Common use of Performance Termination Clause in Contracts

Performance Termination. A. Subject to the provisions of Section 4.02 B below, Lessee shall have the option to terminate this Agreement with respect to all of the Inns if the sum of the Operating Profit (computed, for purposes of this Section 4.02 only, without deducting Base Management Fees) for all of the Inns during any period of two (2) consecutive Fiscal Years during the term of this Agreement (not including any period of time before the expiration of the 1999 Fiscal Year) does not equal or exceed the sum total of (i) the Operating Profit Goal, added once for each of such two (2) Fiscal Years (but to be prorated for any partial Fiscal Year), and (ii) eight percent (8%) of the weighted average outstanding balance of Additional Inn Investments, added once for each of such two (2) Fiscal Years (but to be prorated for any lesser period of time for which such Additional Inn Investments were made). Such option to terminate shall be exercised by serving written notice thereof on Manager no later than sixty (60) days after the receipt by Lessee of the annual accounting under Section 8.01 hereof for such second consecutive Fiscal Year. Such notice shall state the basis on which Lessee asserts the right of termination and shall show all mathematical calculations constituting the basis therefor. If Manager does not elect to avoid termination pursuant to Section 4.02 B below, this Agreement shall terminate as of the end of the first full Accounting Period following the date on which Manager's option to avoid such termination expires pursuant to Section 4.02 B. Lessee's failure to exercise its right to terminate this Agreement pursuant to Section 4.02 A during any given Fiscal Year shall not be deemed an estoppel or waiver of Lessee's right to terminate this Agreement as to subsequent Fiscal Years to which this Section may apply. In the event Lessee or Lessor refinances fewer than all of the Inns or refinances all of the Inns pursuant to more than one financing transaction and calculations of various items under this Agreement are adjusted pursuant to Section 18.04 and Lessee and Manager enter into one or more new management agreements covering the Inns being refinanced in accordance with Section 18.04, then, notwithstanding the provisions of Section 18.04, the calculation for determining whether Lessee has a right to terminate this Agreement as set forth above in this Section 4.02 A and the amount of deficiency to be advanced by Manager under Section 4.02 B to avoid termination shall be made as if all of the Inns were still covered by this Agreement and no adjustments had been made. B. Upon receipt of Lessee's written notice of termination under Section 4.02 A, Manager shall have the option, to be exercised within sixty (60) days after receipt of said notice, to avoid such termination by advancing to Lessee the amount of any deficiency described in Section 4.02 A. If Manager exercises such option, then the foregoing Lessee's election to terminate this Agreement under Section 4.02 A shall be canceled and of no force or effect and this Agreement shall not terminate. Such cancellation, however, shall not affect the right of Lessee, as to each subsequent Fiscal Year to which Section 4.02 A applies, to again elect to terminate this Agreement pursuant to the provisions of Section 4.02 A (which subsequent election shall again be subject to

Performance Termination. A. Subject to If the provisions of Section 4.02 B below, Lessee shall have the option to terminate this Agreement with respect to all of the Inns if the sum average of the Operating Profit (computed, computed for purposes of this Section 4.02 only4.03 only (a) by adding back thereto (i) any Impositions or (ii) any funds supplied by Tenant for Working Capital, without deducting Base Management FeesInventories, or Fixed Asset Supplies over and above Initial Working Capital pursuant to Section 7.01, or (iii) for all any taxes (including any penalties, fines, and interest added thereto) payable by or assessed against Landlord or Tenant related to Tenant's lease hereunder of the Inns Hotels and the personal property located therein, but (b) with a deduction for the annual ground rent payable on all MI Ground Leases, whether paid or deferred) during any period of two three (23) consecutive Fiscal Years during the term of this Agreement (not including any period of time before the expiration of the 1999 Fiscal Year) does not fails to equal or exceed the sum total lesser of (i) the Operating Profit Goal, added once for each of such two (2) Fiscal Years (but to be prorated for any partial Fiscal Year), and (iiI) eight percent (8%) of the weighted average outstanding balance sum of Additional Inn Investmentsthe aggregate original costs incurred by Landlord with respect to purchase of the Hotels then subject to this Agreement and any subsequent expansions thereof, added once for each of such two or (2) the sum of (i) the average annual amount of the interest portion of Debt Service with respect to such Fiscal Years plus (but ii) $5 million, Landlord shall, subject to be prorated for any lesser period the conditions of time for which such Additional Inn Investments were made)Section 4.03.B, have the option to terminate this Agreement. Such option to terminate shall may be exercised by serving written notice thereof on Manager no of Landlord's election to terminate this Agreement upon Tenant not later than sixty ninety (6090) days after the receipt by Lessee of the annual accounting under Section 8.01 hereof Annual Operating Statement for such second third consecutive Fiscal Year. Such notice shall state the basis on which Lessee Landlord asserts the right of termination and shall show all mathematical calculations constituting the basis therefor. B. Upon receipt of Landlord's written notice of termination under Section 4.03.A, Tenant shall have the option, to be exercised within thirty (30) days after receipt of said notice, to pay to Landlord the amount of any deficiency described in clauses (1) and (2) of Section 4.03.A and which constituted the basis of said notice. If Manager Tenant does not elect exercise its option to avoid termination pursuant to make the payment permitted by this Section 4.02 B below4.03.B, then this Agreement shall terminate as of the end of the first third (3rd) full Accounting Period following the date on which Manager's option to avoid such termination expires pursuant to Section 4.02 B. Lessee's failure to exercise its right to terminate this Agreement pursuant to Section 4.02 A during any given Fiscal Year shall not be deemed an estoppel or waiver of Lessee's right to terminate this Agreement as to subsequent Fiscal Years to which this Section may apply. In the event Lessee or Lessor refinances fewer than all of the Inns or refinances all of the Inns pursuant to more than one financing transaction and calculations of various items under this Agreement are adjusted pursuant to Section 18.04 and Lessee and Manager enter into one or more new management agreements covering the Inns being refinanced in accordance with Section 18.04, then, notwithstanding the provisions of Section 18.04, the calculation for determining whether Lessee has a right to terminate this Agreement as set forth above in this Section 4.02 A and the amount of deficiency to be advanced by Manager under Section 4.02 B to avoid termination shall be made as if all of the Inns were still covered by this Agreement and no adjustments had been made. B. Upon receipt of LesseeTenant receives Landlord's written notice of termination under Section 4.02 A, Manager shall have the option, to be exercised within sixty (60) days after receipt of said notice, to avoid such termination by advancing to Lessee the amount of any deficiency described in Section 4.02 A. If Manager exercises such option, then the foregoing Lessee's election to terminate this Agreement under Section 4.02 A shall be canceled and of no force or effect and this Agreement shall not terminate. Such cancellation4.03.A; provided, however, that such period of time shall not affect the right of Lessee, be extended as to each subsequent Fiscal Year to which Section 4.02 A applies, to again elect to terminate this Agreement pursuant required by applicable law pertaining to the provisions termination of Section 4.02 A the employment of the employees at the Hotels either for the minimum period required by law in order not to be in violation thereof or for such lesser period as may be permitted if certain payments are made (which subsequent election shall again be subject tobut only if such payments are made by Landlord).

