FORM OF MANAGEMENT AGREEMENT

Confidentiality Agreement

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Title: FORM OF MANAGEMENT AGREEMENT
Governing Law: New York Date: 3/3/2005
Industry: Real Estate Operations Sector: Services

FORM OF MANAGEMENT AGREEMENT, Parties: felcor lodging trust inc

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EXHIBIT 10.3.2

[THIS AGREEMENT IS SUBJECT TO A CONFIDENTIALITY PROVISION - SECTION 12.21]

[EMBASSY SUITES HOTELS LOGO]

MANAGEMENT AGREEMENT

LOCATION: EMBASSY SUITES __________

DATED: __________, 200_

BY AND BETWEEN

OWNER: __________

MANAGER: PROMUS HOTELS INC.

Embassy Suites __________ Management Agreement

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MANAGEMENT AGREEMENT

THIS AGREEMENT is made as of ____________________, 2004 by and between

__________, a __________ ("Owner"), having a principal office at 545 East John

Carpenter Freeway, Suite 1300, Irving, Texas 75062, and PROMUS HOTELS INC., a

Delaware corporation ("Manager"), having a principal office at 9336 Civic Center

Drive, Beverly Hills, California 90210.

PRELIMINARY STATEMENT

WHEREAS, Owner and Manager are parties to that certain Management

Agreement dated as of __________, as amended by the First Amendment to

Management Agreement dated as of __________ (collectively, "Prior Agreement"),

which provides, among other things, for the operation and management of that

certain Embassy Suites hotel located at __________ in __________ ("Hotel") upon

the terms and conditions set forth therein.

WHEREAS, the Prior Agreement expires as of __________;

WHEREAS, Owner desires to continue utilizing the services and experience

of Manager in connection with the operation of the Hotel, and Manager desires to

render such services, all upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual promises, covenants, and

agreements contained herein, and for other good and valuable consideration, the

receipt and adequacy of which hereby are acknowledged, Owner and Manager agree

as follows:

ARTICLE I

DEFINITIONS

1.01 Definitions. In addition to terms previously defined in the Preamble

and Preliminary Statement, the following terms shall have the meanings

specified:

1.01.1 Affiliate(s) - with respect to any entity, any natural person

or firm, corporation, partnership, association, trust or other entity

which, directly or indirectly, controls, is controlled by, or is under

common control with, the subject entity. For purposes hereof the term

"control" shall mean the possession, directly or indirectly, of the power

to direct or cause the direction of the management and policies of any

such entity, or the power to veto major policy decisions of any such

entity, whether through the ownership of voting securities, by contract,

or otherwise.

1.01.2 Brand - Embassy Suites.

1.01.3 CPI - as defined in Subsection 4.02.3.

1.01.4 Capital Renewals - a collective term for (a) normal capital

replacements of, or additions to, FF&E, and (b) special projects designed

to maintain the Hotel in a first-class condition in accordance with the

standards contemplated by this Agreement, including renovation of the

guest room areas, public space, food and beverage facilities, or back of

the

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house areas, which projects will generally comprise replacements of, or

additions to, FF&E, but may include revisions and alterations in the

Improvements; most of the expenditures for such special projects will be

capitalized, but a portion thereof may be currently expended, such as the

purchase of smaller items of FF&E, or expenditures which are ancillary to

the overall project but which are properly chargeable to "Property

Operations and Maintenance" under the Uniform System of Accounts.

1.01.5 Capital Renewals Budget(s) - as defined in Paragraph

4.02.1(b).

1.01.6 Capital Renewals Reserve and Capital Renewals Account - each

term as defined in Subsection 4.02.5.

1.01.7 Commencement Date - __________, 2004.

1.01.8 Compensation - the direct salaries and wages paid to, or

accrued for the benefit of, any executive or other employee together with

all fringe benefits payable to, or accrued for the benefit of, such

executive or other employee, including employer's contributions required

pursuant to any Legal Requirement, or other employment taxes, pension fund

contributions, group life and accident and health insurance premiums, and

profit sharing, retirement, disability and other similar benefits.

1.01.9 Controlling Person - as defined in Section 12.05.

1.01.10 Corporate Personnel - personnel from the corporate offices

of Manager and/or its Affiliates who perform activities in connection with

the services provided by Manager under this Agreement.

1.01.11 Executive Staff - the Managing Director (if any), General

Manager, Resident Manager (if any), Executive Assistant Manager (if any),

and all non-clerical or administrative positions reporting directly to any

such persons.

1.01.12 FF&E - all furniture, furnishings, equipment, fixtures,

apparatus and other personal property used in, or held in storage for use

in (or if the context so dictates, required in connection with), the

operation of the Hotel, other than Operating Equipment, Operating Supplies

and fixtures attached to and forming part of the Improvements.

1.01.13 Full Operating Year - those Operating Years which are

co-extensive with full calendar years and excluding any partial Operating

Years at the beginning or the end of the Term.

1.01.14 Gross Revenues - as defined in the Management Fee Rider.

1.01.15 Ground Lease - the ground lease, if any, described in

Exhibit I.

1.01.16 Hotel - the hotel referred to in the Preliminary Statement,

including the Land and Improvements, and Owner's interest therein, and any

greater estate or interest hereafter

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acquired, together with all entrances, exits, rights of ingress and

egress, easements and appurtenances belonging or pertaining thereto.

1.01.17 Hotel Accounts - as defined in Section 7.01.

1.01.18 Hotel Personnel - all individuals performing services in the

name of the Hotel at the Hotel who are employed by Manager or an Affiliate

of Manager.

1.01.19 Impositions - all taxes, assessments, water, sewer or other

similar rents, rates and charges, levies, license fees, permit fees,

inspection fees and other authorization fees and charges, which at any

time may be assessed, levied, confirmed or imposed on the Hotel or the

operation thereof.

1.01.20 Improvements - the buildings, structures (surface and

subsurface) and other improvements now or hereafter located on the Land.

1.01.21 Intellectual Property - as defined in Section 11.01

1.01.22 Land - the parcel or parcels of land described in Exhibit I.

1.01.23 Legal Requirements - all public laws, statutes, ordinances,

orders, rules, regulations, permits, licenses, authorizations, directions

and requirements of all governments and governmental authorities, which,

now or hereafter, may be applicable to the Hotel and the operation

thereof, including those relating to zoning, building, life/safety,

environmental and health, employee benefits, and providing continued

health care coverage under the Employees Retirement Income Security Act of

1974, as amended.

1.01.24 License Agreement - the franchise license agreement dated

__________, 2004 by and between __________, as licensee, and __________,

as licensor.

1.01.25 Major Capital Improvements - as defined in Subsection

12.08.1.

1.01.26 Managed Hotels - a collective term for the Hotel and all

Other Managed Hotels.

