, transfer or other disposition, for value or otherwise, voluntary or involuntary, in a single transaction or a series of transactions, of the Controlling Interest in Owner or Landlord, but shall not include any conveyance which results in HPT continuing to hold a Controlling Interest in the transferee.

“SEC” means the United States Securities and Exchange Commission.

“Site” has the meaning ascribed to such term in Section A of the Recitals.

“Specially Designated National or Blocked Person” means (a) a person designated by the U.S. Department of Treasury’s Office of Foreign Assets Control, or other governmental entity, from time to time as a “specially designated national or blocked person” or similar status, (b) a person described in Section 1 of U.S. Executive Order 13224 issued on September 23, 2001, or (c) a person otherwise identified by government or legal authority as a person with whom Manager or its Affiliates are prohibited from transacting business.  Currently, a listing of such designations and the text of the Executive Order are published under the internet website address www.ustreas.gov/offices/enforcement/ofac.

“State” means the state in which the Hotel is located.

“System” means all hotels which are operated under the Trade Names.

“System Fee” mean during any Year, an amount equal to one and one-half percent (1.5%) of Gross Revenues.

“System Standards” means the physical standards (for example, quality of the Building, FF&E, and Fixed Asset Supplies, frequency of FF&E replacements, etc.); each of such standards shall be the standard which is generally prevailing or in the process of being implemented at other hotels in the System, on a fair and consistent basis with other hotels in the System; provided, however, that if the market area or the physical peculiarities of the Hotel warrant, in the reasonable judgment of Manager, a deviation from such standards shall be permitted.

“Term” has the meaning ascribed to such term in Section 2.01.

“Termination Fee” means, an amount equal to the present value of the payments that would have been made to Manager between the date of termination and the scheduled expiration date of the Term (including any Renewal Terms) as Base Management Fee, Reservation Fee, System Fee and the Incentive Fee if this Agreement had not been terminated, calculated based upon the average of each of such fees earned in each of the three (3) calendar years ended prior to the date of termination, discounted at  an annual rate equal to the Discount Rate.

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“Trade Names” has the meaning ascribed to such term in Section 11.10.

“Uniform System of Accounts” means the Uniform System of Accounts for the Lodging Industry, Tenth Revised Edition, 2006, as published by the American Hotel & Lodging Educational Institute, as revised from time to time to the extent such revision has been or is in the process of being generally implemented within the System.

“Unsuitable for Its Permitted Use” means a state or condition of the Hotel such that (a) following any damage or destruction involving the Hotel, the Hotel cannot be operated in the good faith judgment of Manager on a commercially practicable basis and it cannot reasonably be expected to be restored to substantially the same condition as existed immediately before such damage or destruction, within nine (9) months following such damage or destruction or such shorter period of time as to which business interruption insurance is available to cover rent and other costs related to the Hotel following such damage or destruction, or (b) as the result of a partial Condemnation, the Hotel cannot be operated, in the good faith judgment of Manager on a commercially practicable basis in light of then existing circumstances.

“Working Capital” means funds that are used in the day-to-day operation of the business of the Hotel.

“Year” means the calendar year.

12.02       Construction.  The definitions of terms herein shall apply equally to the singular, plural, past, present and future forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in this Agreement shall be construed to refer to this Agreement in its entirety and not to any particular provision thereof, (iv) all references in this Agreement to Articles, Sections and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement, and (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time.  Any titles or captions contained in this Agreement are for convenience only and shall not be deemed part of the text of this Agreement.

[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal as of the day and year first written above.

[·]
By:
	Name:
	Title:
[·]
By:
	Name:
	Title:

Signature page to Management Agreement

S-1

Landlord, in consideration of the obligations of Manager and Owner under the within Agreement joins to evidence its agreement to be bound by the terms of Sections [4.01.C, 4.02.B, 5.05.D, 6.09, 8.01, 8.02, 8.04, 10.02, 11.07, 11.18 and 11.20], to the extent applicable to it.

[HPT · TRUST]
By:
	Name:
	Title:

Signature page to Management Agreement

S-2

EXHIBIT A

THE SITE

EX-10.3

Exhibit 10.3

POOLING AGREEMENT

THIS POOLING AGREEMENT (this “Agreement”) is made as of [·], 20   , by and among [·]  (“Manager”) and the parties listed on Schedule A (each an “Owner” and collectively, “Owners”).

RECITALS:

Each Owner has entered into a Management Agreement with Manager (each a “Management Agreement” and collectively, the “Management Agreements”) with respect to the real estate and personal property described in Schedule B opposite such Owner’s name which is   operated as [full service/limited service] hotel (each a “Hotel” and collectively, the “Hotels”), which Management Agreements are listed on Schedule C.