Performance Termination. A. Subject to the provisions of Section 4.02 B 4.02B below, Lessee Owner shall have the option to terminate this Agreement with respect to all of the Inns Hotels if the sum of the Operating Profit (computed, for purposes of this Section 4.02 only, without deducting Base Management Fees) for all of the Inns Hotels during any period consisting of two three (23) consecutive Fiscal Years during the term of this Agreement (not including any period of time before the expiration of the 1999 1992 Fiscal Year) does not equal or exceed the sum total of (i) the Operating Profit Goal, added once for each of such two (2) Fiscal Years (but to be prorated for any partial Fiscal Year), and (ii) eight percent (8%) of the weighted average outstanding balance sum total for the same three (3) Fiscal Years of Additional Inn Investments(i) the original total cost ($169,818,182) of the Hotels, as adjusted for any Termination, added once for each of such two three (23) Fiscal Years Years, plus (ii) the weighted average outstanding balance of Additional Hotel Investments with respect to the Hotels, added once for each of such three (3) Fiscal Years. Solely for purposes of the foregoing calculation, the term "Operating Profit" shall include the aggregate amount of any payments pursuant to Section 4.02B with respect to such Fiscal Years, with all such payments being applied first to the earliest Fiscal Year for which Operating Profit did not equal eight percent (8%) of such sum total for such Fiscal Year and then being applied to each successive Fiscal Year until the full amount has been applied (but no more than an amount equal to eight percent (8%) of such sum total for a Fiscal Year shall be prorated for any lesser period of time for which applied to such Additional Inn Investments were madeFiscal Year). Such option to terminate shall be exercised by serving written notice thereof on Manager Management Company no later than sixty (60) days after the receipt by Lessee Owner of the annual accounting under Section 8.01 hereof for such second third consecutive Fiscal Year. Such notice shall state the basis on which Lessee Owner asserts the right of termination and shall show all mathematical calculations constituting the basis therefor. If Manager Management Company does not elect to avoid termination pursuant to Section 4.02 B 4.02B below, this Agreement shall terminate as of the end of the first second full Accounting Period following the date on which ManagerManagement Company receives Owner's option written notice of its intent to avoid such termination expires pursuant to Section 4.02 B. Lesseeterminate this Agreement. Owner's failure to exercise its right to terminate this Agreement pursuant to this Section 4.02 A 4.02A during any given Fiscal Year shall not be deemed an estoppel or waiver of LesseeOwner's right to terminate this Agreement as to subsequent Fiscal Years to which this Section may apply. In the event Lessee or Lessor refinances fewer than all of the Inns or refinances all of the Inns pursuant to more than one financing transaction and calculations of various items under this Agreement are adjusted pursuant to Section 18.04 and Lessee and Manager enter into one or more new management agreements covering the Inns being refinanced in accordance with Section 18.04, then, notwithstanding the provisions of Section 18.04, the calculation for determining whether Lessee has a right to terminate this Agreement as set forth above in this Section 4.02 A and the amount of deficiency to be advanced by Manager under Section 4.02 B to avoid termination shall be made as if all of the Inns were still covered by this Agreement and no adjustments had been made. B. Upon receipt of Lessee's written notice of termination under Section 4.02 A, Manager shall have the option, to be exercised within sixty (60) days after receipt of said notice, to avoid such termination by advancing to Lessee the amount of any deficiency described in Section 4.02 A. If Manager exercises such option, then the foregoing Lessee's election to terminate this Agreement under Section 4.02 A shall be canceled and of no force or effect and this Agreement shall not terminate. Such cancellation, however, shall not affect the right of Lessee, as to each subsequent Fiscal Year to which Section 4.02 A applies, to again elect to terminate this Agreement pursuant to the provisions of Section 4.02 A (which subsequent election shall again be subject to

Performance Termination. A. Subject to the provisions of Section 4.02 4.03 B below, Lessee Owner shall have the option to terminate this Agreement with if: 1. With respect to all each of the Inns if the sum of the Operating Profit (computed, for purposes of this Section 4.02 only, without deducting Base Management Fees) for all of the Inns during any period of two (2) consecutive Fiscal Years during the term of this Agreement (not including any period of time before the expiration of the 1999 Term commencing with Fiscal Year) does not equal or exceed the sum total of (i) the Year 2004, Operating Profit Goal, added once for each of such two (2) Fiscal Years (but to be prorated for any partial Fiscal Year), and (ii) is less than eight percent (8%) of the weighted average outstanding balance Owner's Investment (the "Threshold Amount"); and 2. The fact that the Retirement Community is not meeting the test set forth in Section 4.03A1 is not the result of Additional Inn Investments, added once for each either: (i) a Force Majeure; or (ii) any major renovation of such two (2) Fiscal Years (but to be prorated for any lesser period of time for which such Additional Inn Investments were made). the Retirement Community. B. Such option to terminate shall be exercised by serving written notice thereof on Manager Operator no later than sixty (60) days Days after the receipt by Lessee Owner