1.01.27 Management Fee - as defined in the Management Fee Rider.

1.01.28 Manager - the person or entity named in the preamble hereto,

or the successor of Manager's interest with respect to this Agreement.

1.01.29 Manager Software - as defined in Section 11.01

1.01.30 Manager's Grossly Negligent or Willful Acts - any gross

negligence, willful misconduct or fraud committed by Manager, its

Affiliates, the Corporate Personnel or any of the Executive Staff of the

Hotel in the performance of Manager's duties under this Agreement. The

acts or omissions (including grossly negligent, willful or fraudulent acts

or omissions) of Hotel Personnel other than the Executive Staff of the

Hotel shall not be imputed to Manager or its

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Affiliates, or to the Corporate Personnel, nor be deemed to constitute

Manager's Grossly Negligent or Willful Acts, unless such acts or omissions

resulted directly from the gross negligence or willful misconduct of the

Corporate Personnel or the Executive Staff of the Hotel in supervising

such Hotel Personnel.

1.01.31 Mortgage and Mortgagee - each term as defined in Subsection

9.03.3.

1.01.32 Operating Budgets - as defined in Paragraph 4.02.1(a).

1.01.33 Operating Equipment - non-consumable items (other than FF&E)

used in, or held in storage for use in (or if the context so dictates,

required in connection with), the operation of the Hotel, including all

china, glassware, linens, silverware and uniforms.

1.01.34 Operating Manual - the Operating Manual issued by Manager

and revised from time to time which sets out Manager's services and the

policies, practices and standards of Managed Hotels for hotel operations,

identification, advertising and accounting.

1.01.35 Operating Period - the period beginning with the

Commencement Date and ending upon the expiration or termination of this

Agreement.

1.01.36 Operating Supplies - consumable items used in, or held in

storage for use in (or if the context so dictates, required in connection

with), the operation of the Hotel, including food and beverages, fuel,

soap, cleaning materials, matches, stationery, folios, invoices, contract

forms, brochures and other forms of advertising or promotional materials

and other similar items.

1.01.37 Operating Years - the Operating Years shall coincide with,

and be identical to, the calendar years, except that the first Operating

Year shall be a partial year beginning on the Commencement Date and ending

on the following December 31, and if this Agreement shall be terminated

effective on a date other than December 31 in any year, then the partial

year from January 1 of the year in which such termination occurs to such

effective date of termination shall be treated as an Operating Year.

1.01.38 Other Managed Hotels - all full-service hotels and inns

within the United States other than the Hotel which are owned, leased

and/or operated by Manager or any of its Affiliates under the Brand name.

1.01.39 Owner - the person or entity named in the preamble hereto,

or the successor of Owner's interest with respect to this Agreement.

1.01.40 Owner's Invested Capital - as defined in the Management Fee

Rider.

1.01.41 Permitted Exceptions - (i) the Ground Lease, if any, and the

terms thereof; (ii) the Permitted Mortgage(s) and the terms thereof; (iii)

liens for Impositions not delinquent; (iv) undetermined or inchoate liens

or charges for labor or materials supplied to the Hotel in connection with

the construction or current operation thereof, which have not at the time

been filed or recorded pursuant to law; and (v) easements, restrictions on

use, zoning laws and

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ordinances, rights of way and other encumbrances and minor irregularities

in title, which do not individually or in the aggregate impair the use of

the Hotel for hotel purposes.

1.01.42 Permitted Mortgage - as defined in Subsection 9.03.3.

1.01.43 Project - a collective term for the real and personal

property comprising the Hotel.

1.01.44 Technical Services - those advisory and consulting services

which Manager and its Affiliates render to Managed Hotels in connection

with the design, planning, construction, organization and operation

thereof, through which Manager's experience in the field is made available

to such hotels and inns.

1.01.45 Term - as defined in Section 2.01.

1.01.46 Uniform System of Accounts - for purposes of this Agreement

other than the Management Fee Rider, the Uniform System of Accounts for

the Lodging Industry (Ninth Revised Edition, 1996) including any

subsequent revisions of the Uniform System of Accounts; for purposes of

the Management Fee Rider, the Uniform System of Accounts for the Lodging

Industry (Ninth Revised Edition, 1996) not including any subsequent

revisions of the Uniform System of Accounts.

1.02 References and Construction. Except as otherwise specifically

indicated, all references to Article, Section, Subsection and Paragraph numbers

refer to Articles, Sections, Subsections and Paragraphs of this Agreement, and

all references to Exhibits refer to the Exhibits attached hereto. Unless

expressly stated to the contrary, reference to any Section includes the

following Subsections thereof. All pronouns and any variations thereof shall be

deemed to refer to the masculine, feminine, neuter, singular or plural, as

appropriate. The words "herein", "hereof", "hereunder", "hereinafter" and words

of similar import refer to this Agreement as a whole and not to any particular

Article, Section, Subsection or Paragraph hereof. The terms "include" and

"including" shall each be construed as if followed by the phrase "without being

limited to". This Agreement will be interpreted without interpreting any

provision in favor of or against either party by reason of the drafting of the

provision.

1.03 Preamble and Recitals. The preamble and foregoing recitals are true

and correct and are incorporated herein by reference.

ARTICLE II

TERM

2.01 The Term. The "Term" of this Agreement shall commence on __________,

2004 and shall expire at midnight of __________, 2009.

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ARTICLE III

[INTENTIONALLY OMITTED]

ARTICLE IV

OPERATING PERIOD

4.01 Authority and Duty of Manager. Manager shall have the sole and

exclusive right and obligation to manage and operate the Hotel pursuant to the

terms of this Agreement and Manager agrees that it shall manage and operate the

Hotel as a first-class hotel comparable to Other Managed Hotels in accordance

with the standards for full-service Managed Hotels set forth in the Operating

Manual, taking into account the size, location and character of the Hotel. In

connection therewith, Manager shall have the authority and responsibility,

subject to the provisions of this Agreement, to (i) determine operating policy,

standards of operation, quality of service, the maintenance and physical

appearance of the Hotel and any other matters affecting operations and

management; (ii) subject to reasonable conformity with the approved Operating

Budget and Capital Renewals Budget, supervise and direct all phases of

advertising, sales and business promotion for the Hotel; and (iii) subject to

reasonable conformity with the approved Operating Budget and Capital Renewals

Budget, carry out all programs contemplated by the Operating Budgets and Capital

Renewals Budgets, which have been approved by Owner pursuant to Section 4.02.

Owner agrees that it will cooperate reasonably with Manager to permit and assist

Manager to carry out its duties hereunder.

Owner and Manager further agree that this Agreement provides for management in

respect of the Hotel, that Owner and Manager do not intend, nor does this

Agreement grant or create, a franchise within the meaning of the Federal Trade

Commission Act, any rule or regulation promulgated thereunder, or any other

applicable law, rule, regulation or judicial decision.