The parties desire that working capital of each of the Hotels and all revenues from operation of each of the Hotels be pooled for purposes of paying operating expenses of the Hotels, fees and other amounts due to Manager and Owners.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I
DEFINED TERMS

1.01.        Definitions.  Capitalized terms used, but not otherwise defined in this Agreement shall have the meanings given to such terms in the Management Agreements. The following capitalized terms as used in this Agreement shall have the meanings set forth below:

“Additional Hotel” is defined in Section 7.01.

“Additional Owner” is defined in Section 7.01.

“Agreement” is defined in the Preamble.

“Aggregate Additional Manager Advances” means the sum of Additional Manager Advances under all Management Agreements.

“Aggregate Annual Operating Statement” is defined in Article IV.

“Aggregate Base Management Fee” means an amount equal to [3% for full service hotels] [5% for limited service hotels] of the Aggregate Gross Revenues.

“Aggregate Deductions” means the sum of Deductions of the Hotels.

“Aggregate Gross Room Revenues” mean the sum of Gross Room Revenues of the Hotels.

“Aggregate Gross Revenues” means the sum of Gross Revenues of the Hotels.

“Aggregate Incentive Management Fee” means with respect to each Year or portion thereof, an amount equal to twenty percent (20%) of Aggregate Operating Profit remaining after deducting amounts paid or payable in respect of Aggregate Owner’s Priority Return and Aggregate Reimbursable Advances for such Year; provided that for purposes of determining the Aggregate Incentive Management Fee, Aggregate Operating Profit shall be determined based upon ninety-five percent (95%) of Aggregate Gross Revenues.

“Aggregate Invested Capital” means the sum of the Invested Capital for each of the Hotels.

“Aggregate Monthly Statement” is defined in Article IV.

“Aggregate Operating Profit” means an amount equal to Aggregate Gross Revenues less Aggregate Deductions.

“Aggregate Owner Advances” means the sum of Owner Advances under all Management Agreements.

“Aggregate Owner’s Priority” means, for each Year or portion thereof, an amount equal  to eight percent (8%) of Aggregate Invested Capital.

“Aggregate Owner’s Residual Payment” means with respect to each Year or portion thereof, an amount equal to Aggregate Operating Profit remaining after deducting amounts paid or payable in respect of Aggregate Owner’s Priority, Aggregate Reimbursable Advances and the Aggregate Incentive Management Fee for such Year.

“Aggregate Reservation Fee” means for each Year or portion thereof, an amount equal to one and one-half percent (1.5%) of Aggregate Gross Room Revenues.

“Aggregate Reimbursable Advances” means the sum of Reimbursable Advances of the Hotels.

“Aggregate System Fee” means with respect to each Year or portion thereof, an amount equal to one and one-half percent (1.5%) of Aggregate Gross Revenues.

“Hotel” and “Hotels” is defined in the Recitals.

“Management Agreement” and “Management Agreements” is defined in the Recitals.

“Manager” is defined in the Preamble.

“Marketing Party” is defined in Section 5.01.

“Non-Economic Hotel” is defined in Section 5.01.

“Non-Marketing Party” is defined in Section 5.02.

“Owner” is defined in the Preamble.

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ARTICLE II
GENERAL

The parties agree that so long as a Hotel is subject to this Agreement, all Working Capital and all Gross Revenues of such Hotel shall be pooled pursuant to this Agreement and disbursed to pay all Aggregate Disbursements, fees and other amounts due Manager and Owners (not including amounts due pursuant to Section 11.20 of the Management Agreements) with respect to the Hotels and that the corresponding provisions of each Management Agreement shall be superseded as provided in Section 3.03.  The parties further agree that (a) if Manager gives a notice of non-renewal of the Term with respect to any Hotel, it shall be deemed to be a notice of non-renewal of the Term with respect to all the Hotels and (b) if Owner gives notice of termination of any Management Agreement without cause pursuant to Section 2.01 1. of the Management Agreements, or upon a Change in Control of Manager pursuant to Section 2.01 4. of the Management Agreements, or if Manager gives notice of termination of any Management Agreement upon a Change in Control of Owner pursuant to Section 2.01 3. of the Management Agreements, in any such case, it shall be deemed to be a notice of termination with respect to all Management Agreements.