of the annual accounting under Annual Financial Report for the second (2nd) of the two (2) Fiscal Years referred to in Section 8.01 hereof for such second consecutive Fiscal Year. Such notice shall state the basis on which Lessee asserts the right of termination and shall show all mathematical calculations constituting the basis therefor4.03A1. If Manager Operator does not elect to avoid termination such Termination pursuant to Section 4.02 B 4.03B below, this Agreement shall terminate as of the end of the first fourth (4th) full Accounting Period following the date on which ManagerOperator receives Owner's option written notice of its intent to avoid terminate this Agreement; provided that such period of time shall be extended as required by applicable Legal Requirements pertaining to the termination expires pursuant to Section 4.02 B. Lesseeof the employment of the employees at the Retirement Community. Owner's failure to exercise its right to terminate this Agreement pursuant to Section 4.02 A during 4.03A with respect to any given Fiscal Year shall not be deemed an estoppel or waiver of LesseeOwner's right to terminate this Agreement as with respect to subsequent Fiscal Years to which this Section 4.03A may apply. 1. In the event Lessee or Lessor refinances fewer than all Upon receipt of the Inns or refinances all a written notice of the Inns pursuant Termination sent by Owner to more than one financing transaction and calculations of various items under this Agreement are adjusted Operator pursuant to Section 18.04 and Lessee and Manager enter into one or more new management agreements covering the Inns being refinanced in accordance with Section 18.044.03B, then, notwithstanding the provisions of Section 18.04, the calculation for determining whether Lessee has a right to terminate this Agreement as set forth above in this Section 4.02 A and the amount of deficiency to be advanced by Manager under Section 4.02 B to avoid termination shall be made as if all of the Inns were still covered by this Agreement and no adjustments had been made. B. Upon receipt of Lessee's written notice of termination under Section 4.02 A, Manager Operator shall have the option, to be exercised by written notice (the "Cure Notice") to Owner within sixty (60) days Days after receipt of said noticeTermination notice from Owner, to avoid such termination Termination by advancing electing either (i) to Lessee pay to Owner an amount equal to the amount difference between the Threshold Amount for the two consecutive Fiscal Years that gave rise to the Cure Notice and the Operating Profit for the same two consecutive Fiscal Years (the "Shortfall Payment"), or (ii) to reduce the Base Fee payable to Operator pursuant to Section 5.01B during the two (2) full Fiscal Years immediately following the two (2) Fiscal Years referred to in Section 4.03A1 from five percent (5%) of any deficiency Gross Revenues to two percent (2%) of Gross Revenues. In the event Operator elects to avoid such Termination by sending to Owner a Cure Notice, the two consecutive Fiscal Years referred to in Section 4.03A1 with respect to which such election was made shall thereafter not be treated, for purposes of subsequent elections by Owner pursuant to Section 4.03A, as Fiscal Years in which the circumstances described in Section 4.02 A. 4.03A1 have occurred. If Manager Operator exercises such optionoption to send to Owner a Cure Notice, then the foregoing Lesseeany Owner's election to terminate this Agreement under Section 4.02 A 4.03 shall be canceled and of no force or effect and this Agreement shall not terminate. Such cancellationThe preceding sentence, however, shall not affect the right of LesseeOwner, as to each subsequent Fiscal Year to which Section 4.02 A 4.03A applies, to again elect to terminate this Agreement Agreement, pursuant to the provisions of Section 4.02 A (which subsequent election shall again be subject to4.

Performance Termination. A. Subject to (a) Beginning on January 1, 2002, and continuing for the provisions remainder of Section 4.02 B belowthe Term, Lessee Owner shall have the option right to terminate this Agreement with respect to all if Net Operating Income for the immediately preceding Fiscal Year does not equal or exceed 90% of the Inns if budgeted Net Operating Income for such Fiscal Year, as determined pursuant to the sum budgetary process described in Article 8. Owner may exercise such right to terminate this Agreement, without incurring a termination fee or penalty, by giving written notice to Manager within 90 days after receiving the annual financial statement for such Fiscal Year pursuant to Article 8.01. Such performance termination notice shall specify the effective date of such termination which shall not be less than 90 days from the date of such performance termination notice. (b) Notwithstanding anything to the contrary in the foregoing, in the event that Owner is entitled to provide, and does provide, Manager with timely notice of termination of this Agreement pursuant to Article 3.04(a), Manager may elect, but shall not be obligated, to nullify such termination notice and the termination of this Agreement based thereon, by funding to Owner, within thirty (30) days after receipt of Owner's performance termination notice, an amount equal to the amount by which the actual Net Operating Income for the applicable Fiscal Year was less than 90% of the budgeted Net Operating Profit (computedIncome for such Fiscal Year, as determined pursuant to the budgetary process described in Article 8. If Manager exercises this Net Operating Income shortfall cure right, Owner's performance termination notice shall be nullified and of no force and effect, and this Agreement shall remain in full force and effect and the Fiscal Year in question shall be deemed not to be a Fiscal Year in which there occurred a shortfall