Manager acknowledges that this Agreement is subject and subordinate to the Hotel

Lease (it being understood that such subordination does not affect Manager's

right to receive the Base Management Fee when due including during a default by

Owner which has continued beyond the applicable cure period under the Hotel

Lease) and that Manager, on behalf of Owner and at Owner's sole expense, shall

use its reasonable efforts to fulfill Owner's duties and obligations under the

Hotel Lease. Owner shall not pursue any amendments or modifications of the Hotel

Lease if such amendment or modification would affect Manager's rights,

obligations or liabilities under this Agreement, without the prior written

approval of Manager, such approval of Manager not to be unreasonably withheld;

provided, however, that a copy of any amendment, modification or other related

documents shall be delivered to Manager upon execution thereof.

4.02 Operating Budgets and Capital Renewals Budgets.

4.02.1 Preparation. Manager will submit to Owner, not less than

forty-five (45) days in advance of each Operating Year, the following

budgets for such Operating Year:

(a) an operating budget composed of an estimate of profit and loss

by month, an estimated cash flow projection by month, and

departmental forecast of operations (collectively the

"Operating Budgets"); and

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(b) a budget covering estimated Capital Renewals, which indicates

in reasonable detail the replacements of, or additions to,

FF&E, and the nature of the special projects covered thereby

(the "Capital Renewals Budget(s)").

Budgets for Major Capital Improvements initiated under Section 12.08 shall

be treated separately and shall not be included in the Capital Renewals

Budget.

4.02.2 Review. In connection with the submission of the Operating

Budgets and the Capital Renewals Budgets, representatives of Manager will

meet with Owner to have an in-depth discussion thereof, including a

comparison with the previous year's performance of the Hotel, a discussion

of marketing strategy, identity of markets and the proposed expenditures

contained in the Capital Renewals Budget.

4.02.3 Approval of Budgets. The Operating Budget and the Capital

Renewals Budget shall be subject to the approval of Owner, it being

contemplated that each such Operating Budget and Capital Renewals Budget

shall be agreed upon by Owner and Manager within thirty (30) days after

the submission of the same by Manager to Owner. If Owner shall fail to

approve any Operating Budget or Capital Renewals Budget within thirty (30)

days after its submittal by Manager, or to submit its written objections

thereof to Manager within such period, then Owner shall be deemed to have

approved the same. In case of a dispute with regard to any Operating

Budget, then pending the settlement thereof, or until such dispute is

resolved in accordance with Section 12.04, Manager shall be entitled to

continue to operate the Hotel in accordance with the standards set forth

herein and shall be entitled to make expenditures which are contemplated

by and consistent with the Operating Budget proposed by Manager for such

Operating Year; provided that, subject to the standards of performance

described in Subsection 4.02.4 below, the maximum approved amount of such

expenditures shall be equal to (a) the aggregate of all items set forth in

the Operating Budget which are not disputed by Owner, plus (b) with

respect to all items in the Operating Budget which are disputed or

objected to by Owner, the amount allocated to such item(s) in the

Operating Budget for the immediately preceding Operating Year increased by

the greater of (i) five percent (5%), or (ii) the difference between the

Consumer Price Index (All Cities - All Items) (1982-84 = 100) (the "CPI"),

on January 1 of the Operating Year immediately preceding the Operating

Year in question and the CPI on January 1 of the Operating Year in

question. In case of a dispute with regard to any Capital Renewals Budget,

then, pending the settlement thereof, or until such dispute is resolved in

accordance with Section 12.04, Manager shall be entitled to make

expenditures for Capital Renewals during the then current Operating Year

(a) as contemplated by the Capital Renewals Budget proposed by Manager for

all items which are not disputed by Owner plus (b) up to such additional

amount, if any, by which the aggregate amount of such items not disputed

by Owner is less than half the percentage of the Gross Revenues of the

Hotel applicable to the Operating Year then in effect which are to be

deposited in the Capital Renewals Reserve. Manager shall act reasonably

and exercise prudent business judgment in preparing and submitting to

Owner the Operating Budget and the Capital Renewals Budget. Owner shall

act reasonably and exercise prudent business judgment in approving or

disapproving all or any portion of the Operating Budget and the Capital

Renewals Budget and act in a manner that shall permit maintenance and

operation of the Hotel in compliance with the Operating Manual.

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4.02.4 Performance Under Operating Budget. Manager shall use

commercially reasonable efforts to achieve the results set forth in the

Operating Budget with respect to any Operating Year; provided, however,

that Owner acknowledges that the Operating Budget is a composition of

estimates and, therefore, Manager cannot and does not guarantee or warrant

that the actual operation of the Hotel for any Operating Year will be as

set forth in the Operating Budget for such Operating Year. During each

Operating Year, Manager shall use its commercially reasonable efforts to

operate the Hotel within the approved Operating Budget and the Capital

Renewals Budget (subject, in the case of any disputed items, to Subsection

4.02.3). Notwithstanding the foregoing, Owner understands and agrees as

follows:

(a) Certain expenses provided for in the Operating Budget and the

Capital Renewals Budget for any Operating Year will vary based

on the occupancy of the Hotel; and, accordingly, to the extent

that occupancy of the Hotel for any Operating Year exceeds the

occupancy projected in the approved Operating Budget and the

Capital Renewals Budget for such Operating Year, such approved

Operating Budget and the Capital Renewals Budget shall be

deemed to include corresponding increases in such variable

expenses.

(b) The amount of certain expenses including Impositions,

utilities, insurance premiums, and charges provided for in

contracts and leases entered into pursuant to this Agreement,

are not within the ability of Manager to control. Manager

shall have the right to pay all such expenses without

reference to the amounts provided for in respect thereof in

the approved Operating Budget and the Capital Renewals Budget

for any Operating Year.

avoid damage to the Hotel or injury to persons or property,

Manager may make such expenditures, as may reasonably be

required to avoid or mitigate such damage or injury, even if

the amounts of such expenditures are not provided for or

within the amounts provided for in the approved Operating

Budget and the Capital Renewals Budget for the Operating Year

in question; provided Manager shall not expend more than

$100,000 (which figure shall be adjusted annually to reflect

increases in CPI) on any one occasion pursuant to this

paragraph 4.02.4(c) without Owner's prior approval unless

Manager determines that the emergency condition constitutes an

immediate threat to the life or safety of Hotel guests or

employees. Manager shall notify Owner as promptly as

reasonably possible of the making of any such expenditures.