ARTICLE III
PRIORITIES FOR
DISTRIBUTION OF AGGREGATE GROSS REVENUES

3.01.        Priorities for Distribution of Aggregate Gross Revenues.  Aggregate Gross Revenues shall be distributed in the following order of priority:

A.            First, to pay all Aggregate Deductions (excluding the Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee);

B.            Second, to Manager, an amount equal to the Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee;

C.            Third, to Owners, an amount equal to Aggregate Owner’s Priority;

D.            Fourth, pari passu, to (i) Owners, in an amount necessary to reimburse Owners for all Aggregate Owner Advances which have not yet been repaid pursuant to this Section 3.01, and (ii) to Manager, in an amount necessary to reimburse Manager for all Aggregate Additional Manager Advances which have not yet been repaid pursuant to this Section 3.01.  If at any time the amounts available for distribution to Owners and Manager pursuant to this Section 3.01 are insufficient (a) to repay all outstanding Aggregate Owner Advances, and (b) all outstanding Aggregate Additional Manager Advances, then Owner and Manager shall be paid from such amounts the amount obtained by multiplying a number equal to the amount of the funds available for distribution by a fraction, the numerator of which is the sum of all outstanding Aggregate Owner Advances, or all outstanding Aggregate Additional Manager Advances, as the case may be, and the denominator of which is the sum of all outstanding Aggregate Owner Advances plus the sum of all outstanding Aggregate Additional Manager Advances;

E.             Fifth, to Manager, an amount equal to the Aggregate Incentive Management Fee;

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F.             Finally, to Owners, the Aggregate Owner’s Residual Payment.

3.02.        Timing of Payments.  Payment of the Aggregate Deductions, excluding the Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee, shall be made in the ordinary course of business.  The Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee shall be paid on the last Business Day of each calendar month, in arrears, based upon the prior month’s Aggregate Gross Revenues or Aggregate Gross Room Revenues, as the case may be, as reflected in the Aggregate Monthly Statement for such prior month.  The Aggregate Owner’s Priority shall be paid on the last Business Day of each calendar month, in arrears, in equal monthly installments, based upon Aggregate Invested Capital most recently reported to Manager by Owners.  If any installment of the Aggregate Base Management Fee, the Aggregate Reservation Fee, the Aggregate System Fee or the Aggregate Owner Priority is not paid when due, it shall accrue interest at the Interest Rate. The Aggregate Incentive Fee and Aggregate Owner’s Residual Payment shall be paid on the last Business Day of the calendar month following the calendar quarter to which such Aggregate Incentive Fee and/or Aggregate Owner’s Residual Payment relates, in arrears, based upon the year-to-date Aggregate Operating Profit as reflected in the Aggregate Monthly Statement for the last calendar month of such calendar quarter and shall be adjusted, after the first calendar quarter, to reflect distributions for prior calendar quarters.  Additional adjustments to all payments will be made on an annual basis based upon the Aggregate Annual Operating Statement for the Year and any audit conducted pursuant to Section 4.02 of the Management Agreements.

If the portion of Aggregate Gross Revenues to be distributed to Manager or Owner pursuant to Section 3.01 is insufficient to pay amounts then due in full, any amounts left unpaid shall be paid from and to the extent of Aggregate Gross Revenues available therefor at the time distributions are made in successive calendar months until such amounts are paid in full, together with interest thereon, if applicable, and such payments shall be made from such available Aggregate Gross Revenues in the same order of priority as other payments made on account of such items in successive calendar months.

Calculations and payments of the fees and other payments in Section 3.01 and distributions of Aggregate Gross Revenues within a Year shall be accounted for cumulatively within a Year, but shall not be cumulative from one Year to the next.  Calculations and payments of Aggregate Reimbursable Advances shall be accounted for cumulatively within a Year, and shall be cumulative from one Year to the next.

The Aggregate Owner’s Priority and Aggregate Owner’s Residual Payment shall be allocated among Owners as the Owners shall determine in their sole discretion and Manager shall have no responsibility or liability in connection therewith.

3.03.        Relationship with Management Agreements.  For as long as this Agreement is in effect with respect to a Hotel, the provisions of Section 3.01 and 3.02 shall supersede Sections 3.02 and 3.03 of the Management Agreement then in effect with the applicable Hotel.

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ARTICLE IV
FINANCIAL STATEMENTS

Manager shall prepare and deliver the following financial statements to the Owners:

(a)          Within twenty (20) days after the close of each calendar month, Manager shall deliver an accounting to Owner showing Aggregate Gross Revenues, Aggregate Gross Room Revenues, occupancy percentage and average daily rate, Aggregate Deductions, Aggregate Operating Profit, and applications and distributions thereof for the preceding calendar month and year-to-date (“Aggregate Monthly Statement”).

