Common use of Performance Test Clause in Contracts

Performance Test. If for any two consecutive six-month periods (each six-month period is an “Operating Period”) beginning with the first day of the second Full Operating Year (as defined in the Management Contract) (each two consecutive six- month period is a "Testing Period"), each of the following occurs in both of such Operating Periods: (a) the aggregate Gross Operating Profit (as defined in the Management Contract) achieved by the Properties for each Operating Period is less than 90% of the aggregate Gross Operating Profit set forth in the Approved Business Plan for such Operating Period, and (b) the average RevPAR for all of the Properties for each such Operating Period is less than 90% of the average RevPAR for hotels in the Competitive Set for the same Operating Period (collectively, the "Performance Test"). If no Approved Business Plan has been approved by the Parties for any Operating Year (as defined in the Management Contract), the applicable Approved Business Plan for purposes of computing the Performance Test shall be that from the preceding Operating Year. As promptly as reasonably possible after the end of each Testing Period, the Managing Member shall obtain the relevant RevPAR reports (i.e., STAR Reports from STR Global) and provide to the Members such RevPAR reports and the Gross Operating Profit information needed to confirm whether the Performance Test has been achieved for such Testing Period. If the Performance Test is not achieved for any Testing Period, then the Company (subject to the provisions regarding decisions of the Board as set forth in Section 9.2.7(b)) may exercise its right to cause the termination of the Management Contracts for all of the Properties by delivering a notice of termination to Management Company given within sixty (60) days after receipt by the Company of the certified financial statements for the Properties for the second such Operating Period, specifying a termination date not less than sixty (60) days nor more than one hundred- twenty (120) days after the delivery of such notice. Notwithstanding the foregoing, the Company's right to cause termination of Management Contracts under this Section 9.2.7(c) shall not be exercisable if the applicable level of aggregate Gross Operating Profit or the applicable relative RevPAR results is not achieved as a result of: (i) Force Majeure (as defined in the Management Contract) affecting the Properties, (ii) a failure of Owners to fund a Funds Request that Section 5.5.2 of the Management Contract requires Owners to fund, or (iii) the performance of approved Building Capital Improvements (as defined in the Management Contract) or ROI Capital Improvements (as defined in the Management Contract) adversely affecting a material portion of the income generating areas of the Properties or any other area material to the operation of the Properties ).