(d) If any expenditures are required to comply with any Legal

Requirements or to cure or prevent any violation thereof,

Manager may make such expenditures as may be necessary to

comply with such Legal Requirements or to remove or prevent

the violation thereof even if the amounts of such expenditures

are not provided for or within the amounts provided for in the

approved Operating Budget and the Capital Renewals Budget for

the Operating Year in question.

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Manager shall have the right from time to time during each Operating Year

to propose modifications to the approved Operating Budget and the Capital

Renewals Budget then in effect based on actual operations during the

elapsed portion of the Operating Year in question and on Manager's

judgment as to what will transpire during the remainder of such Operating

Year. Any such modifications shall be subject to Owner's approval. Any

dispute relating to a proposed modification of an approved Operating

Budget and the Capital Renewals Budget may be submitted by either party

for resolution in accordance with Section 12.04.

4.02.5 Capital Renewals Reserve. From the revenues from the

operation of the Hotel, or with funds provided by Owner under Section 7.03

or otherwise, Manager will establish and maintain a reserve (the "Capital

Renewals Reserve") for Capital Renewals. The amount of the required

additions to the Capital Renewals Reserve shall be calculated monthly

concurrently with the delivery to Owner of the reports required under

Paragraph 7.05(a) and shall be an amount equal to four percent (4%) of

Gross Revenues of the Hotel (determined as provided in Section B of the

Management Fee Rider).

The Capital Renewals Reserve shall be used solely for the purpose of

paying for Capital Renewals. Any amounts remaining in the Capital Renewals

Reserve at the end of each Operating Year will be carried forward until

fully expended, but shall not be credited against required contributions

to the Capital Renewals Reserve for any subsequent Operating Year. It is

understood that the amounts to be reserved for Capital Renewals under this

Subsection 4.02.5 are minimum and do not represent the amounts which may

be required in later years to maintain the Hotel in the condition

contemplated by this Agreement and, accordingly, Owner and Manager

recognize that the Capital Renewals Budgets in future years may call for

expenditures in excess of the amounts being reserved therefor under this

Subsection 4.02.5.

Except as may otherwise be agreed between Owner and Manager (a) the

additions to the Capital Renewals Reserve will be deposited in an

interest-bearing account (the "Capital Renewals Account") at a banking

institution to be selected in accordance with Section 7.01, (b) interest

earned on the Capital Renewals Account shall be added to the Capital

Renewals Reserve but shall not be credited against amounts required to be

added thereto, and (c) any funds remaining in the Capital Renewals Account

at the expiration or termination of this Agreement will be disbursed to

Owner.

4.02.6 Compliance with Capital Renewals Budget. Manager shall at all

times comply with the applicable Capital Renewals Budget, and shall not

deviate in any substantial respect therefrom; provided that the Capital

Renewals Budget includes appropriate amounts for contingencies.

Notwithstanding the foregoing, Manager shall be entitled to make

additional expenditures not authorized under the then applicable Capital

Renewals Budget in case of emergencies arising out of fire or any other

like or unlike casualty, or in order to comply with any applicable Legal

Requirements. If Manager at any time determines that expenditures are

required to be made pursuant to Paragraphs 4.02.4(c) or 4.02.4(d), Manager

may make such expenditures out of the Capital Renewals Reserve; provided

further that Manager may reallocate up to five percent (5%) of the Capital

Renewals Reserve during each Operating Year to pay any expenses for

Capital Renewals that Manager may reasonably determine to be appropriate

to maintain the Hotel in a manner consistent with the Operating Manual,

regardless of whether such

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Capital Renewals were specifically included in the Capital Renewals Budget

for such Operating Year. Subject to Subsection 4.02.4, in connection with

any expenditure from the Capital Renewals Reserve that was not

specifically contemplated in the Capital Renewals Budget, Manager shall

attempt to notify Owner at least thirty (30) days prior to the time that

the expenditures in question are made. Subject to the availability of

sufficient amounts in the Capital Renewals Reserve or otherwise provided

by Owner, Manager shall arrange for the completion of all Capital Renewals

approved by Owner in the Capital Renewals Budget for any Operating Year or

otherwise. The lack of sufficient monies in the Capital Renewals Reserve

shall not limit Owner's obligations to make Capital Renewals required to

maintain the Hotel in a manner consistent with the Operating Manual or to

provide funds sufficient (in addition to the amounts in the Capital

Renewals Reserve) to enable Manager to complete and pay for all Capital

Renewals provided for in an approved Capital Renewals Budget or otherwise

approved by Owner or authorized under the terms of this Agreement.

4.03 Management Group Services.. The License Agreement contemplates that,

in consideration of the Monthly Program Fee (as defined therein) and other fees

set forth in the License Agreement, Manager and its Affiliates will provide

pursuant thereto such programs as advertising and other marketing programs, a

centralized reservation service and other programs which benefit the Embassy

Suites hotel system. Manager and its Affiliates will also furnish or cause to be

furnished to the Hotel the benefits of "Management Group Services", which phrase

shall mean such services which Manager or its Affiliates may hereafter furnish

to Other Managed Hotels but not to Embassy Suites hotels that are not Managed

Hotels. Management Group Services currently include:

(a) Purchasing;

(b) Operations support, including performance management and

improvement and functional discipline support;

hotel accounting operations (such as accounts payable

processing and payroll processing), reporting and analysis;

(d) Information technology;

(e) Human resources, including recruitment, benefits

administration and training and development;

(f) Legal; and

(g) Risk management.

Management Group Services are not rendered in consideration of the Monthly

Program Fee and may require additional payment by Owner. However, except for any

third party expenses, operations support services, operations finance services,

human resources services (other than training and development charges) and legal

services are provided in consideration of the Management Fee.

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4.04 Technical Services. During the Operating Period, Manager, through its

Technical Services program, will provide, as needed, supervisory and control

services to the Hotel's front office, food, personnel and other operating

departments.

4.05 Personnel.

4.05.1 General. Manager shall hire, train, discharge, promote and

supervise the Executive Staff of the Hotel, and shall supervise through

the Executive Staff the hiring, training, discharging, promotion and work

of all other Hotel Personnel. All members of the Executive Staff of the

Hotel shall be properly qualified for their positions, and the direct

compensation payable to such persons shall be comparable to the direct

compensation paid to the members of the Executive Staff of other

comparable first-class hotels, taking into account the location and size

of the Hotel. Notwithstanding anything contained in the foregoing to the

contrary, Owner shall have the right to approve the selection of any such

individual as the general manager of the Hotel; provided that Owner shall

be deemed to have approved the appointment of any such individual unless

Owner delivers notice of its disapproval of such appointment within seven

(7) days after Manager's delivery to Owner of (a) a written summary of

such individual's professional experience and qualifications and (b)

notice of Manager's desire to arrange an interview between Owner and such

individual at the Hotel or at another mutually acceptable location (it

being agreed that Owner will forego its right to interview any such

individual if Owner is unwilling or unable to have an authorized

representative participate in the interview within seven (7) days

following Manager's notice to Owner of Manager's desire to arrange such an

interview). Moreover, Owner acknowledges that it may not reject more than

three (3) candidates proposed by Manager for the position of general

manager each time the position is being filled.