(b)         Within sixty (60) days after the end of each Year, Manager shall deliver to Owner and Landlord a statement (the “Aggregate Annual Operating Statement”) in reasonable detail summarizing the operations of the Hotels for the immediately preceding Year and an Officer’s Certificate setting forth the totals of Aggregate Gross Revenues, Aggregate Deductions, and the calculation of the Aggregate Incentive Management Fee and Aggregate Owner’s Residual Payment for the preceding Year and certifying that such Aggregate Annual Operating Statement is true and correct.  Manager and Owner shall, within ten (10) Business Days after Owner’s receipt of such statement, make any adjustments, by cash payment, in the amounts paid or retained for such Year as are required because of variances between the Aggregate Monthly Statements and the Aggregate Annual Operating Statement.  Any payments shall be made together with interest at the Interest Rate from the date such amounts were due or paid, as the case may be, until paid or repaid.  The Aggregate Annual Operating Statement shall be controlling over the Aggregate Monthly Statements and shall be final, subject to adjustments required as a result of an audit requested by Owner or Landlord pursuant to Section 4.02.B of the Management Agreements.

(c)          Manager shall also prepare and deliver such other statements or reports as any Owner may, from time to time, reasonably request.

The financial statements delivered pursuant to this Article IV are in addition to any financial statements required to be prepared and delivered pursuant to the Management Agreements.

ARTICLE V
NON-ECONOMIC HOTELS

5.01.        Non-Economic Hotels.  If the Gross Revenues of any Hotel are insufficient to pay the Owner’s Priority for such Hotel in full during any two (2) out of four (4) consecutive Years, each of Manager and the relevant Owner shall, upon thirty (30) days notice to the other, be entitled to designate such Hotel a “Non-Economic Hotel.”  Notwithstanding the foregoing, Manager and Owners shall not be entitled to designate Hotels for which the Invested Capital in the aggregate would exceed twenty percent (20%) of Aggregate Invested Capital and further provided for purposes of this Section 5.01 only, Aggregate Invested Capital shall be determined without giving effect to the termination of the Management Agreement of a Non-Economic

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Hotel and without reduction for proceeds from the sale, or deemed sale, of any Non-Economic Hotel.

The party designating a Hotel as a Non-Economic Hotel (“Marketing Party”) shall market such Non-Economic Hotel for sale and any costs incurred by the Marketing Party or any other Person in connection with such marketing activities and the sale of such Hotel shall be paid out of the net proceeds of such sale.  The relevant Owner, Landlord and Manager, as the case may be, shall cooperate with the Marketing Party in compiling any relevant information, preparing marketing materials and otherwise in connection with the sale of a Non-Economic Hotel.

5.02.        Sale Process.  If a Non-Economic Hotel is marketed for sale in accordance with Section 5.01 and the Marketing Party receives an offer therefor which it wishes to accept on behalf of the relevant Owner and relevant Landlord, the Marketing Party shall give the relevant Owner, or the Manager, as the case may be (the “Non-Marketing Party”), prompt notice thereof, which notice shall include a copy of the offer and any other information reasonably requested by the non-Marketing Party.  If Manager is the Non-Marketing Party, Manager shall have a right of first refusal to purchase such Non-Economic Hotel on the terms of the offer by notice given to the Marketing Party within seven (7) Business Days after receipt of such notice and other information from the Marketing Party.  If an Owner is the Non-Marketing Party, such Owner, on behalf of the relevant Landlord, may reject the offer by notice given to the Marketing Party within seven (7) Business Days after receipt of such notice and other information from the Marketing Party, in which event the Non-Economic Hotel shall be deemed to have been sold to the relevant Landlord on the date, at the price and on the other terms contained in the offer.  If a Non-Economic Hotel is sold to a third party or deemed to have been sold to the relevant Landlord, in each case pursuant to such offer, effective as of the date of sale or deemed sale: (i) the Management Agreement shall terminate with respect to such Non-Economic Hotel; (ii) the Aggregate Invested Capital shall be reduced by an amount equal to the net proceeds of sale after reduction for the costs and expenses of the relevant Landlord, relevant Owner and/or Manager (or, in the case of a deemed sale, the net proceeds of sale determined by reference to such offer, after reduction for any amounts actually expended and any amounts which would reasonably have been expected to have been expended if the sale had been consummated, by the relevant Owner, relevant Landlord and/or Manager).  If the reduction of Aggregate Invested Capital is less than the Invested Capital of the Non-Economic Hotel sold or deemed sold, the difference shall be proportionately reallocated to the Invested Capital of the remaining Hotels.

ARTICLE VI
ACCOUNTS

All Working Capital and all Gross Revenues of each of the Hotels may be pooled and deposited in one or more bank accounts in the name(s) of  Owners designated by Manager, which accounts may, except as required by any Mortgage and related loan documentation or applicable law, be commingled accounts containing other funds owned by or managed by Manager.  Manager shall be authorized to access the accounts without the approval of Owners, subject to any limitation on the maximum amount of any check, if any, established between Manager and Owners as part of the Annual Operating Projections.  One or more Owners shall be a signatory on all accounts maintained with respect to the Hotel, and Owners shall have the right to require that one or more Owner’s signature be required on all checks/withdrawals after the

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occurrence of an Event of Default by Manager.  The Owners shall provide such instructions to the applicable bank(s) as are necessary to permit Manager to implement the Manager’s rights and obligations under this Agreement.  The failure of any Owner to provide such instructions shall relieve Manager of its obligations hereunder until such time as such failure is cured.