in Net Operating Income which would give rise to Owner's termination right under this Article 3.04. Manager shall be entitled to exercise this cure right any number of times during the Term; provided, however, Manager may not exercise this cure right for purposes of this Section 4.02 only, without deducting Base Management Fees) for all of the Inns during any period of two (2) more than 2 consecutive Fiscal Years during the term of this Agreement Term. (not including any period of time before c) Notwithstanding anything to the expiration of the 1999 Fiscal Year) does not equal or exceed the sum total of (i) the Operating Profit Goalcontrary contained herein, added once for each of such two (2) Fiscal Years (but to be prorated for any partial Fiscal Year), and (ii) eight percent (8%) of the weighted average outstanding balance of Additional Inn Investments, added once for each of such two (2) Fiscal Years (but to be prorated for any lesser period of time for which such Additional Inn Investments were made). Such option to terminate shall be exercised by serving written notice thereof on Manager no later than sixty (60) days after the receipt by Lessee of the annual accounting under Section 8.01 hereof for such second consecutive Fiscal Year. Such notice shall state the basis on which Lessee asserts the right of termination and shall show all mathematical calculations constituting the basis therefor. If Manager does not elect to avoid termination pursuant to Section 4.02 B below, this Agreement shall terminate as of the end of the first full Accounting Period following the date on which Manager's option to avoid such termination expires pursuant to Section 4.02 B. Lessee's failure to exercise its right to terminate this Agreement pursuant to Section 4.02 A during any given Fiscal Year shall not be deemed an estoppel or waiver of LesseeOwner's right to terminate this Agreement as under Article 3.04(a) (and the amount of any shortfall to subsequent Fiscal Years to which this Section may apply. In be paid by Manager in the event Lessee Manager exercises its cure right pursuant to Article 3.04(b)) shall be eliminated, or Lessor refinances fewer than all reduced, as applicable, to the extent that the shortfall in Net Operating Income is attributable to (i) force majeure events as described in Article 21 or (ii) increases in utility rates and/or premiums for insurance which Manager is responsible to obtain under Exhibit E, in each case that could not have been reasonably anticipated by Manager in connection with the submission of the Inns Annual Business Plan. Any disputes concerning the applicability of this Article 3.04(c) shall be resolved pursuant to the arbitration procedure described in Article 22, and the time period governing any Owner termination right or refinances Manager cure right shall be extended for a reasonable period of time (not exceeding 180 days) pending such resolution. (d) Owner and Manager have agreed upon the Hotel's current Competitive Set and the Hotel's current Yield Index (as reported in the "Star Report" published by ▇▇▇▇▇ Travel Research) versus such Competitive Set ("Base Yield Index"), all as set forth on Exhibit 1. As a part of the Inns pursuant to more than one financing transaction and calculations of various items under this Agreement are adjusted pursuant to Section 18.04 and Lessee budgetary process described in Article 8, Owner and Manager enter into one shall review such Competitive Set annually and in good faith agree upon any additions to or more new management agreements covering deletions from such Competitive Set and, if necessary, adjust the Inns being refinanced in accordance with Section 18.04Base Yield Index versus such Competitive Set to reflect any additions thereto or deletions therefrom. (e) Beginning on the later of (i) January 1, then2002, notwithstanding and (ii) the provisions date upon which Owner has borrowed the full amount of Section 18.04the then "Commitment" under the Revolving Credit Agreement, and continuing for the calculation for determining whether Lessee has a remainder of the Term, Owner shall have the right to terminate this Agreement as set forth above in this Section 4.02 A and the amount of deficiency to be advanced by Manager under Section 4.02 B to avoid termination shall be made as if all if, during each of the Inns were still covered two immediately preceding fiscal years, the Hotel's Yield Index (as reported in the "Star Report" published by ▇▇▇▇▇ Travel Research) versus its Competitive Set is below the agreed upon Base Yield Index of the Hotel for each of the applicable years. Owner may exercise such right to terminate this Agreement and no adjustments had been made. B. Upon receipt of Lessee's Agreement, without incurring a termination fee or penalty, by giving written notice of termination under Section 4.02 A, to Manager shall have the option, to be exercised within sixty ninety (6090) days after receipt information regarding the Yield Index of said noticethe hotels within the Competitive Set is published by ▇▇▇▇▇ Travel Research and provided to Owner by Manager. Such performance termination notice shall specify the effective date of such termination, to avoid such termination by advancing to Lessee the amount of any deficiency described in Section 4.02 A. If Manager exercises such option, then the foregoing Lessee's election to terminate this Agreement under Section 4.02 A shall be canceled and of no force or effect and this Agreement which shall not terminate. Such cancellation, however, shall not affect be less than ninety (90) days from the right date of Lessee, as to each subsequent Fiscal Year to which Section 4.02 A applies, to again elect to terminate this Agreement pursuant to the provisions of Section 4.02 A (which subsequent election shall again be subject tosuch performance termination notice.