4.05.2 Manager as Employer. All employees of the Hotel shall be

employees of Manager, and all Compensation of such employees shall be paid

by Manager, and subject to the approved Forecast (with such variances and

modifications as contemplated by Section 4.02.4) the amount of such

payments shall immediately be reimbursed to Manager by Owner in accordance

with Section 4.07 hereof. Accordingly, Manager shall establish appropriate

payroll accounts covering all such employees of the Hotel. Arrangements

shall be made such that Manager can draw on the Hotel Accounts to transfer

funds to such payroll accounts immediately upon its payment of such

Compensation.

4.05.3 Labor Relations. Manager shall negotiate for the best

interest of Owner with any labor unions representing Hotel Personnel, but

any collective bargaining agreement or labor contract resulting therefrom

will be executed by Manager as the employer. In addition, it is understood

that, with respect to labor negotiations not involving multi-employer

bargaining arrangements applicable to the Hotel and other hotel properties

not owned or managed by Manager, Manager shall consult with Owner in

advance of, and, to the extent practicable, during the course of,

negotiations with any labor union.

4.05.4 Manager Personnel. If Manager shall reasonably deem it

advisable in the best interests of the Hotel, or with Owner's reasonable

consent, Manager may temporarily assign the general manager, the director

of finance and other members of the Executive Staff of the Hotel

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from the Corporate Personnel or from the staff of Other Managed Hotels.

All such employees will be paid their regular Compensation, such

Compensation to be paid by the Hotel, or if Manager deems it advisable, by

Manager, in which case Manager will be reimbursed by Owner therefor as

provided in Section 4.07.

4.05.5 Business Expenses. The Executive Staff and other appropriate

Hotel Personnel shall be reimbursed for all reasonable business expenses,

including business entertainment and travel expenses, in accordance with

the standard practices in effect at Other Managed Hotels.

4.05.6 Benefit Plans, etc. Manager shall have the right to provide

to Hotel Personnel who are eligible therefor and who are not covered by

collective bargaining or similar arrangements, with benefits of the

incentive plans, and the pension, profit sharing or other employee

retirement, disability, health or welfare or other benefit plan or plans

now or hereafter applicable to employees of Other Managed Hotels, and to

charge the Hotel with the Hotel's pro rata share of the costs and expenses

of such plan or plans allocated to the Hotel on the same basis as

allocated to participating Other Managed Hotels; provided, however, that

without the prior consent of Owner (not to be unreasonably withheld,

delayed or conditioned), Manager shall not:

(a) Increase, from the amounts in effect as of the date of this

Agreement, the overall annual cash incentive bonus plan payout

targets (expressed as a percentage of annual base salary)

applicable to the General Manager, other members of the

Executive Staff and members of the sales department of the

Hotel, except to the extent, if any, that Manager, at its sole

discretion, elects to fund the amount of such increase;

(b) Reduce, from the amounts in effect as of the date of this

Agreement, the amount of the annual cash incentive bonus plan

payout target (expressed as a percentage of the annual

incentive = bonus) payment of which is dependent upon one or

more financial measures including, but not limited to, total

revenues, food and beverage revenues, catering revenues,

revenues per available guest room, Yield Index, Income After

Undistributed Operating Expenses (also referred to as "Gross

Operating Profit" or "GOP"), GOP margin (i.e., GOP as a

percentage of total revenues) and GOP flow through (i.e.,

marginal GOP as a percentage of marginal total revenues); or

incentive bonus plan payout target not otherwise dependent

upon the financial measures referenced in clause (b) above is

conditioned on achieving threshold levels of one or more

financial measures referenced in clause (b) above, reduce,

from the levels in effect as of the date of this Agreement,

the threshold levels which must be so achieved.

Owner agrees and acknowledges that Manager may (but shall not be required

to) provide benefits and allow participation in such plans on whatever

modified basis as it may determine appropriate under the circumstances,

and may waive any waiting period or any preconditions to coverage or

participation otherwise applicable to such employees. No statement,

promise,

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representation or warranty regarding the terms of such plans or the

participation or coverage of employees shall be enforceable, binding or

effective in any way unless made in writing and signed by an authorized

representative of Manager.

Notwithstanding the foregoing, in no event shall Manager initiate or adopt

any plans, programs or benefits for Hotel Personnel not otherwise in

effect at Other Managed Hotels unless required by applicable collective

bargaining agreements.

4.05.7 Termination of Hotel Personnel. Owner acknowledges that

Manager or its Affiliates may have an obligation under federal, state or

local law to give advance notice to Hotel Personnel of any termination of

their employment, and that failure to comply with any such notification

obligation could give rise to civil liabilities. Therefore,

notwithstanding anything to the contrary contained in this Agreement,

Owner shall indemnify, hold harmless and defend Manager and its Affiliates

from and against any such liabilities based on Owner's actions (including

terminating this Agreement) which give rise to such a notification

obligation on the part of Manager or any of its Affiliates, unless Manager

(or its Affiliates) is given adequate opportunity to comply with such

obligation.

4.05.8 Non-Solicitation. Owner, on behalf of itself, and its

Affiliates and its and their successors, hereby agrees not to solicit the

employment of any of the Executive Staff of the Hotel or Corporate

Personnel at any time during the Term of this Agreement or within twelve

(12) months following the expiration or termination of this Agreement

without Manager's prior written approval.

4.06 Additional Responsibilities of Manager. Manager is authorized to

perform and shall, on behalf of Owner, either in its own name, or in the name of

Owner, perform the following additional services, or cause the same to be

performed for the Hotel:

(a) establish and revise, as necessary, administrative policies

and procedures, including policies and procedures for the

control of revenue and expenditures, for the purchasing of

supplies and services, for the control of credit, and for the

scheduling of maintenance, and verify that the foregoing

procedures are operating in a sound manner;

(b) consummate leases with respect to the commercial and office

space, and concession or other arrangements with respect to

other space and facilities, in the Hotel; provided that

Owner's prior written approval shall be required for any

lease, concession or other such arrangement having a

non-terminable term in excess of one year, if the amount of

the expenditures thereunder would, or is reasonably

anticipated to, exceed $50,000 in the aggregate per annum, or

if Owner would be obligated thereunder to indemnify, defend,

hold harmless or otherwise protect a third party;

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provided that:

(i) Owner's prior written approval shall be required for any

contract for goods or services to the Hotel (A) having a

non-terminable term in excess of one year, (B) if the

amount of the expenditures thereunder would, or is

reasonably anticipated to, exceed $50,000 in the

aggregate per annum, or (C) if Owner would be obligated

thereunder to indemnify, defend, hold harmless or

otherwise protect a third party; and

(ii) any contract for goods or services to the Hotel entered

into with Manager or an Affiliate of Manager = (other

than the License Agreement, contracts entered into as

contemplated by the License Agreement and contracts

specifically authorized by another provision of this

Agreement, including Section 12.01), Owner's prior

approval of the costs thereunder shall be required

(which approval shall be deemed given if such costs are

included in identified in (A) the attached Exhibit ___

or (B) the then applicable approved Operating Budget as

being payable to = Manager or an Affiliate of Manager);

(d) subject to compliance with the applicable Capital Renewals

Budget, make all repairs, decorations, revisions, alterations

and improvements to the Hotel as shall be reasonably necessary

for the proper maintenance thereof in good order, condition

and repair;

(e) purchase such Operating Equipment and Operating Supplies as

shall be reasonably necessary for the proper operation of the

Hotel;

(f) apply for, and use its best effort to obtain and maintain, all

licenses and permits required of Owner or Manager in

connection with the operation and management of the Hotel;

Owner agrees to execute and deliver any and all applications

and other documents as shall be reasonably required and to

otherwise cooperate, in all reasonable respects, with Manager

in applying for, obtaining and maintaining such licenses and

permits;

(g) use its reasonable efforts to do, or cause to be done, all

such acts and things in and about the Hotel as shall be

reasonably necessary to comply with Legal Requirements and the

terms of all insurance policies, and to discharge any lien,

encumbrance or charge on or with respect to the Hotel and the

operation thereof, other than Permitted Exceptions;

(h) provided sufficient funds are then available in the Hotel

Accounts, pay all Impositions and insurance premiums, when due

(or reimburse Owner, to the extent Owner pays any such

Impositions or insurance premiums on behalf of the Hotel);

(i) use commercially reasonable efforts to cause the Hotel to

comply with all applicable covenants and provisions of the

Ground Lease (if any) and Mortgage,

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and pay, when due, the installments of rental under the Ground

Lease (if any) and of principal and interest on the Mortgage;

(j) retain legal counsel for the Hotel, which legal counsel shall

perform legal services under the direction of Manager;

(k) cooperate with Owner and any prospective purchaser, lessee,

Mortgagee or other lender in connection with any proposed

sale, lease or financing of or relating to the Hotel;

provided, however, that Manager shall not be required to

release any information that is confidential or proprietary to

Manager or its Affiliates; and provided further that Owner

shall reimburse Manager for any expenses incurred by Manager

in connection with such cooperation when such expense is not

otherwise paid or reimbursed under this Agreement;

(l) institute in its own name or in the name of Owner or the

Hotel, and as an operating expense of the Hotel, any and all

legal actions or proceedings to collect charges, rent or other

income derived from the Hotel's operations or to oust or

dispossess guests, tenants or other persons in possession

therefrom, or to cancel or terminate any lease, license or

concession agreement for the breach thereof or default

thereunder by the tenant, licensee or concessionaire; and at

the direction and expense of Owner (and not as an operating

expense of the Hotel), Manager shall take appropriate steps to

challenge, protest, appeal and/or litigate to final decision

in any appropriate court or forum any alleged non-compliance

with Legal Requirements affecting the Hotel or any alleged

violation of any law, but only provided that (a)

non-compliance with the Legal Requirements or violation of law

in question during such challenge, protest, appeal or

litigation does not result in the closing of any portion of

the Hotel or any facility thereof and does not impose any risk

of criminal or civil liability on Manager or (b) Owner

complies with such Legal Requirements or remedies such

violation of law to the extent necessary to prevent any such

closure or risk of liability; provided further that if such

non-compliance with Legal Requirements or violation of law

resulted from the actions of Manager in the operation of the

Hotel, Manager shall bear the expense of such legal costs,

which costs shall be an operating expense of the Hotel unless

Manager would be obligated to indemnify Owner against the same

pursuant to Subsection 12.03.2 of this Agreement;

(m) collect on behalf of Owner and account for and remit to

governmental authorities all Impositions collectible by the

Hotel directly from patrons or guests, or as part of the sales

price of any goods, services or displays, including gross

receipts, admissions or similar or equivalent taxes, duties,

levies or charges;

(n) collect all charges, rent and other amounts due from guests,

lessees and concessionaires of the Hotel and use those funds,

as well as funds from other sources as may be available to the

Hotel, first to pay for the expenditures stipulated in Section

7.02 and then any other financial obligations of the Hotel as

Owner may direct; and

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(o) perform such other tasks as are customary and usual in the

operation of a hotel of the class and standing of the Hotel.

Owner shall be entitled to meet with the area vice president of Manager, or

other responsible Manager representative, on a quarterly basis to review and

discuss the operation of the Hotel, including any substantial deviation from the

operating strategies, policies or procedures which form the basis on which the

current Operating Budgets were made. Manager shall reasonably consider any

comments or suggestions of Owner.

4.07 Reimbursements to Manager. In addition to the Management Fee provided

for in Article VI, Manager and its Affiliates shall be entitled to be reimbursed

for the following costs and expenses incurred in rendering services to the

Hotel:

(a) the Hotel's share of all costs and expenses incurred in

connection with the rendition of Management Group Services,

allocated on the same basis as allocated to Other Managed

Hotels;

(b) the Compensation paid by Manager or its Affiliates to Hotel

Personnel;

Vice Presidents, and higher ranking executive officers), who

are not assigned to the Hotel, under Subsection 4.05.4, while

working on an assignment for the specific benefit of the

Hotel, Owner or its Affiliates;

(d) reasonable travel and entertainment expenses of officers and

employees of Manager and its Affiliates incurred in performing

Manager's duties hereunder in connection with any phase of the

operation of the Hotel in accordance with the policies of

Manager then in effect;

(e) the Compensation and expenses paid or reimbursed by Manager or

its Affiliates to all independent consultants rendering

services to the Hotel if and to the extent contemplated in the

Operating Budget or Capital Renewals Budget for such Operating

Year or as otherwise approved by Owner;

(f) payments made or incurred by Manager or its Affiliates, or its

or their employees to third parties for goods and services in

the ordinary course of business in the operation of the Hotel,

in accordance with the Operating Budget or Capital Renewals

Budget or as otherwise approved by Owner or permitted under

this Agreement;

(g) all taxes and similar assessments (other than Manager's income

taxes) levied against any reimbursements payable to Manager

under this Agreement for expenses incurred for Owner's

account, including the reimbursable expenses described in this

Section 4.07; and

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(h) all other expenditures which are authorized, permitted or

required under the provisions of this Agreement which have

been paid or funded by Manager on Owner's behalf.