ARTICLE VII
ADDITION AND REMOVAL OF HOTELS

7.01.        Addition of Hotels.  At any time and from time to time, Manager and any Owner or any Affiliate of an Owner (an “Additional Owner”) which enters into a management agreement with Manager for the operation of an additional Hotel (an “Additional Hotel”), the Additional Owner  may become a party to this Agreement by signing an accession agreement confirming the applicability of this Agreement to such Additional Hotel.  If an Additional Hotel is made subject to this Agreement other than on the first day of a calendar month, the parties shall include such prorated amounts of the Gross Revenues and Deductions (and other amounts as may be necessary) applicable to the Additional Hotel for such calendar month, as mutually agreed in their reasonable judgment, in the calculation of Aggregate Gross Revenues and Aggregate Deductions (and other amounts as may be necessary) for the calendar month in which the Additional Hotel became subject to this Agreement and shall make any other prorations, adjustments, allocations and changes required.  Additionally, any amounts held as Working Capital for the Additional Hotel or to fund capital expenditures, if any, shall be held by Manager under this Agreement.

7.02.        Removal of Hotels.  From and after the date of termination of any Management Agreement, the Hotel managed thereunder shall no longer be subject to this Agreement.  If the termination occurs on a day other than the last day of a calendar month, the parties shall exclude such prorated amounts of the Gross Revenues and Deduction (and other amounts as may be necessary) applicable to such Hotel for such calendar month, as mutually agreed in their reasonable judgment, in the calculation of Aggregate Gross Revenues and Aggregate Deductions (and other amounts as may be necessary) for the calendar month in which the termination occurred.  Additionally, the relevant Owner and Manager, both acting reasonably, shall mutually agree to the portion of the Aggregate Working Capital and Aggregate Gross Revenues allocable to the Hotel being removed from this Agreement and the amount of the Aggregate Working Capital, Aggregate Gross Revenues so allocated and any amounts held to fund capital expenditures, shall be remitted to the relevant Owner and the relevant Owner and Manager shall make any other prorations, adjustments, allocations and changes required.

ARTICLE VIII
TERM AND TERMINATION

8.01.        Term.  This Agreement shall continue and remain in effect indefinitely unless terminated pursuant to Section 8.02.

8.02.        Termination.  This Agreement may be terminated as follows:

(a)          By the mutual consent of Manager and Owners which are parties to this Agreement.

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(b)Automatically, if all Management Agreements terminate or expire for any reason.

(c)By Manager, if any or all Owners do not cure a material breach of this Agreement by any Owner or Landlord within thirty (30) days of written notice of such breach from Manager and if such breach is not cured, it shall be an Owner Event of Default under the Management Agreements.

(d)By Owners, if Manager does not cure a material breach of this Agreement by Manager within thirty (30) days of written notice of such breach from any Owner and if such breach is not cured, it shall be a Manager Event of Default under the Management Agreements.

8.03.Effect of Termination.  Upon the termination of this Agreement, except as otherwise provided in Section 2.02.1. or 9.04.B. of the Management Agreements, Manager shall be compensated for its services only through the date of termination and all amounts remaining in any accounts maintained by Manager pursuant to Article VI, after payment of such amounts as may be due to Manager hereunder, shall be distributed to Owners.  Notwithstanding the foregoing, upon the termination of any single Management Agreement, pooled funds shall be allocated as described in Section 7.02.

8.04.Survival.  The following Sections of this Agreement shall survive the termination of this Agreement:  8.03 and Article IX.

ARTICLE IX
MISCELLANEOUS PROVISIONS

9.01.Notices.  All notices, demands, consents, approvals, and requests given by any party to another party hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, upon confirmation of receipt when transmitted by facsimile transmission, or on the next business day if transmitted by nationally recognized overnight courier, to the parties at the following addresses:

To Owners:

c/o [·]

Two Newton Place

225 Washington Street

Newton, Massachusetts 02458

Attn:

Telephone:

Facsimile:

To Manager:

c/o [·]

225 Washington Street

Newton, Massachusetts 02458

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Attn:

Telephone:

Facsimile:

9.02.Applicable Law; Arbitration.  This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of the Commonwealth of Massachusetts, with regard to its “choice of law” rules.  Any “Dispute” (as such term is defined in the Management Agreements) under this Agreement shall be resolved through final and binding arbitration conducted in accordance with the procedures and with the effect of, arbitration as provided for in the Management Agreements.