Performance Termination. A. Subject to the provisions of Section 4.02 B below, 8.1 Lessee shall have the option to terminate this Agreement all of the Operating Agreements (as a complete group with respect to all of the Inns Leased Properties), subject to this Article VIII, if: (a) With respect to any full Fiscal Year commencing after the date of this Agreement, the Aggregate Operating Profit is less than the First-Tier Minimum Rent due for such Fiscal Year (the "First-Tier Performance Threshold"); (b) Aggregate Operating Profit for any two consecutive, full Fiscal Years is less than an amount equal to the following percentage applied to Lessee's Investment Basis (as defined in the Operating Agreements), together with the Lessee's Additional Investment (as defined in the Operating Agreements): (i) 8.0% with respect to Fiscal Years 2003 and 2004, (i) 8.5% with respect to Fiscal Years 2005 through 2007, (i) 9.0% with respect to Fiscal Years 2008 and following (the "Second-Tier Performance Threshold"); provided, however, Lessee shall not have the option to terminate the Operating Agreements, if the sum First-Tier Performance Threshold or the Second-Tier Performance Threshold is not satisfied as a result of (i) Force Majeure affecting one or more of the Leased Properties; or (ii) major renovation to any Leased Property(ies) that materially and adversely affects the operation of such Leased Property(ies); or (iii) any default by Lessee under this Agreement, the Operating Profit Agreements or any of the Operative Documents. Provided, further, that Lessee shall not have the option to terminate the Operating Agreements following Fiscal Years 2004 and 2005, in the event that the Second-Tier Performance Threshold would be satisfied by excluding that portion of the Aggregate Operating Profit, Lessee's Investment Basis (computedas defined in the Operating Agreements), for purposes and Lessee's Additional Investment (as defined in the Operating Agreements) allocable to the Brighton Gardens of this Naples, Florida Leased Property and the Brighton Gardens of Venice, Florida Leased Property. Section 4.02 only, without deducting Base Management Fees8.2 Lessee shall have the right to exercise its option under Section 8.1 by giving Operator notice of such exercise within ninety (90) days of Lessee's receipt of the Annual Financial Report (as defined in the Operating Agreements) for all of the Inns during Fiscal Year(s) in question. Lessee's failure to exercise its option under Section 8.1 with respect to any period of two (2) consecutive Fiscal Years during in which the term of this Agreement (Second-Tier Performance Threshold is not including any period of time before the expiration of the 1999 Fiscal Year) does not equal or exceed the sum total of (i) the Operating Profit Goal, added once for each of such two (2) Fiscal Years (but to be prorated for any partial Fiscal Year), and (ii) eight percent (8%) of the weighted average outstanding balance of Additional Inn Investments, added once for each of such two (2) Fiscal Years (but to be prorated for any lesser period of time for which such Additional Inn Investments were made). Such option to terminate shall be exercised by serving written notice thereof on Manager no later than sixty (60) days after the receipt by Lessee of the annual accounting under Section 8.01 hereof for such second consecutive Fiscal Year. Such notice shall state the basis on which Lessee asserts the right of termination and shall show all mathematical calculations constituting the basis therefor. If Manager does not elect to avoid termination pursuant to Section 4.02 B below, this Agreement shall terminate as of the end of the first full Accounting Period following the date on which Manager's option to avoid such termination expires pursuant to Section 4.02 B. Lessee's failure to exercise its right to terminate this Agreement pursuant to Section 4.02 A during any given Fiscal Year satisfied shall not be deemed an estoppel or waiver of Lessee's right to terminate this Agreement as exercise its option under Section 8.1 for the Second-Tier Performance Threshold with respect to subsequent the second of such two (2) Fiscal Years and the immediately following Fiscal Year. Section 8.3 Upon receipt of a notice of exercise sent by Lessee to Operator pursuant to Section 8.2, Operator may avoid termination of the Operating Agreements by delivering to Lessee the Shortfall Payment within thirty (30) days after receiving such notice. For purposes of this Agreement, the "Shortfall Payment" shall mean: (i) with respect to any failure to satisfy the First-Tier Performance Threshold, an amount by which this Section may applyAggregate Operating Profit for the applicable Fiscal Year is less than the First-Tier Performance Threshold for such Fiscal Year, or (ii) with respect to any failure to satisfy the Second-Tier Performance Threshold, an amount by which Aggregate Operating Profit for the applicable two (2) Fiscal Years is less than the Second-Tier Performance Threshold for such two (2) Fiscal Years. Under no circumstances shall Lessee be obligated to repay or reimburse Operator for any Shortfall Payment, and the Shortfall Payment shall not be characterized as a loan. In the event Operator delivers the Shortfall Payment, then any exercise by Lessee or Lessor refinances fewer than all of the Inns or refinances all of the Inns pursuant an option to more than one financing transaction and calculations of various items under this Agreement are adjusted terminate pursuant to Section 18.04 and Lessee and Manager enter into one or more new management agreements covering the Inns being refinanced in accordance with Section 18.04, then, notwithstanding the provisions of Section 18.04, the calculation for determining whether Lessee has a right to terminate this Agreement as set forth above in this Section 4.02 A and the amount of deficiency to be advanced by Manager under Section 4.02 B to avoid termination shall be made as if all of the Inns were still covered by this Agreement and no adjustments had been made. B. Upon receipt of Lessee's written notice of termination under Section 4.02 A, Manager shall have the option, to be exercised within sixty (60) days after receipt of said notice, to avoid such termination by advancing to Lessee the amount of any deficiency described in Section 4.02 A. If Manager exercises such option, then the foregoing Lessee's election to terminate this Agreement under Section 4.02 A 8.1 shall be canceled and of no force or effect with respect to the Fiscal Year(s) in question and this Agreement the Operating Agreements shall not terminate. Such cancellation; provided, however, Lessee's option to terminate the Operating Agreements under Section 8.1 shall remain in effect as to subsequent Fiscal Years. In the event Operator makes a Shortfall Payment pursuant to this Section 8.3, the Fiscal Year(s) with respect to which such Shortfall Payment are made shall thereafter not affect be treated as Fiscal Year(s) in which the First-Tier Performance Threshold or the Second-Tier Performance Threshold is not satisfied. Operator shall have the right of Lessee, as to each subsequent Fiscal Year to which Section 4.02 A applies, to again elect to terminate this Agreement pursuant make a Shortfall Payment (i) on unlimited occasions with respect to the provisions First-Tier Performance Threshold, (ii) on only two (2) occasions during the Initial Term of Section 4.02 A the Operating Agreements (which subsequent election shall again be subject toas defined therein) with respect to the Second-Tier Performance Threshold, and (iii) only one (i) occasion during each of the Extended Terms, if any, under the Operating Agreements (as defined therein) with respect to the Second-Tier Performance Threshold.