It is agreed that, to the extent the entire amount of Compensation or other

expense reimbursable to Manager or its Affiliates under this Section 4.07, or

under any other provisions of this Agreement, is not incurred solely for the

benefit of the Hotel, then such amount or expense shall be appropriately

allocated.

Manager shall be entitled to reimburse itself and its Affiliates for the above

items out of the Hotel Accounts, or may submit statements covering such items to

Owner, and Owner will pay to Manager or its Affiliate(s), as applicable, the

amount indicated thereon promptly upon the receipt of such statements.

ARTICLE V

INSURANCE

5.01 Coverage.

5.01.1 Required Insurance. The following insurance shall be secured

and maintained with respect to the Hotel at all times during the Term of

this Agreement:

(a) Property insurance provided by an all risk policy form,

including coverage for the perils of fire, windstorm, flood,

earthquake and other risks covered by extended coverage

endorsements on the Improvements and contents in an amount

equal to the full replacement value thereof;

(b) Business interruption insurance provided by an all risk policy

form, including business interruption resulting from the

perils of fire, windstorm, flood, earthquake and other risks

covered by extended coverage endorsements for full recovery of

the net profits and continuing expenses of the Hotel

(including the Management Fee) for not less than twelve months

of any such business interruption;

explosion of, boilers, electrical apparatus, air conditioning

systems, including refrigeration and heating apparatus,

pressure vessels and pressure pipes in an amount equal to the

full replacement value of such items;

(d) Business interruption insurance against loss arising from

accidental damage to, or from the explosion of, boilers,

electrical apparatus, air conditioning systems, including

refrigeration and heating apparatus, pressure vessels and

pressure pipes for full recovery of the net profits and

continuing expenses of the Hotel (including the Management

Fee) for not less than twelve months of any such business

interruption;

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(e) Commercial general liability, commercial automobile liability

insurance including coverage for owned, non-owned and leased

automobiles, garage keepers liability, products and completed

operations, contractual liability, liquor liability and

innkeepers' liability in an amount not less than

$100,000,000.00 per occurrence;

(f) Comprehensive crime insurance in an amount equal to not less

than $5,000,000.00;

(g) Workers' compensation insurance providing statutory benefits

and employers' liability insurance in an amount equal to not

less than (i) $1,000,000.00 each accident, (ii) $1,000,000.00

each disease-policy limit and (iii) $1,000,000.00 each

disease-each employee;

(h) Employment practices liability insurance in the amount of

$2,000,000.00 per claim; and

(i) Insurance against such other insurable risks as Manager may,

from time to time, reasonably require.

5.01.2 Responsibility to Maintain. During the Term, Owner, or if and

to the extent requested by Owner, Manager at the expense of Owner, shall

procure and maintain the above insurance policies, including those

required under clauses (a) through (i) excluding clause (g) of Subsection

5.01.1. Owner may satisfy this requirement by participating in Manager's

insurance programs.

5.01.3 Changes in Coverage. Manager shall have the right to raise

the minimum amount of insurance to be maintained with respect to the Hotel

under the above Subsection 5.01.1 to make such insurance comparable to the

amount of insurance carried with respect to Other Managed Hotels, taking

into account the size and location of the Hotel. In addition, neither

party shall unreasonably withhold its consent to a request by the other

party that such minimum limits of insurance be lowered on the basis that

such insurance cannot be obtained in such amounts, or can be obtained only

at a prohibitive cost. Similarly, if during the Term of this Agreement

changes in the insurance industry shall make any description of the

required insurance coverage inaccurate or inappropriate, then Manager

shall have the right, by notice to and with the prior written approval of

Owner, to change such requirements to accurately describe, in the then

current vernacular, the type of insurance which would be comparable to the

coverage described in the above Subsection 5.01.1.

5.01.4 Requirements. All policies of insurance shall be written on

an "occurrence" basis, if possible, and if any policy is written on a

"claims made" basis, then such policy must, if possible, be continued in

effect for a period of two (2) years following the expiration or early

termination of this Agreement. The insurance coverage shall in any event

comply with the requirements of the Mortgage, if any.

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5.02 Policies and Endorsements.

5.02.1 Policies. All insurance provided for under Section 5.01 shall

be effected by policies issued by insurance companies of good reputation

and of sound and adequate financial responsibility. The party procuring

such insurance shall deliver to the other party certificates of insurance

with respect to the policies of insurance so procured, including existing,

additional and renewal policies, and in the case of insurance about to

expire, shall deliver certificates of insurance with respect to the

renewal policies to the other party not less than thirty (30) days after

the respective dates of expiration.

5.02.2 Endorsements. All policies of insurance provided for under

this Article V shall provide that (a) such policy shall not be canceled or

materially changed without at least thirty (30) days prior written notice

to Owner and Manager, and (b) to the maximum extent reasonably obtainable

from the insurer, no act or omission of Owner or Manager shall affect the

obligation of the insurer to pay the full amount of any loss sustained.

All insurance policies procured by Owner pursuant to Subsection 5.01.1

shall contain an endorsement or otherwise provide that such insurance is

primary to any similar coverage provided by Manager.

5.02.3 Named Insureds. All policies of insurance required under

clauses (a) through (i) of Subsection 5.01.1 (excluding clause (g) which

shall be carried in the name of Manager only) shall be carried in the name

of Owner, Manager and, if required, Mortgagee and/or the lessor under any

Ground Lease. Losses thereunder shall be payable to the parties as their

respective interests may appear (excluding insurance required under

clauses (a) and (c) which shall be payable to Owner). Notwithstanding the

foregoing, if Mortgagee is an Institutional Lender and so requires, losses

may be made payable to Mortgagee, or to a bank or trust company qualified

to do business in the state where the Hotel is located, in either instance

as trustee for the custody and disposition of the proceeds therefrom.

Owner agrees to use reasonable efforts to cause Mortgagee to agree that

its Mortgage shall contain a provision to the effect that proceeds from

property insurance shall be made available for restoration of the Hotel.

All insurance policies required in clauses (a) through (i) of Subsection

5.01.1 (excluding clause (g)) procured by Owner shall name Owner and its

Affiliates, directors, officers, agents and employees of each such entity

as named insureds, and Manager, its Affiliates, directors, officers,

agents and employees of each such entity as named insureds or additional

insureds as their interests appear.