9.03.Severability.  If any term or provision of this Agreement or the application thereof in any circumstance is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.

9.04.Gender and Number.  Whenever the context of this Agreement requires, the gender of all words herein shall include the masculine, feminine, and neuter, and the number of all words herein shall include the singular and plural.

9.05.Headings and Interpretation.  The descriptive headings in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.  References to “Section” in this Agreement shall be a reference to a Section of this Agreement unless otherwise indicated.  Whenever the words “include,” “includes” or “including” are used in this Agreement they shall be deemed to be followed by “without limitation.”   The words “hereof,” “herein,” “hereby,” and “hereunder, when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision unless otherwise indicated.  The word “or” shall not be exclusive.  This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting.

9.06.Confidentiality of Information.  Any information exchanged between the Manager and each Owner pursuant to the terms and conditions of this Agreement shall be subject to Section 11.07 of the Management Agreements.

9.07.Assignment.  Neither Manager nor any Owner may assign its rights and obligations under this Agreement to any other Person without the prior written consent of the other parties.

9.08.Entire Agreement; Construction; Amendment.  With respect to the subject matter hereof, this Agreement supersedes all previous contracts and understandings between the parties and constitutes the entire Agreement between the parties with respect to the subject matter hereof.  Accordingly, in the event of any conflict between the provisions of this Agreement and the Management Agreements, the provisions of this Agreement shall control, and the provisions of the Management Agreements are deemed amended and modified, in each case as required to

9

give effect to the intent of the parties in this Agreement.  All other terms and conditions of the Management Agreements shall remain in full force and effect; provided that, to the extent that compliance with this Agreement shall cause a default, breach or other violation of the Management Agreement by one party, the other party waives any right of termination, indemnity, arbitration or otherwise under the Management Agreement related to that specific default, breach or other violations, to the extent caused by compliance with this Agreement.  This Agreement may not be modified, altered or amended in any manner except by an amendment in writing, duly executed by the parties hereto.

9.09.Third Party Beneficiaries.  The terms and conditions of this Agreement shall inure to the benefit of, and be binding upon, the respective successors, heirs, legal representatives or permitted assigns of each of the parties hereto and except for Landlords, which are intended third party beneficiaries, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

[Signatures begin on the following page.]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement with the intention of creating an instrument under seal.

[·]
By:
	[Name]
	[Title]
[·]
By:
	[Name]
	[Title]

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Schedule A

Owners

Schedule B

Hotels

Schedule C

Management Agreements

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contacts:

Timothy A. Bonang, Vice President, Investor Relations, or Carlynn Finn, Senior Manager, Investor Relations.

(617) 796-8232

Hospitality Properties Trust Announces Plan to Acquire Royal Sonesta Hotels

in Cambridge and New Orleans

Newton, MA (November 3, 2011):  Hospitality Properties Trust (NYSE: HPT) today announced that it has entered into agreements to acquire the entities which own the Royal Sonesta Hotel in Cambridge, MA (400 keys, 2 restaurants/bars and 22,000 sq.ft. of meeting space) and lease the Royal Sonesta Hotel in New Orleans, LA (483 keys, five restaurants/bars and 20,000 sq.ft. of meeting space) for approximately $150.5 million.

The Cambridge and New Orleans hotels are currently operated by Sonesta International Hotels Corporation (NASDAQ GLOBAL: SNSTA).  The Cambridge hotel is owned by a SNSTA subsidiary and the New Orleans hotel is leased by a SNSTA subsidiary.  HPT’s acquisition is a component part of a transaction that involves the acquisition by merger of all of SNSTA’s shares by Sonesta Acquisition Corp. (“SAC”), an affiliate of Reit Management & Research LLC (“RMR”), the manager of HPT.  Upon completion of the merger, SAC will transfer the entities which own the Cambridge hotel and lease the New Orleans hotel to HPT, and HPT expects to prepay an existing mortgage encumbering the Cambridge hotel, which mortgage amount is included in the purchase price above.  Prior to completion of the merger, SAC will be capitalized independently from HPT with $25 million. The transaction is expected to close during the first quarter of 2012.

After the merger and sale to HPT of the entities which own the Cambridge hotel and lease the New Orleans hotel, SAC will retain the existing management business of SNSTA and these hotels will continue to be managed by the same management team which now operates these two hotels.  Also,

SAC and its Sonesta management team will be available to operate other hotels for HPT, including certain hotels HPT now owns and it is considering rebranding and hotels it may selectively acquire in the future.  Because RMR and SAC are affiliated, the purchase price for the Cambridge and New Orleans hotels and the terms of the management contracts for these hotels were approved by Independent Trustees of HPT who are not owners, employees or otherwise affiliated with RMR.