Performance Termination. A. Subject to the provisions of Section 4.02 4.03 B below, Lessee Owner shall have the option to terminate this Agreement with if: 1. With respect to all each of the Inns if the sum of the Operating Profit (computed, for purposes of this Section 4.02 only, without deducting Base Management Fees) for all of the Inns during any period of two (2) consecutive Fiscal Years during the term of this Agreement (not including any period of time before the expiration of the 1999 Term commencing with Fiscal Year) does not equal or exceed the sum total of (i) the Year 2000, Operating Profit Goal, added once for each of such two (2) Fiscal Years (but to be prorated for any partial Fiscal Year), and (ii) is less than eight percent (8%) of the weighted average outstanding balance Owner's Investment (the "Threshold Amount"); and 2. The fact that the Retirement Community is not meeting the test set forth in Section 4.03A1 is not the result of Additional Inn Investments, added once for each either: (i) a Force Majeure; or (ii) any major renovation of such two (2) Fiscal Years (but to be prorated for any lesser period of time for which such Additional Inn Investments were made). the Retirement Community. B. Such option to terminate shall be exercised by serving written notice thereof on Manager Operator no later than sixty (60) days Days after the receipt by Lessee Owner of the annual accounting under Annual Financial Report for the second (2nd) of the two (2) Fiscal Years referred to in Section 8.01 hereof for such second consecutive Fiscal Year. Such notice shall state the basis on which Lessee asserts the right of termination and shall show all mathematical calculations constituting the basis therefor4.03A1. If Manager Operator does not elect to avoid termination such Termination pursuant to Section 4.02 B 4.03B below, this Agreement shall terminate as of the end of the first fourth (4th) full Accounting Period following the date on which ManagerOperator receives Owner's option written notice of its intent to avoid terminate this Agreement; provided that such period of time shall be extended as required by applicable Legal Requirements pertaining to the termination expires pursuant to Section 4.02 B. Lesseeof the employment of the employees at the Retirement Community. Owner's failure to exercise its right to terminate this Agreement pursuant to Section 4.02 A during 4.03A with respect to any given Fiscal Year shall not be deemed an estoppel or waiver of LesseeOwner's right to terminate this Agreement as with respect to subsequent Fiscal Years to which this Section 4.03A may apply. 1. In the event Lessee or Lessor refinances fewer than all Upon receipt of the Inns or refinances all a written notice of the Inns pursuant Termination sent by Owner to more than one financing transaction and calculations of various items under this Agreement are adjusted Operator pursuant to Section 18.04 and Lessee and Manager enter into one or more new management agreements covering the Inns being refinanced in accordance with Section 18.044.03B, then, notwithstanding the provisions of Section 18.04, the calculation for determining whether Lessee has a right to terminate this Agreement as set forth above in this Section 4.02 A and the amount of deficiency to be advanced by Manager under Section 4.02 B to avoid termination shall be made as if all of the Inns were still covered by this Agreement and no adjustments had been made. B. Upon receipt of Lessee's written notice of termination under Section 4.02 A, Manager Operator shall have the option, to be exercised by written notice (the "Cure Notice") to Owner within sixty (60) days Days after receipt of said noticeTermination notice from Owner, to avoid such termination Termination by advancing electing either (i) to Lessee pay to Owner an amount equal to the amount difference between the Threshold Amount for the two consecutive Fiscal Years that gave rise to the Cure Notice and the Operating Profit for the same two consecutive Fiscal Years (the "Shortfall Payment"), or (ii) to reduce the Base Fee payable to Operator pursuant to Section 5.01B during the two (2) full Fiscal Years immediately following the two (2) Fiscal Years referred to in Section 4.03A1 from five percent (5%) of any deficiency Gross Revenues to two percent (2%) of Gross Revenues. In the event Operator elects to avoid such Termination by sending to Owner a Cure Notice, the two consecutive Fiscal Years referred to in Section 4.03A1 with respect to which such election was made shall thereafter not be treated, for purposes of subsequent elections by Owner pursuant to Section 4.03A, as Fiscal Years in which the circumstances described in Section 4.02 A. 4.03A1 have occurred. If Manager Operator exercises such optionoption to send to Owner a Cure Notice, then the foregoing Lesseeany Owner's election to terminate this Agreement under Section 4.02 A 4.03 shall be canceled and of no force or effect and this Agreement shall not terminate. Such cancellationThe preceding sentence, however, shall not affect the right of LesseeOwner, as to each subsequent Fiscal Year to which Section 4.02 A 4.03A applies, to again elect to terminate this Agreement Agreement, pursuant to the provisions of Section 4.02 A (which subsequent election shall again be subject to4.

Performance Termination. A. Subject to the provisions of Section 4.02 B 2.02.B below, Lessee shall have the option to terminate this Agreement with and to cause Manager to terminate the Submanagement Agreement, if: 1. With respect to all of the Inns if the sum of the Operating Profit (computed, for purposes of this Section 4.02 only, without deducting Base Management Fees) for all of the Inns during any period of two (2) consecutive Fiscal Years during the term of this Agreement (not including any period of time before the expiration of the 1999 Fiscal Year) does not equal or exceed the sum total of (i) the Operating Profit Goal, added once for each of such two (2) Fiscal Years within any three (but 3) Fiscal Year period (not including any portion of any Fiscal Year prior to be prorated for any partial Fiscal Year), and (ii) eight percent (8%) the expiration of the weighted average outstanding balance first (1st) full Fiscal Year after the Take-Over Date) Operating Profit is less than the applicable Performance Termination Threshold; and 2. The Revenue Index of Additional Inn Investments, added once for the Hotel during each of such Fiscal Years (i.e. any two (2) Fiscals Years within three (3) Fiscal Years (but to be prorated for any lesser period of time for which such Additional Inn Investments were made)Year period) is less than the Revenue Index Threshold. Such option to terminate and to cause Manager to terminate the Submanagement Agreement shall be exercised by serving written notice thereof on Manager no later than sixty (60) days after the receipt by Lessee of the annual accounting under Section 8.01 4.01.B hereof for such the second consecutive of the two (2) Fiscal Year. Such notice shall state the basis on which Lessee asserts the right of termination and shall show all mathematical calculations constituting the basis thereforYears referred to in Section 2.02.A.1. If Manager does (and Marriott pursuant to Section 2.02.B of the Submanagement Agreement) do not elect to avoid termination such Termination pursuant to Section 4.02 B 2.02.B below, this Agreement shall terminate (and Manager shall cause the Submanagement Agreement to terminate) as of the end of the first fourth (4th) full Accounting Period following the date on which ManagerManager receives Lessee's option written notice of its intent to avoid terminate this Agreement; provided that such period of time shall be extended as required by applicable Legal Requirements pertaining to the termination