5.02.4 Evidence of Insurance. As soon as practicable prior to the

effective date of the applicable coverages, the party obtaining the

insurance coverages under this Article V shall provide the other party

with binders evidencing that the applicable insurance requirements of this

Agreement have been satisfied and, as soon as practicable thereafter,

shall provide certified copies of policies for such insurance. As soon as

practicable prior to the expiration date of each such policy, the party

obtaining such insurance shall provide the other party with binders

evidencing renewal of existing or acquisition of new coverages. Certified

copies of renewed or new policies or certificates of insurance shall be

provided by the party obtaining insurance coverage under this Article V to

the other party as soon as practicable after renewed or new coverages

become effective. On request of the other party, each party shall furnish

the other with a schedule of insurance obtained by such party under this

Article V, listing the policy

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numbers of the insurance obtained, the names of the companies issuing such

policies, the names of the parties insured, the amounts of coverage, the

expiration date or dates of such policies and the risks covered thereby.

5.02.5 Review of Insurance. All insurance policy limits provided

under this Article V shall be reviewed by Owner and Manager every three

(3) years following the Commencement Date, or sooner if reasonably

requested by Manager, to determine the suitability of such insurance

limits in view of exposures reasonably anticipated over the ensuing three

(3) years. Owner and Manager hereby acknowledge that changing practices in

the insurance industry and changes in the local law and custom may

necessitate additions to types or amounts of coverage during the Operating

Period. Owner agrees to comply with any other insurance requirements

Manager reasonably requests in order to protect the Hotel and the

respective interests of Owner and Manager.

5.03 Waiver of Liability. Neither Manager nor Owner shall assert against

the other, and do hereby waive with respect to each other, or against any other

entity or person named as additional insureds on any policies carried under this

Article V, any claims for any losses, damages, liability or expenses (including

attorneys' fees) incurred or sustained by either of them on account of injury to

persons or damage to property arising out of the ownership, development,

construction, completion, operation or maintenance of the Hotel, to the extent

that the same are covered by the insurance required under this Article V. Each

policy of insurance shall contain a specific waiver of subrogation reflecting

this Section 5.03, and a provision to the effect that the existence of the

preceding waiver shall not affect the validity of any such policy or the

obligation of the insurer to pay the full amount of any loss sustained.

5.04 Insurance by Manager. Any insurance provided by Manager under this

Article V may, at its option, be effected under policies of blanket insurance

which cover other properties of Manager and its Affiliates, and Manager shall

have the right to charge the Hotel with the Hotel's pro rata share of the

aggregate premiums charged by Manager to all participating Managed Hotels, such

share to be allocated to the Hotel on the same basis as allocated to

participating Other Managed Hotels. Subject to Owner and Manager agreeing upon

such matters as the identification of the relevant records, the procedures for

reviewing such records, and limitations on use or disclosure of the information

contained in such records, to the extent any insurance coverage relating to this

Agreement is effected under a policy of blanket insurance, Manager shall make

its books and records available, upon Owner's request and at Owner's expense, in

sufficient detail for Owner to verify the allocation and calculation of

premiums. Any policies of insurance maintained by Manager pursuant to this

Article V may contain deductible provisions in such amounts as are maintained

with respect to Other Managed Hotels, for which Owner shall be responsible or

which Manager, at Owner's expense, may pay. Further, in lieu of all or a part of

commercial general liability insurance, workers' compensation and employer's

liability insurance and employment practices liability insurance under clauses

(e), (g) and (h) of Subsection 5.01.1, any or all of the risks covered by such

insurance, at Manager's option, may be self-insured or self-assumed by Owner

under a self-insurance or assumption of risk program similar to those in effect

at Other Managed Hotels, up to such amounts which such risks are self-insured or

assumed at Other Managed Hotels.

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5.05 Business Interruption Insurance. Subject to the terms of any Mortgage

and the Ground Lease, if any, any proceeds from business interruption insurance

payable to Owner hereunder shall be fairly and equitably apportioned between

Owner and Manager in accordance with their respective interests and equities to

the end that the fair value of Manager's expectable compensation under this

Agreement for the period covered by such business interruption insurance shall

be paid to Manager.

ARTICLE VI

MANAGEMENT FEE

6.01 Management Fee. In addition to the reimbursements required under

Section 4.07 for Manager's services hereunder during the Operating Period, Owner

shall pay Manager the Management Fee computed and made payable as provided in

the Management Fee Rider attached hereto.

6.02 Place and Means of Payment. All amounts payable to Manager or its

Affiliates under this Agreement (a) shall be paid to Manager in United States

dollars, in immediately available funds, without reduction for any withholding

tax, value added tax and any other assessment, tax, duty, levy or charge

required under the applicable laws of any applicable jurisdiction; (b) shall be

made to Manager at the place for the giving of notice to Manager set forth in or

pursuant to Section 12.10, or to such other place as Manager shall designate to

Owner; and (c) at Manager's option, shall be made by Manager electronically out

of the Hotel Accounts on the dates specified for payment in the Management Fee

Rider attached hereto, or as elsewhere provided in this Agreement, as

applicable. Any and all amounts that may become due to Manager from Owner under

this Agreement shall bear interest from and after the respective due dates

thereof until the date on which the amount is received in the bank account

designated by Manager, at an annual rate of interest equal to the lesser of (i)

the prevailing lending rate of Manager's principal bank for working capital

loans to Manager plus three percent (3%) and (ii) the maximum amount permitted

by applicable law; provided, however, the foregoing shall not apply if the

delinquency shall have occurred because of the fault of Manager.

6.03 Taxes. If any gross receipts, sales, use, excise or similar tax that

is based upon gross income or revenues is imposed upon Manager for the receipt

of any payments Owner is required to make to Manager hereunder (including the

Management Fee) then Owner shall also pay Manager an amount equal to such tax.

If any gross receipts, sales, use, excise or similar tax that is based upon

gross income or revenues is imposed upon the payment made pursuant to this

Section 6.03, the amount due under this Section 6.03 will be an amount such that

the net amount retained by Manager, after payment of such tax, equals the tax

imposed on all payments made hereunder other than Section 6.03.

ARTICLE VII

ACCOUNTS; WORKING FUNDS; RECORDS AND REPORTS

7.01 Bank Accounts. Bank accounts for the Hotel will be established at a

banking institution or institutions mutually approved by Owner and Manager, such

accounts to be in the name of Owner or the Hotel (the "Hotel Accounts"). Manager

will deposit in such Hotel Accounts all monies furnished by Owner as working

funds under Section 7.03 and all monies received from the operation of the

Hotel, and shall disburse the same for the purposes set forth in Section 7.02.

Notwithstanding the foregoing, Manager shall be entitled to maintain such funds

as it reasonably deems proper in house banks or in petty cash funds at the

Hotel.

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With Owner's consent, funds in the Hotel Accounts, the Capital Renewals Account

or any other fund or account under the control of Manager that contains monies

belonging to the Hotel or to the Owner may be combined or commingled with any

other accounts or funds controlled by Manager or any Affiliate thereof with

respect to other hotels operated by Manager or any Affiliate thereof on behalf

of Owner.

Manager's d

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