John G. Murray, President of HPT, made the following statement at the time of this announcement:

“HPT is pleased to be adding the Sonesta management team to the hotel operators with whom it does business.   Sonesta is a niche brand with a strong reputation for high quality accommodations and guest services.  HPT looks forward to working with Sonesta personnel to expand the Sonesta brand.”

Duff & Phelps LLC provided certain valuation services to the Independent Trustees of HPT.  Attorneys at Skadden, Arps, Slate, Meagher & Flom LLP and at Sullivan & Worcester LLP represented SAC and HPT, respectively.

Hospitality Properties Trust is a real estate investment trust, or REIT, which owns 288 hotels and 185 travel centers located throughout the United States and in Ontario, Canada and Puerto Rico.  HPT is headquartered in Newton, MA.

WARNING REGARDING FORWARD LOOKING STATEMENTS

THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS.  THESE FORWARD LOOKING STATEMENTS ARE BASED UPON HPT’S PRESENT BELIEFS AND EXPECTATIONS BUT THEY ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR VARIOUS REASONS, INCLUDING SOME REASONS BEYOND HPT’S CONTROL.  FOR EXAMPLE:

·THIS PRESS RELEASE STATES THAT HPT HAS ENTERED AGREEMENTS EXPECTED TO RESULT IN THE ACQUISITION OF ENTITIES WHICH OWN THE ROYAL SONESTA HOTEL IN CAMBRIDGE, MA AND LEASE THE ROYAL SONESTA HOTEL NEW ORLEANS, LA.   THE IMPLICATION OF THIS STATEMENT IS THAT HPT WILL ACQUIRE THESE HOTELS.  IN FACT, THESE

ACQUISITIONS ARE PART OF A COMPLEX TRANSACTION INVOLVING THE ACQUISITON BY SAC OF SHARES OF SNSTA AND A MERGER.   A HIGHER BID MAY BE RECEIVED BY SNSTA OR THE FAILURE OF CERTAIN MERGER CONDITIONS MAY CAUSE THE MERGER TO FAIL.  IF THE MERGER DOES NOT OCCUR, HPT WILL NOT ACQUIRE THESE HOTELS.  HPT HAS LIMITED CONTROL OVER WHETHER SNSTA RECEIVES A HIGHER BID OR WHETHER THE PROPOSED MERGER OCCURS.

·THIS PRESS RELEASE STATES THAT SAC AND THE ENTITY EXPECTED TO MANAGE THE HOTELS TO BE ACQUIRED ARE AFFILIATES OF RMR AND THAT THE HOTELS’ PURCHASE PRICE AND THE TERMS OF THE MANAGEMENT CONTRACTS WERE APPROVED BY THE INDEPENDENT TRUSTEES OF HPT WHO ARE NOT OWNERS, EMPLOYEES OR OTHERWISE AFFILIATED WITH RMR.   AN IMPLICATION OF THESE STATEMENTS MAY BE THAT THESE AGREEMENTS BETWEEN HPT AND SAC MAY BE CONSIDERED ARMS LENGTH TRANSACTIONS.  RMR MANAGES HPT, AND HPT’S MANAGING TRUSTEES ARE OWNERS, DIRECTORS AND OFFICERS OF RMR AND OF SAC.  THE INDEPENDENT TRUSTEES OF HPT ARE ALSO INDEPENDENT TRUSTEES OR INDEPENDENT DIRECTORS OF OTHER PUBLICLY OWNED COMPANIES MANAGED BY RMR.  ACCORDINGLY, THESE AGREEMENTS MAY IMPLICATE THE RISKS ASSOCIATED WITH RELATED PARTY TRANSACTIONS.  FOR A MORE DETAILED DESCRIPTION OF THE RELATIONSHIPS BETWEEN HPT AND RMR AND THE RISKS WHICH MAY ARISE FROM SUCH RELATIONSHIPS PLEASE SEE HPT’S ANNUAL REPORT ON FORM 10K FOR THE YEAR ENDED DECEMBER 31, 2010, ESPECIALLY THE SECTIONS TITLED “RISK FACTORS” AND “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — RELATED PERSON TRANSACTIONS”, AND HPT’S DEFINITIVE PROXY STATEMENT FOR HPT’S 2011 ANNUAL MEETING DATED FEBRUARY 22, 2011, ESPECIALLY THE SECTION TITLED “RELATED PERSON TRANSACTIONS AND COMPANY REVIEW OF SUCH TRANSACTIONS”;  WHICH ANNUAL REPORT AND PROXY STATEMENT ARE AVAILABLE AT THE WEBSITE OF THE U.S.SECURITIES AND EXCHANGE COMMISSION, OR THE SEC:  WWW.SEC.GOV .