expires pursuant to Section 4.02 B. of the employment of the employees at the Hotel. Lessee's failure to exercise its right to terminate this Agreement pursuant to Section 4.02 A during 2.02.A with respect to any given Fiscal Year shall not be deemed an estoppel or waiver of Lessee's right to terminate this Agreement as (and to cause Manager to terminate the Submanagement Agreement) with respect to subsequent Fiscal Years to which this Section 2.02.A may apply. In the event Lessee or Lessor refinances fewer than all of the Inns or refinances all of the Inns pursuant to more than one financing transaction and calculations of various items under this Agreement are adjusted pursuant to Section 18.04 and Lessee and Manager enter into one or more new management agreements covering the Inns being refinanced in accordance with Section 18.04, then, notwithstanding the provisions of Section 18.04, the calculation for determining whether Lessee has a right to terminate this Agreement as set forth above in this Section 4.02 A and the amount of deficiency to be advanced by Manager under Section 4.02 B to avoid termination shall be made as if all of the Inns were still covered by this Agreement and no adjustments had been made. B. Upon receipt of Lessee's written notice of termination Termination under Section 4.02 A2.02.A, Manager shall have the option, to be exercised within sixty (60) days after receipt of said notice, to avoid such termination Termination by advancing electing (in a notice to Lessee Lessee) to waive the payment of the Base Management Fee and by obtaining from Marriott a written waiver of the Base Management Fee under the Submanagement Agreement (and a written waiver of the payment of franchise fees under the Franchise Agreement) (in each case beginning as of the first day of the next full Accounting Period after the date of such notice from Manager) until such time as the total cumulative amount (the "Cumulative Waived Base Fees") of such waived Base Management Fees and franchise fees equals the total amount (the "Cure Payment") by which Operating Profit for each of the Fiscal Years in question (i.e., the Fiscal Years referred to in Section 2.02.A.1) was less than the Performance Termination Threshold. [ In the case of Houston, the following applies: Upon receipt of Lessee's written notice of Termination under Section 2.02.A, Manager shall have the option, to be exercised within sixty (60) days after receipt of said notice, to avoid such Termination by electing (in a notice to Lessee) to pay an amount equal to the amount (the "Cure Payment") by which Operating Profit for each of any deficiency the Fiscal Years in question (i.e., the Fiscal Years referred to in Section 2.02.A.1) was less than the Performance Termination Threshold, and shall pay the Cure Payment within thirty (30) days of providing such notice to Lessee.] In the event Manager makes a Cure Payment pursuant to this Section 2.02.B, the Fiscal Years with respect to which such Cure Payment was made shall thereafter not be treated, for purposes of subsequent elections by Lessee pursuant to Section 2.02.A, as Fiscal Years in which the circumstances described in Section 4.02 A. 2.02.A.1 have occurred. If Manager exercises such optionoption to make such Cure Payment, then the foregoing Lessee's election to terminate this Agreement under Section 4.02 A 2.02.A shall be canceled and of no force or effect with respect to the two (2) Fiscal Years in question, and this Agreement shall not terminate. Such cancellation, however, shall not affect the right of Lessee, as to each subsequent Fiscal Year to which Section 4.02 A 2.02.A applies, to again elect to terminate this Agreement pursuant to the provisions of Section 4.02 A 2.02.A. If Manager does not exercise its option to make a Cure Payment as aforesaid, then this Agreement and the Submanagement Agreement shall each be terminated as of the date set forth in Section 2.02.A. Manager may not elect to make a Cure Payment more than one (which subsequent election shall again be subject to1) time during the Term hereof.

Performance Termination. A. Subject to the provisions of Section 4.02 B 4.02.B below, Lessee Owner shall have the option to terminate this Agreement with respect to all of the Inns if the sum average of the Operating Profit (computed, for purposes of this Section 4.02 4.02.A only, without deducting Base Management Feesany Impositions) for all of the Inns during any period of two three (23) consecutive Fiscal Years during the term of this Agreement (not including any period of time before the expiration of the 1999 Fiscal Year) does not equal or exceed eight percent (8%) of the sum total of (i) the Operating Profit Goal, added once for each of such two (2) Fiscal Years (but to be prorated for any partial Fiscal Year)Total Original Cost, and (ii) eight percent (8%) of the weighted average outstanding balance of Additional Inn Investments, added once for each of such two (2) Fiscal Years (but to be prorated for any lesser period of time for which such Additional Inn Investments previously made with respect to the Inns that were made)subject to this Agreement during the relevant periods. Such option to terminate shall be exercised by serving written notice thereof on Manager no later than sixty (60) days after the receipt by Lessee Owner of the annual accounting under Section 8.01 hereof for such second third consecutive Fiscal Year. Such notice shall state the basis on which Lessee Owner asserts the right of termination and shall show all mathematical calculations constituting the basis therefor. If Manager does not elect to avoid termination pursuant to Section 4.02 B 4.02.B below, this Agreement shall terminate as of the end of the first second full Accounting Period following the date on which ManagerManager receives Owner's option written notice of its intent to avoid such termination expires pursuant to Section 4.02 B. Lesseeterminate this Agreement. Owner's failure to exercise its right to terminate this Agreement pursuant to Section 4.02 A 4.02.A during any given Fiscal Year shall not be deemed an estoppel or waiver of LesseeOwner's right to terminate this Agreement as to subsequent Fiscal Years to which this Section may apply. In the event Lessee or Lessor refinances fewer than all of the Inns or refinances all of the Inns pursuant to more than one financing transaction and calculations of various items under this Agreement are adjusted pursuant to Section 18.04 and Lessee and Manager enter into one or more new management agreements covering the Inns being refinanced in accordance with Section 18.04, then, notwithstanding the provisions of Section 18.04, the calculation for determining whether Lessee has a right to terminate this Agreement as set forth above in this Section 4.02 A and the amount of deficiency to be advanced by Manager under Section 4.02 B to avoid termination shall be made as if all of the Inns were still covered by this Agreement and no adjustments had been made. B. Upon receipt of LesseeOwner's written notice of termination under Section 4.02 A4.02.A, Manager shall have the option, to be exercised within sixty (60) days after receipt of said notice, to avoid such termination by advancing to Lessee Owner the amount of any deficiency described in Section 4.02 A. 4.02.A. If Manager exercises such option, then the foregoing LesseeOwner's election to terminate this Agreement under Section 4.02 A 4.02.A shall be canceled and of no force or effect and this Agreement shall not terminate. Such cancellation, however, shall not affect the right of LesseeOwner, as to each subsequent Fiscal Year to which Section 4.02 A applies, to again elect to terminate this Agreement pursuant to the provisions of Section 4.02 A (which subsequent election shall again be subject to4.