·THIS PRESS RELEASE STATES THAT SAC MAY MANAGE ADDITIONAL HOTELS NOW OWNED, OR WHICH MAY BE ACQUIRED, BY HPT AND A STATEMENT THAT HPT LOOKS FORWARD TO WORKING WITH SONESTA PERSONNEL TO EXPAND THE SONESTA BRAND.  AN IMPLICATION OF THESE STATEMENTS IS THAT HPT WILL REBRAND HOTELS IT OWNS TO BE OPERATED AS SONESTA HOTELS AND HPT WILL PURCHASE ADDITIONAL HOTELS WHICH MAY BE BRANDED AND OPERATED AS SONESTA HOTELS.   THERE ARE NUMEROUS CONTINGENCIES ASSOCIATED WITH ANY EXPANSION OF HPT’S INVESTMENTS IN HOTELS BRANDED AND OPERATED AS SONESTA HOTELS:  HPT IS CURRENTLY IN DISCUSSIONS WITH THIRD PARTIES ABOUT SELLING AND REBRANDING CERTAIN HOTELS IT OWNS AND THOSE DISCUSSIONS MAY LEAD TO SUCCESSFUL TRANSACTIONS; AND HPT MAY BE UNABLE TO LOCATE

ADDITIONAL HOTELS TO PURCHASE ON ACCEPTABLE TERMS.  MANY OF THE CONTINGENCIES ASSOCIATED WITH HPT’S REBRANDING OF HOTELS AND ACQUISITIONS INVOLVE DECISIONS BY THIRD PARTIES WHICH ARE BEYOND HPT’S CONTROL.  ALSO, HPT HAS ENTERED LONG TERM BRANDING CONTRACTS FOR MOST OF THE HOTELS IT NOW OWNS.  ACCORDINGLY, HPT CAN NOT PROVIDE ANY ASSURANCE THAT IT WILL PURCHASE ANY ADDITIONAL HOTELS OR OTHERWISE EXPAND ITS INVESTMENT IN SONESTA BRANDED HOTELS.

FOR THE FOREGOING REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE.  EXCEPT AS MAY BE REQUIRED BY LAW, HPT DOES NOT INTEND TO IMPLY THAT IT HAS UNDERTAKEN ANY OBLIGATION TO MAKE UPDATES TO THE FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE.

IMPORTANT ADDITIONAL INFORMATION

IN CONNECTION WITH THE PROPOSED MERGER, HPT EXPECTS THAT SNSTA WILL FILE RELEVANT MATERIALS WITH THE SEC, INCLUDING A PROXY STATEMENT.  INVESTORS AND SECURITY HOLDERS OF SNSTA ARE URGED TO READ THESE DOCUMENTS (IF AND WHEN THEY BECOME AVAILABLE) AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SNSTA, THE PROPOSED TRANSACTIONS AND THE PARTIES TO THE PROPOSED TRANSACTIONS.  INVESTORS AND SECURITY HOLDERS MAY OBTAIN THESE DOCUMENTS (AND ANY OTHER DOCUMENTS FILED BY SNSTA, HPT AND SAC WITH THE SEC) FREE OF CHARGE AT THE SEC’S WEBSITE AT WWW.SEC.GOV.  IN ADDITION, THE DOCUMENTS FILED WITH THE SEC BY SNSTA MAY BE OBTAINED FREE OF CHARGE BY DIRECTING SUCH REQUEST TO: BOY VAN RIEL, VICE PRESIDENT AND TREASURER OF SNSTA AT (617) 421-5444, OR BY ACCESSING SONESTA’S INVESTOR INFORMATION WEBSITE AT HTTP://WWW.SONESTA.COM/CORPORATE/INDEX.CFM?FA=CORPORATE.INVESTORINFORMATION .  INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE SNSTA PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED MERGER.

SNSTA, SAC AND HPT AND EACH OF THEIR RESPECTIVE DIRECTORS, TRUSTEES AND EXECUTIVE OFFICERS MAY BE DEEMED TO BE PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM SNSTA’S STOCKHOLDERS IN RESPECT OF THE PROPOSED MERGER.  STOCKHOLDERS MAY OBTAIN INFORMATION REGARDING PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM SNSTA’S STOCKHOLDERS IN RESPECT OF THE PROPOSED MERGER, AND THEIR RESPECTIVE INTERESTS WITH RESPECT TO THE PROPOSED MERGER, BY READING THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS REGARDING THE PROPOSED TRANSACTIONS, WHEN THEY ARE FILED WITH THE SEC.

(END)