Performance Termination. A. Subject to the provisions of Section 4.02 4.03 B below, Lessee Owner shall have the option to terminate this Agreement with if: 1. With respect to all each of the Inns if the sum of the Operating Profit (computed, for purposes of this Section 4.02 only, without deducting Base Management Fees) for all of the Inns during any period of two (2) consecutive Fiscal Years during the term of this Agreement (not including any period of time before the expiration of the 1999 Term commencing with Fiscal Year) does not equal or exceed the sum total of (i) the Year 2000, Operating Profit Goal, added once for each of such two (2) Fiscal Years (but to be prorated for any partial Fiscal Year), and (ii) is less than eight percent (8%) of the weighted average outstanding balance Owner's Investment (the "Threshold Amount"); and 2. The fact that the Retirement Community is not meeting the test set forth in Section 4.03A1 is not the result of Additional Inn Investments, added once for each either: (i) a Force Majeure; or (ii) any major renovation of such two (2) Fiscal Years (but to be prorated for any lesser period of time for which such Additional Inn Investments were made). the Retirement Community. B. Such option to terminate shall be exercised by serving written notice thereof on Manager Operator no later than sixty (60) days Days after the receipt by Lessee Owner of the annual accounting under Annual Financial Report for the second (2nd) of the two (2) Fiscal Years referred to in Section 8.01 hereof for such second consecutive Fiscal Year. Such notice shall state the basis on which Lessee asserts the right of termination and shall show all mathematical calculations constituting the basis therefor4.03A1. If Manager Operator does -------------------------------------------------------------------------------- OPERATING AGREEMENT PAGE 25 not elect to avoid termination such Termination pursuant to Section 4.02 B 4.03B below, this Agreement shall terminate as of the end of the first fourth (4th) full Accounting Period following the date on which ManagerOperator receives Owner's option written notice of its intent to avoid terminate this Agreement; provided that such period of time shall be extended as required by applicable Legal Requirements pertaining to the termination expires pursuant to Section 4.02 B. Lesseeof the employment of the employees at the Retirement Community. Owner's failure to exercise its right to terminate this Agreement pursuant to Section 4.02 A during 4.03A with respect to any given Fiscal Year shall not be deemed an estoppel or waiver of LesseeOwner's right to terminate this Agreement as with respect to subsequent Fiscal Years to which this Section 4.03A may apply. 1. In the event Lessee or Lessor refinances fewer than all Upon receipt of the Inns or refinances all a written notice of the Inns pursuant Termination sent by Owner to more than one financing transaction and calculations of various items under this Agreement are adjusted Operator pursuant to Section 18.04 and Lessee and Manager enter into one or more new management agreements covering the Inns being refinanced in accordance with Section 18.044.03B, then, notwithstanding the provisions of Section 18.04, the calculation for determining whether Lessee has a right to terminate this Agreement as set forth above in this Section 4.02 A and the amount of deficiency to be advanced by Manager under Section 4.02 B to avoid termination shall be made as if all of the Inns were still covered by this Agreement and no adjustments had been made. B. Upon receipt of Lessee's written notice of termination under Section 4.02 A, Manager Operator shall have the option, to be exercised by written notice (the "Cure Notice") to Owner within sixty (60) days Days after receipt of said noticeTermination notice from Owner, to avoid such termination Termination by advancing electing either (i) to Lessee pay to Owner an amount equal to the amount difference between the Threshold Amount for the two consecutive Fiscal Years that gave rise to the Cure Notice and the Operating Profit for the same two consecutive Fiscal Years (the "Shortfall Payment"), or (ii) to reduce the Base Fee payable to Operator pursuant to Section 5.01B during the two (2) full Fiscal Years immediately following the two (2) Fiscal Years referred to in Section 4.03A1 from five percent (5%) of any deficiency Gross Revenues to two percent (2%) of Gross Revenues. In the event Operator elects to avoid such Termination by sending to Owner a Cure Notice, the two consecutive Fiscal Years referred to in Section 4.03A1 with respect to which such election was made shall thereafter not be treated, for purposes of subsequent elections by Owner pursuant to Section 4.03A, as Fiscal Years in which the circumstances described in Section 4.02 A. 4.03A1 have occurred. If Manager Operator exercises such optionoption to send to Owner a Cure Notice, then the foregoing Lesseeany Owner's election to terminate this Agreement under Section 4.02 A 4.03 shall be canceled and of no force or effect and this Agreement shall not terminate. Such cancellationThe preceding sentence, however, shall not affect the right of LesseeOwner, as to each subsequent Fiscal Year to which Section 4.02 A 4.03A applies, to again elect to terminate this Agreement Agreement, pursuant to the provisions of Section 4.02 A (which subsequent election shall again be subject to4.